Management Reports • May 4, 2007
Management Reports
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(Translation from the Portuguese original)
Last year I stated that 2005 had been an exceptional year.
2006 was also an exceptional year, both in terms of results achieved and of the magnitude of the challenges that the Group faced during the year and the way that the Group managed those challenges.
Under the portfolio management model adopted by Sonae, which balances mature businesses, high growth businesses and options for the future, we delivered sustained growth in the Group's operational results – EBITDA grew 8.3% – and in net income, which grew by almost 30% on a like for like basis.
In the Retail business, despite the opening of a significant number of new stores, which had an impact on over half of our portfolio of stores, we gained market share and strengthened our competitiveness, essential aspects to give us confidence when considering new expansion opportunities outside Portugal.
Sonae Sierra has benefited from a significant increase in the value of the Shopping Centres owned by the company and we accelerated our international expansion, capitalising on the strong brand, an excellent management team and on the significant value added by our partner Grosvenor, through complementary skills and by challenging our management.
Sonaecom was outstanding in its handling of the demanding Tender Offer bid for Portugal Telecom which I will come back to later, while at the same time achieving operational progress. Growth in the customer base was the highest in the past five years, profitability improved in contrast to a general deterioration in the sector and the company led innovation, particularly for broadband services.
Sonae Capital accelerated its development of the Tróia project, created the conditions to launch other tourist resorts, refurbished significant assets (including the Porto Palácio and Aqualuz hotels), divested from non-core sectors and invested in new growth opportunities such as renewable energies and insurance brokerage services.
The Sonae Group – as is well known – has always tended to lose in business opportunities that depend on the Portuguese Government. The Portuguese Government has a golden Share in Portugal Telecom with veto rights, including the unblocking of the Articles of Association – upon which the success of our offer was conditional. For this reason, when the offer was announced, I stated that we had informed the Government of our intention and that, obviously, our bid would not be pursued if the Government had any intention of using that power to block the operation.
I believe that most economic and business agents, regulatory entities and consumers in general, believed that Sonaecom's proposal would end a long period of anti-competitive practices and arrogance from the incumbent operator.
We expected that, at the appropriate time, the Government would clearly express their overwhelming support for the operation as it was by far the quickest and safest way to fulfil its promises and wishes to create a competitive environment in the sector, to accelerate the development of the "information society", while, at the same time, providing a long term solution for Portugal Telecom, under capable management. We were wrong to believe these would be the sole criteria on which the Government would base its decision.
Another solution will emerge, as the current shareholder structure is obviously unstable, and lacks a short or medium term project that would respond to the needs of the company and of the Country.
Sonae will move forward, will continue to strictly fulfil its obligations, and will comply with State laws. It will also continue to fight for a more modern, developed, competent, transparent and fair society. We will continue to demand delivery of the benefits for consumers that our offer would have produced and that the Government has so many times promised, whatever the outcome of the Offer.
As is generally known, the next Shareholders' General Meeting of Sonae SGPS is elective and one of the items on the agenda refers to the election of the governing bodies for the four year period 2007 to 2010.
I will be finalising a proposal to elect a new Board of Directors in which I will occupy the position of Chairman, without accumulating the role of CEO. Paulo Azevedo will become CEO of the Group, and will be supported by Nuno Jordão (CEO of Modelo Continente), Álvaro Portela (CEO of Sonae Sierra) and Ângelo Paupério (CEO of Sonaecom) as members of the Executive Committee and Vice-Presidents of the Company.
I decided to anticipate making this information public to clarify, both internally and externally, the new roles being proposed.
This will be the basis of Efanor's proposal to the Shareholders' General Meeting, and I very much hope to see the proposal enthusiastically supported by a large majority of minority shareholders.
Under the new organisational model, that I hope to see implemented after the coming Shareholders' General Meeting, Paulo Azevedo, as the next CEO of Sonae SGPS, will also take my place as Chairman of the Boards of Directors of Modelo Continente, Sonae Sierra and Sonaecom.
As part of the continuing restructuring of the Sonae Group, we intend to provide Sonae Capital with adequate human, financial and management resources to permit its spin off from Sonae SGPS in the near future.
Following this spin off, the business portfolio of Sonae SGPS will be much more focussed on activities which will be, directly or indirectly, close to the final consumer.
I often say that my main role is to help to develop leaders who will be better than me.
This very strong desire is behind this new reorganisational initiative, which continues the formula that has brought so much success to the Group: a combination of shareholder stability and the appointment of highly professional management teams.
It is also the right moment to thank the financial system – Portuguese and international – for the almost unlimited support given to our projects, which allows us to aggressively pursue growth opportunities, both organically and via acquisitions.
We hope to continue to be worthy of your support, since we are going to require it!
Given that over the last 20 years the value of Sonae has multiplied by a factor of 74, and that capital calls have been less than distributed assets, we advise our shareholders to continue to believe in the increasing value of their investments and remain with us.
To my employees, with whom I share ambitions and challenges, I would like to say that I will now change functions – the "Zig Zag" career applies to everybody in the organisation – and, more importantly, that I am sincerely grateful for your capacity, day by day, to build your skills and be ever more enthusiastic in fulfilling our customers needs, by improving the quality of our products and also increasingly the quality of our services.
I am totally confident of your success, which will be, as I have said, the best reward for me, the best dividend for this manager who has been dedicated to Sonae for the last 42 years.
Belmiro de Azevedo 20 March 2007
Sonae, SGPS, SA - Sociedade Aberta Lugar do Espido Via Norte Apartado 1011 4471-909 Maia Portugal Share Capital Euro 2 000 000 000.00 Maia Commercial Registry and Fiscal Number 500 273 170
(Translation from the Portuguese original)
(Unless otherwise stated, the figures presented in this report relate to the year 2006. The figures shown in brackets are the comparable1 figures for the previous year.)
In 2006, the World economy recorded accelerated growth for the third consecutive year. GDP, at current prices and exchange rates, grew by 3.8% (3.9% in 2004 and 3.4% in 2005). More credible calculations, which correct the obvious undervaluation of emerging economies, reveal a growth rate of 5.1%.
As forecasted, it was a year in which all the major economic zones grew significantly: the United States by 3.3%, the Euro zone by 2.6% and Japan by 2.8%, all of which were rates above those of their respective potential products. However, it was in the emerging economies that the highest growth rates occurred (an average of 7.3%), led by China (10%), India (8.3%) and Russia (6.5%).
Other favourable developments also marked the year, such as the slowdown of the increase in oil prices, followed in the latter part of the year by what would appear to be a corrective adjustment with the price falling below 60 US dollars a barrel.
As the year unfolded, the greatest doubts about the sustainability of this growth arose in the United States, faced with an overvalued real estate sector and the impact of seventeen consecutive increases in the Federal Reserve interest rate, which has risen from an historic low of 1% to the current 5.25%, clearly above that which can be considered as a neutral interest rate. Real estate overvaluation has led to a fall in investment in construction, with the fear that lower property prices may also restrict private consumption through the impact that property prices have on family wealth
1 The consolidated profit and loss account for the year 2006 is not directly comparable with the figures for the year 2005, because of: the spin-off of the Wood Based Panels business (with accounting effects from 1 October 2005), the sale of the Retail operations in Brazil (with accounting effects from 1 December 2005), the change in the method of consolidation of the Shopping Centres business from full to proportionate (following the sale to Grosvenor, on 29 December 2005, of 17.04% of the share capital of Sonae Sierra) and the sale of the shareholding in Imocapital/Gescartão in the first quarter of 2005. 2006 actual figures are compared with 2005 pro-forma figures, which take account of these changes in the consolidation perimeter.
and on deteriorating consumer credit conditions, caused by a reduction in the underlying value of the security offered.
Some observers, however, continue to point to the good performance of American companies with sound balance sheets, satisfactory profits and high levels of investment, which are a reflection of the current excellent conditions provided by the moderation of long term interest rates. Already at the beginning of 2007, it was clear that it was nothing more than a temporary slowdown, with domestic consumption returning to satisfactory growth rates.
With a growth rate of only 1.3%, Portugal had one of the most modest growth rates of the entire World economy, penalised by the need to reduce the public deficit (public consumption fell by 0.3%), the need to contain private consumption (growing by only 1%) and the continued negative growth of investment (a fall of 2.1%). Growth was thus driven by a good performance in the export sector, which grew by 8.3% and was able to take advantage of some favourable opportunities, in particular in the liquid fuels area.
The forecast performance for the Portuguese economy for 2007 is slightly better, and will continue to be driven by exports and a reversal of the trend of falls in investment in the private sector. The main factor holding the economy back from better performance will continue to be the poor state of public finances.
The Spanish economy grew by 3.7%, one of the highest rates in the entire Euro zone, and was based on high growth of all the component parts of internal demand (growth rates of 3.4% in private consumption, 4% in public consumption and 6% in gross fixed capital formation). Nonetheless, there were a number of less favourable trends in the Spanish economy, the main ones being the inflation rate (over 3.5%, and well above the European Union average), the weak performance of international trade (growth of imports higher than exports) and the sharp deterioration in the external current account balance, which reached 8.8% of GDP (the second highest in the World in absolute terms).
In Central Europe, the good performance of the German economy became evident, with successive forecasts of growth throughout the year being revised upwards reaching a current level of 2.6%. Founded on a genuine containment of wages, coupled with a reduction in unit labour costs, Germany has focused on an export led growth model (exports increasing by 10%) and on investment (growth of 5.8%, with private business investment growing by 8%). With a slowdown forecast for 2007 (growth in 2006 was more than 1% above the growth rate of potential GDP, and is unlikely to be repeated), the German economy will continue with the same growth model, sustained by exports and private investment, with neither private nor public consumption showing any significant signs of recovery as yet.
With a growth rate of 2.1%, the French economy also performed satisfactorily, based on growth factors which were almost the opposite of those in Germany: growth rates of 2.6% and 2.2% in private and public consumption, respectively, and growth of 4.4% in business investment, in this respect clearly justified by the behaviour of the internal market. As opposed to Germany, French exports grew less than imports with external trade in goods and services being a factor slowing growth.
Further south, still in the Euro zone, the good performance of the Greek economy (a growth rate of 4%, only exceeded by Ireland at 5.1% and Finland at 5%) contrasts with the difficulties in Italy (growth rate of 1.8%, only slightly higher than that of Portugal at 1.3%), where the economy was negatively impacted by the need to correct the poor state of public finances (a deficit of 4.8% of GDP in 2006, the highest amongst Euro zone countries, and just above the 4.6% of GDP in Portugal).
With inflation rates above that of the Euro Zone, both Greece and Italy have implemented internal programmes to moderate price increases. Success has been greater in Italy, where greater pressures are being felt due to the tougher competition which the country's exports face.
The UK economy grew by 2.6%, recovering from the difficult situation in 2005. Throughout 2006, there were signs of intensifying growth, based on very high growth of exports (12.8%) and of public investment (11.3%), which were the main drivers of the growth in private investment (4.9%) and of private and public consumption (2.1% and 2%, respectively). Also worthy of note was the recovery of investment in housing, after the fall in 2005. Continued inflationary pressures led the Bank of England to follow a policy of aggressively increasing interest rates, which are significantly above those of the European Central Bank and very close to those of the American Federal Reserve.
After a hesitant start to the year, the Brazilian economy gained momentum, ending the year with a growth rate of 3.1%, which is expected to increase to 3.8% in 2007, with a positive impact on the majority of key indicators, particularly employment. Confidence levels were also stimulated by the success of the country's economic policies, reflected in the fall in the inflation rate (3%, almost an historic minimum) and the reduction in the public sector deficit (2.5% of GDP), wholly explained by the extremely high level of interest rates (at around 10%), given that the primary public sector balance is clearly in surplus, at 4.3% of GDP.
One of the most favourable results of the Brazilian economy is the continuation of an extremely positive commercial trade balance. Although the budget surplus is expected to fall due to the accelerated growth forecast in 2007 and 2008, it is expected that this balance will continue to be positive. This factor together with the high level of reserves held by the Central Bank means that greater stability can be expected in the external trade component of the Brazilian economy, so that the exchange rate will remain stable and all the conditions will be in place to at last move towards normalising interest rates.
With the United States economy being more vigorous than expected a few months ago, growth expectations for 2007 remain very high, with only slight falls in almost all the major economic zones of the World. The greatest risk would appear to come from increasing inflationary pressures (with the exception of Japan, inflation rates are in general very close or even above the targets set by Governments and Central Banks), which could in turn lead to increases in short term interest rates that are counterproductive to growth. In this respect, the European Union and the United Kingdom are the areas of higher risk.
Following the announcement made on 22 December 2004, a further 3.92% of the share capital of ba Vidro was sold for 12 million euro, generating a capital gain of 3.2 million euro.
On 6 February 2006, Sonae, SGPS, SA, together with its affiliated company Sonaecom, SGPS, SA announced the launch of Public Tender Offers for the whole of the share capital of Portugal Telecom and of PT Multimedia. Subsequently, Sonaecom, SGPS, SA submitted a preliminary tender offer for 100% of Portugal Telecom's share capital with a minimum acceptance level of at least 50.01% of the outstanding share capital. The consideration offered was 9.5 euro in cash for each share and five thousand euro for each convertible bond, conditional upon a 2006 dividend distribution of 0.385 euro per share. On 22 December 2006 the Competition Authority announced its final decision, disclosing the commitments to be undertaken by Sonaecom to allow the offer to proceed. The offer was registered with the Portuguese Securities and Exchange Commission (CMVM) on 12 January 2007, and the final offer prospectus was published on 16 January 2007. The offer consideration was increased to 10.5 euro per share on 15 February 2007. The offer terminated automatically on 2 March 2007 because proposed changes to the articles of association of Portugal Telecom, which was one of the conditions on which the offer was dependent, were not approved by a qualified majority of its shareholders.
On 20 April 2006, in an over the counter transaction, Sonae, SGPS, SA acquired, through Sonae Investments BV, 146,625,000 shares (13.3295% of the share capital) of its affiliate Modelo Continente, SGPS, SA, for 265.8 million euro. The transaction was made under the terms of the Call Option contract signed on 16 November 2004 between Sonae, SGPS, SA and Banco Santander Central Hispano, SA and its affiliated companies. On 6 September 2006, in a similar transaction, Sonae, SGPS, SA and Sonae Investments BV acquired, over the counter, 100,000,000 shares (9.09% of the share capital) of its affiliate Modelo Continente, SGPS, SA for 183.7 million euro. With this acquisition, this Call Option contract was fully executed and 98.82% of the share capital and voting rights of Modelo Continente, SGPS, SA were attributable to Sonae, SGPS, SA at that date.
On 6 October 2006, Sonae, SGPS, SA, as the holder of 1,093,834,387 shares representing circa 99.44% of the share capital of Modelo Continente, SGPS, SA, launched a tender offer, involving a consideration of 2.05 euro per share, over the remaining shareholders of the company, in respect of 6,165,613 shares representing circa 0.56% of the share capital and voting rights. On 16 October 2006, Sonae, SGPS, SA announced that it had acquired all of the shares of Modelo Continente, SGPS, SA, held by remaining shareholders. As a consequence of such an acquisition 100% of the share capital of Modelo Continente, SGPS, SA is attributable to Sonae, SGPS, SA since that date.
On 18 October 2006, the notary deed was signed for the share capital increase of Sonaecom, SGPS, SA from 296,526,868 euro to 366,246,868 euro, through the issue of 69,720,000 new shares, each with a nominal value of 1 euro and with a corresponding total share premium of 275,657,217 euro, subscribed by 093X - Telecomunicações Celulares, SA and Parpública - Participações Públicas, SGPS, SA by means of contribution of their respective shareholdings, including supplementary capital, in Optimus - Telecomunicações, SA.
On 20 October 2006, Sonae Sierra, SGPS, SA signed an agreement for the sale of 50% of the share capital of Sonae Sierra Brazil, BV/Sarl to Developers Diversified Realty (DDR). The transaction price was 150 million US dollars (118.8 million euros using the exchange rate as at 30 September 2006). The gain arising from this transaction was circa 16 million euro.
On 22 November 2006, Sonae, SGPS, SA sold 100 million of Modelo Continente's shares, equal to 9.09% of its share capital, to Modelo Continente, SGPS, SA, for 205 million euro.
On 15 December 2006, Sonae, SGPS, SA exercised a Call Option over 5,710,000 shares representing 1.559% of the share capital of Sonaecom, SGPS, SA, held by Parpública - Participações Públicas, SGPS, SA, under the terms of the Agreement entered into on 6 September. This Call Option was executed on 20 December 2006 and the acquisition of the above mentioned shares was made at a price of 4.63 euro per share, equal to a total price of 26,437,300 euro.
Consolidated gross investment for the year was 661 million euro, and included the following contributions:
In 2006, the average number of employees at the Sonae Group was over 30 thousand, of which most worked in Retail (70%), Sonae Capital (21%) and Telecommunications (6%).
The Sonae Group continues to attach special importance to the training of its human resources. Among the various businesses, more than 1,177,000 hours of training were given during the year.
The objectives, processes and organisation of Risk Management and Internal Audit activities are laid out in chapter "1.3. Risk Control" of the Report on Corporate Governance.
During 2006, the work carried out in accordance with the planned activities of each function, was as follows.
In the Risk Management area, management activities continued, relating to security risks for tangible assets and human resources, business process and information systems risks, business and operational interruption risks, risks from change and investment projects, and environmental risks.
In relation to security risks of tangible assets, the cycle of technical and operational risk management activities continued and was articulated with the insurance management of the Group by conducting preventive and safety audits in different locations of the business units. In the main business units, tests and simulations were made to emergency and preventive systems and plans, sometimes 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.
Turning to people safety risks (staff, subcontractors, customers and visitors), work continued on the PERSONÆ Project, to develop integrated actions and attitudes towards safety, with special emphasis on changing individual behaviour. Following the preparatory and diagnostic phases completed in 2003, implementation of this project began at Sonae Sierra in 2004, in partnership with a leading international consulting firm in this field, part of a group recognized as being one of the most safety conscious and socially responsible in the world. The programme combines the implementation of best management practices in Hygiene, Safety and Social Responsibility with the development of internal capabilities through training and knowledge sharing. An essential part of the methodology is to integrate responsible attitudes and behaviour into the culture of the company. The programme involves all operations world wide and all businesses of Sonae Sierra from project development through to the management of shopping and leisure centres, including investment and construction. The project will last for four years, and represents, in consulting and training alone, an investment of 5 million euro. Its progress has been monitored by the other sub-holdings of the Group with a view to taking advantage of synergies and adapting the management model to other Group companies.
The Sonae Group 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 in order to guarantee 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.
In 2006, a specific project was launched and developed regarding risks that are common to the different businesses of the Group. This project was promoted at the Group level and at each of its main businesses, with the objective of preparing and testing emergency and contingency plans to respond to the threat of a pandemic flu. Actions were developed to identify critical processes and people in each business, assess the impacts of the pandemic flu and define action plans. Contacts were made with Government health divisions and other health authorities, to share information and knowledge regarding national contingency plans and other cooperation actions. In order to support and access protocols, procedures and other relevant information and knowledge, specialised consultancy work was contracted from an international health and medical services company. Complying with guidance from health organisations, a strategic amount of antiviral drug was acquired for preventive use and to respond to the risk of shortage of the drug.
In the area of environmental risks, several environmental certifications have been obtained, audits continued and improvement actions were implemented as part of the Environmental Management Systems of Group companies.
In Retail, and as a result of the project and organisational actions begun in previous years, a programme of food safety audits was implemented and consolidated in stores, warehouses and production centres, leading to the main conclusions and corrective actions being identified and reported upon. This audit programme has the goal of monitoring in a systematic way, food safety risks, and of complying with legal regulations and the internal control system for food quality. A similar programme was implemented in hotels belonging to the Group.
Risks associated with critical business processes and major change projects, especially new investments and information system changes, were analysed and monitored as part of Risk Management work as well as Internal Audit activity.
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.
As far as technical and operational risks are concerned, the objective of rationalising the financial transfer of these types of risk continued, either by searching to establish a sound insurance capital structure for the value at risk, based on the constant changes in the businesses involved, or by reaching greater critical mass to take on more risk internally. Insurance coverage and retention levels have also been optimised in accordance with the needs of each business, ensuring internally effective insurance management worldwide, using Brokers Link the Group's insurance brokerage network and Sonae Re the Group's captive reinsurer.
Further work was carried out on reviewing, inspecting and documenting risk conditions by independent auditors and their conclusions were fully shared with the risk takers involved.
The Risk Management Consultation Group (internal body for co-ordination and sharing knowledge across the Group) reviewed on a regular basis the work of the risk management function.
In the Internal Audit area, internal control compliance audits were carried out in several business units as well as audits of the main business processes and information systems of Group companies, in line with action plans based on the evaluation of business risks.
The Audit Committee (internal body for co-ordination and sharing knowledge across the Group) met regularly during the year and was kept informed of the plan of activities and the conclusions from the work completed.
The Board Audit and Finance Committee also regularly reviewed Internal Audit and Risk Management activities.
As far as development of the Risk Management and Internal Audit function is concerned, in 2006, Group companies continued to fund staff training for those who voluntarily put themselves forward for international certification in internal audit programmes promoted by the IIA (The Institute of Internal Auditors) - Certified Internal Auditor (CIA) and Certification in Control Self Assessment (CCSA) – and other certifications in information systems auditing, such as Certified Information System Auditor (CISA), Certified Information System Security Professional (CISSP) and BS ISSO/IEC 27001: 2005 Information Security Management (CISM). There are eleven members of the Audit and Risk Management teams of the Sonae Group who have certifications, six of which are CIA accredited, three CCSA, one CISA and one CISM. The Sonae Group is one of the organisations with more certified employees in internal audit and risk management in Portugal. In 2007, Sonae will continue to fund this important training programme, and the international development and qualification of its internal audit and risk management staff, in line with international best practices.
On 13 December 2005, the Retail business disposed of its entire shareholding in the Brazilian company Sonae Distribuição Brasil, SA, thus ceasing its retail activity in that country. Therefore, consolidated figures for the years of 2006 and 2005 are not directly comparable.
| Values in million euro | |||
|---|---|---|---|
| 2006 | 20053 | ∆ | |
| Turnover | 3,091 | 2,745 | +13% |
| Operational Cash-Flow (EBITDA) | 254 | 235 | +8% |
| EBITDA Margin (% of turnover) | 8.2% | 8.5% | -0.3 p.p. |
| Profit Attributable to Equity Holders of Modelo Continente |
158 | 123 | +28% |
EBITDA (M.€)
2 The figures included in this section are taken from the consolidated financial statements of each business. 3 Excluding the impact of Retail operations in Brazil, sold in 2005.
4 Excluding the impact of Retail operations in Brazil, sold in 2005.
Openings in the year were as follows:
| Openings in 2006 |
Total number of stores |
|
|---|---|---|
| Continente | - | 19 |
| Modelo | 11 | 80 |
| Modelo Bonjour | - | 25 |
| Food Retail | 11 | 124 |
| Worten | 14 | 87 |
| Modalfa | 12 | 70 |
| Sportzone | 7 | 48 |
| Vobis | - | 21 |
| MaxMat | 1 | 21 |
| Zippy | 3 | 11 |
| Star | 2 | 61 |
| Área Saúde | 26 | 26 |
| Worten Mobile | 11 | 11 |
| Non Food Retail | 76 | 356 |
• Following the acquisition of 100% control of the company's share capital by Sonae SGPS, SA, Modelo Continente SGPS, SA was delisted from the Portuguese Stock Exchange as from 22 September 2006.
| Values in million euro | |||
|---|---|---|---|
| 2006 | 2005 | ∆ | |
| Operational Cash-Flow (EBITDA) | 150 | 126 | +20% |
| Direct Profits5 | 84 | 69 | +22% |
| Profit Attributable to Equity Holders of Sonae Sierra |
160 | 148 | +8% |
| 31 Dec'06 | 31 Dec'05 | ∆ | |
|---|---|---|---|
| NAV6 per share |
45.82 | 38.90 | +18% |
| Asset gearing7 8 | 29.4% | 31.9% | -2.5 p.p. |
Total: 2.0 million square metres
5 Direct Profits = Net Profit before Minorities + Deferred Tax – Value created on Investments – Income realised on Properties.
6 NAV – Net Asset Value.
7 Asset Gearing = Net Bank Debt / (Total Assets – Cash and Cash Equivalents and Current Investments). 8
GLA – Gross Lettable Area.
9 GLA – Gross Lettable Area. 10 NAV – Net Asset Value.
Consolidated figures for the years of 2006 and 2005 are not directly comparable, as Enabler was sold, at the end of the first half of 2006, and costs with the tender offer for Portugal Telecom were recorded, in the fourth quarter of 2006.
| Values in million euro | |||
|---|---|---|---|
| 2006 | 2005 | ∆ | |
| Turnover | 836 | 843 | -1% |
| Operational Cash-Flow (EBITDA) | 184 | 157 | +17% |
| EBITDA Margin | 22.0% | 18.6% | +3.4 p.p. |
| Profit Attributable to Equity Holders of Sonaecom |
(14) | 2 | (16) |
| 31 Dec'06 | 31 Dec'05 | ∆ | |
|---|---|---|---|
| Net Debt | 338 | 252 | +34% |
EBITDA (M. €)
EBITDA EBITDA Margin
Sonae, SGPS, SA Report of the Board of Directors – 2006 Page 16
11 ARPU – Average Return per User. 12 MTR – Mobile Termination Rates. 13 Total voice traffic = Total incoming traffic + Total outgoing traffic + Total Roaming out. 14 UMTS = Universal Mobile Telecommunications System. 15 HSDPA = High-Speed Downlink Packet Access.
• Sonaecom Fixed strongly expanded its ADSL direct broadband services, completing its transformation process to a direct access business, which accounted for more than 65% of its customer revenues and 71% of total services, by the end of 2006, compared to 36% of its customer revenues and 34% of total services, by the end of 2005. To capture broadband growth, Sonaecom Fixed increased the number of unbundled central offices with ADSL2+, from 130 at the end of 2005 to 137 Central Offices at end of 2006, reaching 1.6 million homes in Portugal, approximately 50% of the Portuguese population. Of these central offices, 61% are equipped with full triple play capability.
Sonae Capital is made up of businesses in Tourism, Engineering Services and Real Estate Development, Facility Management, Insurance Brokerage and Risk Management and Seed and Risk Capital.
| Values in million euro | |||
|---|---|---|---|
| 2006 | 2005 | ∆ | |
| Turnover | 450 | 560 | -20% |
| Operational Cash-Flow (EBITDA) | 18 | 44 | -60% |
| Profit for the period | 14 | 104 | -90 |
Consolidated turnover of Sonae Capital decreased around 20% to 450 million euro (560 million euro), reflecting the lower contribution of the Tourism business (a reduction of 107 million euro) due to the sale of Star, the travel agency format, to the Retail business (2005 turnover of 106 million euro) and to a lower level of activity in Real Estate Development and Engineering Services (a reduction of 28 million euro).
Consolidated operational cash flow (EBITDA) decreased 60% to 18 million euro (44 million euro). In 2005, consolidated EBITDA included around 34 million euro associated with the gain on the sale of the Casino project in Tróia. The Insurance Brokerage and Risk Management and Facility Management businesses improved their operational performance, increasing their contributions to consolidated EBITDA. Other business areas contributions remained more or less in line with the previous year.
Consolidated net profit for the period was 14 million euro (104 million euro). In 2005, net income included around 53 million euro of investment income arising from the sale of shareholdings in ba Vidro.
Activity in the main business areas can be summarised as follows.
During 2006, at the Tróia project, construction at UNOP161 progressed at a brisk pace. Construction work began, on the following projects: Marina apartments, Praia apartments, main building and infrastructures, and joining of the common areas of Rosamar and Magnoliamar. Simultaneously, construction of the marina and of the new ferry pier continued, and marketing of the Praia and Marina apartments commenced. Projects for residential building plots in the beach area continued, following the Government's ratification, on 26 January 2006, of the detailed plan for UNOP162 (published on the Portuguese Official journal dated 23 February 2006). In 2006, contracts for the construction of four ferry boats were signed. These boats will link Setúbal to the Tróia Peninsula, with two of them allowing for transport of both vehicles and people and the other two exclusive for transport of people.
For Hotels, which include the Porto Palácio Hotel and Aqualuz, the broad refurbishment and expansion project launched in 2005 continued, aiming at repositioning the hotel services in a more competitive and demanding market. These projects led to the full or partial closure of the units involved with impacting results for the year.
Contacto, a civil and public works construction company, reached a turnover of 154 million euro, an 8% increase over the previous year, an operational cash-flow (EBITDA) of 7.2 million euro and a net profit of 7.8 million euro.
Cinclus, a project management and control company, had a turnover of 5.8 million euro, and generated an operational cash-flow (EBITDA) of 270 thousand euro and a net profit of 190 thousand euro.
Prædium and Spinveste, the companies focused on quality residential developments, reached a turnover of 6.8 million euro and a negative operational cash-flow of 0.7 million euro. The sale of apartments in Edíficio Sedas II continues and construction and sale of the City Flats/City Lofts building (212 apartments) continued. This building is expected to be completed in early 2007.
In relation to the Efanor project, demolition of existing buildings and urban and environmental infrastructure work begun in 2006. Projects for the first residential building are underway.
Consolidated turnover at the Selfrio Group totalled 64 million euro (56 million euro), a 14% increase, with operational profit (EBIT) reaching 5 million euro. The Group performed well during the year, both in terms of turnover and profitability. For 2007, the Group expects to improve over the performance achieved in 2006.
16 UNOP = Operational Planning Unit.
Safira's business has been growing steadily, reaching a turnover of 28 million euro in 2006, driven by the increasing presence of the company in the cleaning services segment. The net profit of 0.8 million euro reflects increases in profitability, following the policies implemented to increase productivity and optimise costs.
During 2006, mds, the Sonae Group's insurance broker, strengthened its leadership in the insurance brokerage market, achieving consolidated revenues of circa 13 million euro, 8% up on the previous year. The year 2006 was marked by the conclusion of the merger between mds and the two companies acquired in 2005 (Unibroker and Becim).
mds has been expanding its international activity by promoting and providing leadership of the insurance brokers network, Brokers Link, which covers all European countries and several countries in Latin America, Asia, Africa, the United States and Canada.
In France, the holding Développement et Partenariat Assurance17, a subsidiary of mds, continued its organic growth in the French market, achieving a turnover of 4.9 million euro, up 19% on the previous year.
In Brazil, Lazam/mds17, a partnership between Sonae and the Feffer Group, achieved revenues of 17 million Brazilian real, an increase of 13% compared to the previous year.
Sonae Re, the captive reinsurance company of the Sonae Group, with its head office in Luxembourg, reached a volume of re-insurance premiums of 19 million euro.
Consolidated turnover of Box Lines was 49.5 million euro, 13% up on 2005. Around 77% of this total relates to sales outside the Sonae Group. Consolidated operational cash-flow (EBITDA) was 2.2 million euro and net profits amounted to 1.3 million euro.
In the Fitness business, the health clubs network, Solinca, continued to expand with the opening of a new unit at Estádio do Dragão. The openings at Estádio do Dragão (2006) and Norteshopping (December 2005), led to a significant increase in the number of club members, contributing to an 11% growth in turnover which reached almost 11 million euro. During 2006, the business went through a major operational and commercial reorganisation, in line with best practices and market trends, so as to improve the performance of the Solinca health clubs over the short term.
Choice Car – SGPS, SA, was set up in 2000 to concentrate investments that the Sonae Group held at that time in the Auto Sector. It is a 50/50 partnership with the Salvador Caetano Group.
In 2006, Guérin consolidated its recovery that began in 2005. Market trends remained largely in line with the previous year, with stagnant domestic demand, but with an interesting recovery linked to tourism. Turnover, as measured by rental days, grew around 38% to 1,167 thousand days (844 thousand days). The average income
17 This company was accounted for using the equity method.
per day grew marginally (0.5%) compared to the previous year. Sales volume amounted to 27.4 million euro (19.8 million euro). 2006 net profit was more than double that of 2005, totalling 1.2 million euro. In 2006, Guérin pursued an ambitious geographic expansion plan, ending the year with 41 agencies, of which approximately half are franchises or partnerships.
Finlog ended the year of 2006 with a fleet under management of 7,130 vehicles, a 6% growth over the previous year. The leasing business grew at a steady pace, and the company diversified its business activities to warranty management. Turnover was 38.7 million euro and profit before taxation was 2 million euro.
Carplus continued to face a difficult market environment. Turnover, as measured by units sold, dropped from 1,087 units in 2005 to 1,013 units in 2006. Nevertheless, gross margin grew 1.8 million euro to 2.1 million euro. 2006 net profit amounted to 0.4 million euro (0.8 million euro loss). 2006 profit includes 0.6 million euro of gains arising from the sale of two pieces of land.
On 27 December 2006, Choice Car, SGPS, SA, sold the whole of its shareholding in the company Autocenter – Serviços, Acessórios e Peças para Viaturas, SA, to Império Pneus – SGPS, SA, which became the holder of 100% of the share capital of the company.
The Plysorol group does its business through 3 companies: one produces and sells plywood in France, while the other 2 companies explore tropical hardwood forest and unroll timber, in Gabon.
Plysorol France achieved a turnover of 108.1 million euro, up 10% on the previous year, driven by a 9.4 % growth in sales volumes and by a slight improvement of 0.5% in average selling prices. In December, average selling prices were already 4.3% higher than the previous year's average, due to improvements in the last quarter of the year. The level of activity in manufacturing units grew 5.4% in 2006, leading to an increase in productivity and in the use of installed capacity. Operational cash-flow (EBITDA) improved to negative 1 million euro (negative 1.6 million euro), and net profit improved to negative 4.6 million euro (negative 6.5 million euro). Organisational and restructuring actions are underway, to increase the competitiveness of the company, and have already allowed for losses to be cut, and will have a favourable impact in 2007 activity with a return to profitability.
Leroy Gabon's activity, as predicted, decreased significantly as the use of four plots is in their final stage. Production was around 86,000 m3 , 30% less than in 2005. Turnover amounted to 11.1 million euro, a 22% decrease compared with the previous year. Net profits were negative 4.3 million euro (negative 3.1 million euro). With the beginning of exploration of a new plot, expected in March 2007, the company will be able to significantly improve profitability. At Placage d'Okoumé du Gabon, turnover amounted to 10.7 million euro, up 10%, and operational cash-flow (EBITDA) was 1.2 million euro (0.6 million euro), double that of the previous year. These improvements are a result of the industrial reorganisation of this unit, closely linked to the industrial restructuring in France.
Isoroy Casteljaloux, producer of softboard for thermal and acoustic isolation, continued to experience difficulties in 2006 despite a 5.4% increase in turnover, to 13.6 million euro. Although sales volumes increased 3.5%, the increase was not enough to offset cost increases of 6.3%, related to sharp increases in energy and raw material prices, making up around 50% of production costs. As a result, EBITDA margin decreased to negative 3.8% in 2006 from positive 0.1% in 2005. Net profits fell to negative 1 million euro (negative 0.8 million euro in 2005). In 2007, the company expects to break even through cost reductions and improvements in sales prices.
Essences Fines Isoroy, producer of veneer, started to show signs of recovery. Turnover totalled 10 million euro, a 23% increase compared to the previous year. Operational cash-flow (EBITDA) improved 0.6 million euro, but was still negative by around 0.8 million euro. Net losses improved slightly, from 1.4 to 1.3 million euro in 2006. The development of the new manufacturing model, implemented in 2004, should allow an improvement in turnover and profitability of the company in the coming years.
TP18, in the cogeneration and renewable energy business, had a consolidated turnover of 33.6 million euro, operational cash-flow (EBITDA) of 7.7 million euro and net profit of 2.6 million euro.
TP has a 20% share in the Éolicas de Portugal consortium, which has been granted a license, by the Portuguese State, to install wind power farms generating up to 1,200 MW. The public tender launched by the Government initially intended to grant the winner a license for 1,000 MW of power but this limit was increased, since the consortium's proposal was considered to have "special merit". Total investment planned by the consortium will amount to 1,500 million euro and will be phased over time until 2011.
Sodesa18, which sells energy in open market segments, had, by year end, a customer base representing a consumption of 2,800 GWH per annum, and generated an operational cash-flow (EBITDA) of 1.7 million euro and a net profit of 517 thousand euro.
During 2006, Norscut and Operscut, working on a SCUT19 concession for the construction and operation of the Interior Norte or A24 motorway, opened an additional 49.8 km. At the end of 2006, 137.6 km were in operation, made up of two sections: the northern section, between the Spanish border and the IC5, in Vila Pouca de Aguiar, covering 46.5 km and the southern section, between Fortunho (3 km north of Vila Real) and Viseu, covering 91.1 km. The investment in construction amounted to 618 million euro at the end of the year. The last section of the motorway, in Vila Pouca de Aguiar area, is under construction, and is due to enter service at the end of the first half of 2007.
At the end of 2006, the project for an hospital in Oporto, which was developed by the team at Saúde Atlântica, was sold, generating a gain of approximately 12 million euro.
18 Company accounted for using the equity method. 19 SCUT is an abbreviation in Portuguese for "without cost for the user".
The activity of Sonae, SGPS, SA, as a stand alone company, is focused on the management of its holdings in affiliated companies.
During 2006, the following significant transactions were completed:
Also of significance was a bond issue of 250 million euro with a tenor of 5 years.
Net profits for the year of 2006 amounted to 65.1 million euro, which were favourably impacted by dividends received from its affiliated companies Modelo Continente and Sonae Sierra.
Consolidated turnover for the year grew 6%, up to 4,384 million euro (4,117 million euro). The Retail business was the major contributor to this increase, through the positive performance of the like for like store portfolio, new store openings and the acquisition of control over Star. The Shopping Centres business increased its contribution for the year by 11 million euro, an increase of 8%, despite the sale of 50% of the Brazilian portfolio in October 2006. In the Telecommunications business, yearly contribution remained roughly in line with 2005 figures. The lower contribution from Sonae Capital and Holding was mostly due to the sale of Star to the Retail business.
Consolidated operational cash flow (EBITDA) for the year was 599 million euro (553 million euro), generating a consolidated EBITDA margin of 13.7% (13.4%). The Shopping Centres business delivered most of the growth in consolidated EBITDA, with an increase in contribution of around 36 million euro in 2006. Value created on investment properties was of 130 million euro (98 million euro), up 32 million euro due to the general decrease in market yields, particularly in Portugal, and to the higher number of shopping centres in the company's portfolio. The Retail business strategy for growth delivered positive results in the year, with the respective contribution to consolidated EBITDA growing 17 million euro. The lower contribution of the Telecommunications business to consolidated EBITDA, 146 million euro (161 million euro) reflects the impact of the costs associated with the tender offer for Portugal Telecom, partially offset by improvements in business operations as a result of innovation and growth initiatives promoted and of strong investment in the direct access business.
Consolidated operational profit (EBIT) grew 22 million euro in 2006, an increase of 7% to 357 million euro (335 million euro). The Shopping Centres business, through the value created on investment properties, was the major positive contributor to this growth.
Consolidated net financial expenses totalled 100 million euro (85 million euro) in the year. This increase reflects a lower level of financial income, namely at Sonae Capital and Holding level, and the financial costs associated with the tender offer for Portugal Telecom. In spite of increases in interest rates, and excluding the impact of the tender offer, interest expenses remained at the same level due to better financial conditions negotiated on some of the major loan contracts.
20 The consolidated profit and loss accounts for the year 2006 are not directly comparable with the figures for the year 2005, because of: the spin-off of the Wood Based Panels business (with accounting effects from 1 October 2005), the sale of the Retail operations in Brazil (with accounting effects from 1 December 2005), the change in the method of consolidation of the Shopping Centres business from full to proportionate (following the sale to Grosvenor, on 29 December 2005, of 17.04% of the share capital of Sonae Sierra) and the sale of the shareholding in Imocapital/Gescartão in the first quarter of 2005. 2006 actual figures are compared with 2005 pro-forma figures, which take account of these changes in the consolidation perimeter.
Consolidated net profit for the year rose by 74 million euro to 339 million euro (265 million euro), mostly due to improved operational performance and higher investment income. Contributing to the year's profit are 136 million euro of investment income (81 million euro), which include the gain on the sale of an additional 3.92% shareholding in ba Vidro, the price adjustment on the sale of the Brazilian retail operations, the gain on the sale of Enabler, the impact of the roll-up into Sonaecom of the shareholdings held by Parpública and EDP in Optimus and the gain on the sale of 50% of Sonae Sierra Brazil. In 2005, investment income included gains on the sale of shareholdings in Gescartão and ba Vidro.
Consolidated net profit attributable to equity holders of Sonae improved 56 million euro in 2006 to 242 million euro (186 million euro).
| Turnover | EBITDA21 | Profit for the Period |
|
|---|---|---|---|
| Retail | 3,097 | 253 | 162 |
| Shopping Centres | 147 | 192 | 132 |
| Telecommunications | 836 | 146 | (2) |
| Sonae Capital & Holding | 467 | 11 | (30)* |
| Eliminations | (163) | (3) | 78 * |
| TOTAL | 4,384 | 599 | 339 |
Contributions to the consolidated total of Sonae, SGPS, SA were as follows:
Values in million euro
* Includes dividends paid by the Retail and the Shopping Centres businesses.
Consolidated gross investment for the year was 661 million euro. The Retail business made up around 31% of this total, mainly due to the opening of 87 stores (11 food and 76 non-food), with sales area growing by around 10% to 543,000 m2 . Investment by the Shopping Centres business amounted to circa 220 million euro, of which 111 million euro contributed to consolidated investment. Most of the investment reflects the opening of RioSul shopping and leisure centre, in Portugal, the acquisition of a green-field site in Weiterstadt, Germany, and progress on the development of 8ª Avenida, in Portugal, Alexa, in Germany, El Rosal, in Spain, and Freccia Rossa, in Italy. In 2006, investment by the Telecommunications business was mainly associated with the acquisition of shares in Portugal Telecom and the deployment of the high speed mobile and wireline networks, representing circa 38% of consolidated investment. Investment in Sonae Capital and Holding amounted to around 91 million euro, most of which was associated with the development of the Tróia project, the opening of fitness centres and refurbishment of hotels.
21 EBITDA = Operational Profit (EBIT) + Depreciation and Amortisation + Provisions and Impairment Losses – Reversal of Impairment Losses and Provisions (included in Other Operational Income and amounting to 12.9 M.€ in 2006 and 11.0 M.€ in 2005 pro-forma).
Consolidated net debt22 as at 31 December 2006 amounted to 2,063 million euro, an increase of 443 million euro over the end of 2005, and a 113 million euro decrease compared to the end of the third quarter of the year. The decrease in the quarter is for the most part explained by the stronger cash generation in the Retail business as a result of the Christmas season effect. Of the total consolidated net debt as at 31 December 2006, 533 million euro are attributable to the Shopping Centres business and are fully and exclusively guaranteed by its own assets.
| Values in million euro | |||
|---|---|---|---|
| 31 Dec'06 | 31 Dec'05 | ∆ | |
| Retail | 377 | 196 | 181 |
| Shopping Centres | 533 | 499 | 34 |
| Telecommunications | 337 | 250 | 87 |
| Sonae Capital & Holding | 722 | 501 | 221 |
| Eliminations | 94 | 174 | (80) |
| TOTAL | 2,063 | 1,620 | 443 |
Contributions to the consolidated net debt of Sonae, SGPS, SA were as follows:
The ratio of consolidated net debt to consolidated operational cash flow (EBITDA) for the last 12 months was 3.4, which compares with 2.9 as at 31 December 2005. Annualised interest cover was 6.1, above the 5.9 at the end of 2005.
22 Net Debt = Non-Current Borrowings + Current Borrowings – Cash and Cash Equivalents – Current Investments.
The Sonae SGPS's share ended the year of 2006 quoted at 1.51 euro, corresponding to a nominal gain of 28% which compares with a general stock market gain of 29.9% as measured by the Portuguese Stock Market Index (PSI 20). As at the date of this report the share price was 1.58 euro.
On a monthly basis, February and October posted the most significant increases, with the share price increasing by 10% and 9%. The highest closing price in the year, 1.52 euro per share, was achieved on 14 November, and the average daily transaction volume was around 7.9 million shares. Since the end of the period under review, the highest closing price has been 2.01 euro.
On 12 May 2006, Sonaecom, SGPS, SA transferred, in an over the counter transaction and in accordance with its Deferred Performance Bonus Plan, 557,574 Sonae, SGPS, SA shares to employees. After this transaction, Sonae, SGPS, SA holds directly or through its affiliated companies 133,418,572 own shares, representing 6.671% of its share capital.
Sonae, SGPS, SA, as the holding company of the Group, had net profits of 65,138,044.45 euro. The Board of Directors will propose to the Shareholders' General Meeting that this profit should be appropriated as follows:
| Legal Reserves ……………………… | 3,256,902.22 euro |
|---|---|
| Free Reserves ……………………… 5,883,699.39 euro | |
| Dividend ……………………………. 55,997,442.84 euro |
Given that the Board of Directors intends to maintain the number of own shares held until the dividend is paid, a gross dividend of 0.03 euro per share has been proposed. This is equal to a dividend yield of 2.27% on the average share price in 2006 of 1.32 euro and to a payout ratio of 23.16% of consolidated profits attributed to equity holders of Sonae.
The Retail business will continue to capitalize on its growth strategy. In order to strengthen its leadership in the Portuguese market, the company will continue to open new stores at a brisk pace, increasing its sales area by more than 10%. In 2007, the company intends to open 10 food stores, 90 non-food stores and to refurbish more than 50 stores. Further studies will be carried out to support the development of new business formats as well as the possibility of entering new geographies. The company will continue to invest in efficiency and innovation programmes, reaching its customers through targeted customer loyalty initiatives.
The Shopping Centres business plans to inaugurate 6 of the centres under development in Portugal, Spain, Italy and Germany, while proactively looking for opportunities in Central Europe. In 2007, construction of a new shopping centre will start in Manaus, Brazil, with the company having set the objective of doubling Sonae Sierra Brazil's net assets over the next 3 years. The company aims to strengthen significantly its international management activity in the coming years, particularly in Italy, Germany and Greece, keeping its focus on the increase in the underlying value of its assets.
Despite having failed in the bid to control Portugal Telecom we believe that we have contributed to a more competitive telecommunications market. Telecommunications will continue to invest for growth, looking for disruptive opportunities. Operating priorities at the Telecommunications businesses will continue to focus on increasing market share, improving profitability and consolidating the direct access broadband service. Regarding Software and Systems Information, the company will invest in the growth of its existing businesses, while analysing new opportunities both within the current portfolio and via acquisitions and investments in selective start-ups.
In Sonae Capital development of the Tróia Resort will continue, with the conclusion of the first phase being scheduled for the summer of 2008. Regarding existing business areas, focus will be on growing the services business area and strengthening the leadership of the insurance brokerage market. Investment in new business opportunities will increase.
Sonae SGPS will strive to identify new business opportunities outside the scope of the main businesses.
The Board of Directors would like to thank all its stakeholders for their support and confidence, with special thanks to the statutory auditor for their co-operation and work, and to all our staff for their efforts during the year.
Maia, 20 March 2007
The Board of Directors
Belmiro Mendes de Azevedo
Álvaro Carmona e Costa Portela
Álvaro Cuervo García
Ângelo Gabriel Ribeirinho dos Santos Paupério
Duarte Paulo Teixeira de Azevedo
Luíz Felipe Palmeira Lampreia
Michel Marie Bon
Nuno Manuel Moniz Trigoso Jordão
Nuno Miguel Teixeira de Azevedo
Appendix to the Report of the Board of Directors as of 31 December 2006 required by article 447 of the Portuguese Companies Act
| Purchases | Sales | Balance as of 31.12.2006 |
|||||
|---|---|---|---|---|---|---|---|
| Date | Quantity | Aver. Price | Quantity | Aver. Price | Quantity | ||
| Belmiro Mendes de Azevedo | |||||||
| Efanor Investimentos, SGPS, SA (1) | 49,999,997 | ||||||
| Sonae, SGPS, SA | 14,901 | ||||||
| Sonaecom, SGPS, SA | 75,537 | ||||||
| Álvaro Carmona e Costa Portela | |||||||
| Sonae, SGPS, SA | 25,934 | ||||||
| Sonaecom, SGPS, SA | 5,000 | ||||||
| Ângelo Gabriel Ribeirinho dos Santos Paupério | |||||||
| Sonae, SGPS, SA | 4,564 | ||||||
| Sonae.com, SGPS, SA | 60,070 | ||||||
| Duarte Paulo Teixeira de Azevedo | |||||||
| Efanor Investimentos, SGPS, SA (1) | 1 | ||||||
| Imparfin, SGPS, SA (3) | 150,000 | ||||||
| Sonae, SGPS, SA | 596,909 | ||||||
| Shares attributed under a Share | |||||||
| Based Compensation Plan | 11.05.2006 | 236,318 | 0 | ||||
| Sonaecom, SGPS, SA | 387,342 | ||||||
| Shares attributed under a Share | |||||||
| Based Compensation Plan | 13.03.2006 | 71,547 | 0 | ||||
| Luiz Felipe Lampreia | |||||||
| Sonae, SGPS, SA | 10,000 | ||||||
| Michel Marie Bon | |||||||
| Sonae, SGPS, SA | 45,363 | ||||||
| Purchase | 13.01.2006 | 4,000 | 1.24 | ||||
| Purchase | 17.05.2006 | 3,400 | 1.33 | ||||
| Purchase | 06.07.2006 | 4,900 | 1.17 | ||||
| Purchase | 11.10.2006 | 3,500 | 1.41 | ||||
| Nuno Miguel Teixeira de Azevedo | |||||||
| Efanor Investimentos, SGPS, SA (1) | 1 | ||||||
| Sonae, SGPS, SA | 14,320 |
| Purchases | Sales | Balance as of 31.12.2006 |
||||
|---|---|---|---|---|---|---|
| Date | Quantity | Aver. Price | Quantity | Aver. Price | Quantity | |
| (1) Efanor Investimentos, SGPS, SA | ||||||
| Sonae, SGPS, SA | 658,804,410 | |||||
| Pareuro, BV (2) | 20,000 | |||||
| Sonaecom, SGPS, SA | 1,000 | |||||
| (2) Pareuro, BV | ||||||
| Sonae, SGPS, SA | 400,000,000 | |||||
| (3) Imparfin, SGPS, SA | ||||||
| Sonae, SGPS, SA | 4,105,273 |
Appendix to the Report of the Board of Directors as of 31 December 2006 required by article 448 of the Portuguese Companies Act - Number of shares held by shareholders owning more than 10%, 33% or 50% of the comany's share capital
Number of shares held as of 31.12.06
Efanor Investimentos, SGPS, SA Sonae, SGPS, SA 658,804,410 Pareuro, BV 20,000
Pareuro, BV Sonae, SGPS, SA 400,000,000
As required by article 8 nr. 1 e) of CMVM Regulation 04/2004, the following shareholders held more than 2% of the company's share capital:
| Shareholder | Nr. of shares | % of Share Capital |
% of Voting Rights |
|
|---|---|---|---|---|
| Efanor Investimentos, SGPS, S.A. | 658,804,410 | 32.940% | 35.295% | |
| Pareuro, BV | 400,000,000 | 20.000% | 21.430% | |
| Maria Margarida CarvalhaisTeixeira de Azevedo | 14,901 | 0.001% | 0.001% | |
| Maria Cláudia Teixeira de Azevedo | 342,287 | 0.017% | 0.018% | |
| Duarte Paulo Teixeira de Azevedo | 596,909 | 0.030% | 0.032% | |
| Nuno Miguel Teixeira de Azevedo | 14,320 | 0.001% | 0.001% | |
| Total attributable to Efanor Investimentos, SGPS, S.A. | 1,059,772,827 | 52.989% | 56.776% | |
| Banco BPI, S.A. | 51,868 | 0.003% | 0.003% | |
| Banco Português de Investimento, S.A. | 2,200,204 | 0.110% | 0.118% | |
| Fundos de Pensões do Banco BPI | 37,878,620 | 1.894% | 2.029% | |
| BPI Vida - Companhia de Seguros de Vida, S.A. | 784,501 | 0.039% | 0.042% | |
| Total attributable to Banco BPI, S.A. | 40,915,193 | 2.046% | 2.192% | |
| Fundação Berardo, Instituição Particular de Solidariedade Social | 49,849,514 | 2.492% | 2.671% | |
| Total attributable to Fundação Berardo, Instituição Particular de Solidariedade Social | 49,849,514 | 2.492% | 2.671% | |
| Centaurus Capital Ltd. | ||||
| Centaurus Alpha Master Fund Limited | 37,011,048 | 1.851% | 1.983% | |
| Greenway Managed account series Ltd. | 2,178,615 | 0.109% | 0.117% | |
| Citi Centaurus Limited | 1,261,106 | 0.063% | 0.068% | |
| Total attributable to Centaurus Capital Ltd. | 40,450,769 | 2.023% | 2.167% | |
| FMR Corp. and Fidelity International Limited | ||||
| Fidelity European Fund | 18,928,524 | 0.946% | 1.014% | |
| Fidelity European Values PLC | 3,578,100 | 0.179% | 0.192% | |
| FID FDS - Iberia Pool | 11,841,800 | 0.592% | 0.634% | |
| Norges Bank Eur Ex UK Ex Norwy | 8,609,600 | 0.430% | 0.461% | |
| Fidelity Intl FD - Pep Europe | 312,200 | 0.016% | 0.017% | |
| Total attributable to FMR Corp. and Fidelity International Lilited | 43,270,224 | 2.164% | 2.318% |
(Translation from the Portuguese original)
This document gives a brief description of the Corporate Governance practices of Sonae SGPS, SA, and was prepared to comply with Regulation 7/2001 of 20 December 2001 of the CMVM (Portuguese Securities Market Commission) as amended by Regulations 11/2003 of 19 November 2003 and 10/2005 of 3 November 2005.
Given that this Report on Corporate Governance is an appendix to the Report of the Board of Directors, it should be read together with and as a complement to that document. In order to avoid duplication, certain aspects in this report are cross referenced to the main body of that report, as it was felt that it was more appropriate to deal with them in the main body of the report.
Compliance with the recommendations of the CMVM on Corporate Governance is explicit in this report and in each of the chapters into which it is divided.
Strategic management decisions are taken in meetings of the Board of Directors of the company and decisions related to the execution of that strategy are taken in meetings of the Executive Committee.
The Board of Directors functions as a body composed of a Chairman and eight other voting members. The Board has as its main responsibilities to approve the Annual Report and Accounts, to approve the annual portfolio configuration strategy and to approve the annual business plan and any significant changes to it.
The Executive Committee functions as a body, composed of a Chief Executive Officer and four other Executive members, and is responsible for managing and executing day-to-day operations, with particular emphasis on management of the portfolio of businesses, financial co-ordination and career development for top managers.
Ângelo Paupério co-ordinates operationally the functional departments shown above, meeting regularly with the respective managers. Decisions taken by the functional managers are validated by powers delegated by the Executive Committee and are coordinated in the above-mentioned meetings of this Committee.
The Audit Committee is chaired by Belmiro de Azevedo and is made up of Internal Audit managers and of directors responsible for this function for each of the sub-holdings. It meets quarterly to review internal and external audit work plans and findings.
The Finance Committee is chaired by Ângelo Paupério and meets monthly, made up of directors responsible for finance in each sub-holding and functional managers of Sonae, SGPS, SA who are relevant to the subjects on the meeting's agenda. The committee's functions cover the review and co-ordination of financial risk management policies of the Sonae Group.
The composition and responsibilities of the Shareholders' Remuneration Committee are described in paragraph 1.9 below.
The Board Committees are described in paragraph 4.1. below.
The system of risk management implemented in the company covers the following:
The Sonae values and principles (see 3.1 below) refer to the concepts that provide the framework for the policies, organisation and management of risk, in particular:
Risk Management, which is one of the components of the Sonae culture and a pillar of Corporate Governance, is present in all management processes and is a responsibility of all management and employees of the Sonae Group, at all levels of the organisation.
The objective of risk management is the creation of value by managing and controlling uncertainties and threats that can affect the going concern of Sonae Group companies, with the aim of taking advantage of business opportunities.
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 the entire planning process as a structured and disciplined approach that aligns strategy, processes, people, technologies and knowledge with the goal of identifying, evaluating and managing the uncertainties and threats that Sonae Group companies face in the pursuit of their business objectives and value creation.
As part of strategic planning, the risks of the existing business portfolio as well as new businesses and relevant projects, are identified and evaluated, while strategies to manage those risks are also defined.
At the operational level, business risks and planned actions to manage those risks, are identified and evaluated, and are included and monitored in business unit and functional unit plans.
For risks that cross business unit boundaries, such as large scale organisational changes, contingency and business recovery plans, structural risk management programmes are developed with the participation of those responsible for the units and functions involved.
As far as tangible asset and people safety risks are concerned, policies and standards are defined, their implementation is self-monitored, audits are carried out at the main units, and when risks are identified, preventive and corrective actions are implemented. On a regular basis, the financial cover of insurable risks is reassessed.
Financial risk management is carried out and monitored as part of the activity of holding and sub-holding companies' financial departments, whose work is reported to, coordinated and reviewed by the Finance Committee and the Board Audit and Finance Committee.
The risk management process is supported by a uniform and systematic methodology, based on the international standard Enterprise Risk Management – Integrated Framework issued by COSO (Committee of Sponsoring Organizations of the Treadway Commission) that includes the following:
Risk Management is the responsibility of all managers and staff of Sonae Group companies at all levels of the organisation, and is supported by the Audit and Risk Management and Management Planning and Control Departments.
The Audit and Risk Management function'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.
The Risk Management function promotes, co-ordinates, facilitates and supports the development of risk management processes.
The Internal Audit function identifies and evaluates the effectiveness and efficiency of management and control of business processes and information systems risks, as well as risks arising from non compliance with legislation, contracts and company policies and procedures. The Internal Audit annual plan includes critical business process audits, compliance audits, financial audits and information systems audits.
Financial and accounting information reliability and integrity risks are also evaluated and reported upon by the External Audit function.
The Management Planning and Control function promotes and supports the integration of risk management into the management and planning control process of companies.
Risk Management, Internal Audit and Management Planning and Control are activities carried out in all businesses of the Group, through especially dedicated teams, which report directly to their respective Boards of Directors both of the holding and each of the sub-holdings.
At present, the Internal Audit and Risk Management functions have 46 full time staff, carrying out their work in all countries where the Sonae Group operates.
At Group level, there are bodies – the Audit Committee and the Risk Management Consultation Group (GCGR) – that assist the Executive Committee and the Board Audit and Finance Committee to define policies, review and co-ordinate the activities of Risk Management, Internal and External Audit, and to review internal control processes and systems. These bodies are also platforms for sharing knowledge and experience of these activities. They meet quarterly and are made up of directors responsible for the respective functions in each sub-holding, of Risk Management and Audit Managers of the holding and sub-holdings, of the Group Controller, and, in the case of the GCGR, of the Group Insurance Manager. These bodies are chaired by a director appointed by the Executive Committee, which reports directly to both the Executive Committee and the Board Audit and Finance Committee. The Audit Committee is chaired by the Chairman of the Board of Directors of Sonae, SGPS, SA.
As mentioned in 4.1. below, the Board of Directors has appointed a Board Audit and Finance Committee, made up of four Non-Executive Directors, three of which are independent, which monitors Audit and Risk Management activities on behalf of the Board.
Sonae Group companies promote the development of human resources, Internal Audit and Risk Management methodologies and seek to follow best international practices. As far as human resources are concerned, Group companies sponsor a program of training and updating of skills that includes the International Internal Audit professional certification promoted by the IIA – The Institute of Internal Auditors – the Certified Internal Auditor (CIA), as well as other international certifications in information systems audit such as the Certified Information Systems Audit (CISA), Certified Information System Security Professional (CISSP) and BS ISO/IEC 27001:2005 Information Security Management System (CISM). Currently, there are eleven members of the Sonae Group Internal Audit and Risk Management teams who have certifications, of which six are CIA accredited, three CCSA, one CISA and one CISM. A group of nine candidates are applying for certification in 2007 and are preparing to take the respective exams. The Sonae Group is one of the entities in Portugal with the most certified staff in the Internal Audit and Risk Management function.
In the relevant chapter of the Report of the Board of Directors, Internal Audit and Risk Management activities, for the year 2006, are described.
To complement information on the performance of the Sonae share price given in the Report of the Board of Directors, further data is shown below highlighting the most relevant facts and the most significant price movements during the year.
Sonae, SGPS, SA's shares are quoted on the main Portuguese securities market (Euronext Lisbon) and weight 4.27 % in the PSI 20 Index.
| Sonae, SGPS, SA's shares reference information: |
|
|---|---|
| Name: Sonae, SGPS, SA | ISIN Code: PTSON0AE0001 |
| Security's issuer: Sonae, SGPS, SA | Symbol: SON |
| Listing date: 15 September 1989 | Reuters: SONP.IN |
| Share Capital: 2,000,000,000 € | Bloomberg: SON PL |
| Listed amount: 2,000,000,000 | |
| Treasury stock: 6.7% (a) |
(a) Affiliated companies, Modelo Continente and Sonaecom, also held 50,000 and 562,500 shares of Sonae, SGPS, SA, respectively, as at 31 December 2006.
The Sonae share ended the year quoted at 1.51 euro, a nominal gain of 28% during the year, which compares with a general stock market gain of 29.9 %, as measured by the Portuguese Stock Market Index (PSI-20).
The year was marked by the launch of the Public Tender Offers for Portugal Telecom and PT Multimédia, which led to a significant increase in volumes and prices throughout the year, both of the Sonae share and of the market as a whole. The following graph highlights the trend of the share price during 2006.
| Sonae, SGPS, SA's shares statistics: | |||
|---|---|---|---|
| 2004 | 2005 | 2006 | |
| Background | |||
| Share capital (€) | 2,000,000,000 | 2,000,000,000 | 2,000,000,000 |
| Shares outstanding | 2,000,000,000 | 2,000,000,000 | 2,000,000,000 |
| Nominal value per share (€) | 1.0 | 1.0 | 1.0 |
| Consolidated Net Profit / (Loss) | |||
| for the year attributable to equity holders of | 192.1 | 512.8 | 241.8 |
| Sonae (M.€) | |||
| EPS (€) | 0.10 | 0.27 | 0.13 |
| Dividend per share (€) | 0.02 | 0.025 | 0.03(c) |
| Share Prices | |||
| Opening price | 0.70 | 1.07 | 1.18 |
| Maximum price | 1.08 | 1.53 | 1.52 |
| Minimum price | 0.70 | 1.09 | 1.11 |
| Average price (a) | 0.91 | 1.25 | 1.32 |
| Closing price | 1.07 | 1.18 | 1.51 |
| Change | 62% | 50%(d) | 28% |
| Transactions (daily quantity) | |||
| Maximum quantity | 28,481,901 | 29,760,076 | 90,416,350 |
| Minimum quantity | 315.142 | 480.556 | 608.397 |
| Average quantity | 5,210,367 | 5,621,424 | 7,902,693 |
| Market capitalisation (b) | |||
| Year end (€) | 2,140,000,000 | 2,360,000,000 | 3,020,000,000 |
| Change | 62% | 50% | 28% |
(a) Weighted average of daily closing prices. (b) Market capitalisation was calculated using the total number of shares.
(c) Proposal of the Board of Directors to the Shareholders' Annual General Meeting.
(d) Calculation considers closing price adjusted by the value of Sonae Indústria's de-merger rights (0.43 euro) attributed to Sonae, SGPS, SA's Shareholders.
In the year, material events and other announcements included:
06 September: Acquisition, under the call option agreement of 9.09% of the share capital of Modelo Continente, SGPS, SA;
09 September: Roll-up of Parpública's holding in Optimus to Sonaecom;
The dividends distributed in recent years were as follows:
| 2003 | 2004 | 2005 | |
|---|---|---|---|
| Dividend per share (euro) | 0.015 | 0.02 | 0.025 |
| Dividends distributed (thousand euro) | 27,987 | 37,316 | 46,651 |
| Dividend Yield | 1.5% | 2.2% | 2.0% |
| Pay out ratio1 | 24.5% | 19.4% | 9.1% |
The Shareholders' Remuneration Committee (see 1.9. below) has approved a Deferred Performance Bonus Plan Policy. The Deferred Performance Bonus Plan is a discretionary deferred compensation plan, which is equity based, and has a three year deferral period between the award date and the vesting date. The decision to award Deferred Performance Bonus Plan for any year is taken by the Board Nomination and Remuneration Committee and the Shareholders' Remuneration Committee for the Executive Committee members and by the Executive Committee for remaining participants. The values awarded are derived from the Annual Performance Bonuses actually paid for the same "performance year". The Sonae Deferred Performance Bonus Plan is a discretionary third component of Sonae's remuneration and other compensation policy. The Deferred Performance Bonus Plan is aimed at enhancing loyalty and increasing employees' awareness of the importance of their performance to the overall success of Sonae, as reflected by changes in the Company's share price.
All Sonae senior employees are eligible to participate in the Sonae Deferred Performance Bonus Plan, provided that their entry date is before 31 December of the previous year. Deferred Performance Bonus Plans are awarded in March each year, in respect of performance during the previous financial year. The number of shares to be awarded is calculated by dividing the value of the Deferred Performance Bonus awarded by the average share price in the month prior to the award date. Participants are given the choice between acquiring the number of shares awarded, on the third anniversary of the award date, at zero cost, or acquiring a number of shares calculated using the Black-Scholes option pricing model and the value of the Deferred Performance Bonus awarded, on the third anniversary of the award date, at the share price on the award date. In both alternatives the acquisition may be made on any date between the third anniversary of the
1 Calculated using consolidated net profits after minority interests.
2 Details of liabilities arising from the Deferred Performance Bonus Plan are given in Note 28 to the Consolidated Financial Statements.
award date and the end of that year. The company retains the right to pay the equivalent value in cash at the vesting date rather than transfer actual shares. The right to any deferred compensation ceases, if the participant leaves the Sonae Group. On retirement of the participant, deferred compensation plans not yet vested are maintained until they actually vest. In the case of death or permanent injury of the participant, deferred compensation plans are marked to market and paid to the rightful heirs or to the participant.
Through a subsidiary company, Sonae, SGPS, SA signed an agreement with Sonaecom, SGPS, SA under which it accepts to deliver Sonaecom shares to those employees of Sonaecom and its affiliates who are beneficiaries of share acquisition and stock option plans, when these plans fall due. This was implemented to hedge the risk that exists for Sonaecom resulting from share price fluctuations, which that company was unable to cover itself as it does not meet Portuguese Company Law requirements to purchase own shares. However, these share and stock option plans continue to be the exclusive responsibility of Sonaecom, SGPS, SA, and are described in detail in that company's report.
The company did not have business dealings with any member of the Board of Directors.
The only transactions with the Statutory External Auditor were those related to his official duties and his fees were paid as described in paragraph 1.10 below.
Transactions with companies controlled by Sonae, SGPS, SA were made on an arms length basis and were part of normal business activity of the respective companies, and as such do not need further disclosure.
In strict compliance with law and regulations, the company informs expeditiously its shareholders and the capital markets in general 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.
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).
On the latter site, all announcements issued since 1999 are available on the Public Relations page. The most recent versions of the institutional presentation, Report of the Board of Directors and Financial Statements, Earnings Announcements and Environmental Report are available on the Home Page. Reports of the Board of Directors and Financial Statements are issued every quarter, and the institutional presentation is updated every six months.
As a means of creating greater interaction with shareholders and investors, the site also includes a page for Investors which contains:
Sonae, SGPS, SA, via its Investor Relations Office, a part of the Investor Relations Department, maintains constant contact with investors and analysts by supplying up to date information. In addition, on request, it provides clarification of relevant facts about the company's activities as already disclosed by law.
The Investor Relations Office can be contacted at: Telephone: +351 22 940 47 76; Fax: +351 22 940 46 34; E-mail: [email protected]; Address: Lugar do Espido, Via Norte, Apartado 1011, 4471-909 Maia. The Investor Relations Manager is José Luís dos Santos Lima Amorim, who can be contacted using the above numbers and address.
The legal representative for Capital Market Relations is Luzia Leonor Borges e Gomes Ferreira (Telephone: +351 22 948 75 22; Fax: + 351 22 948 77 22; E-mail: [email protected]).
Annual, half yearly and quarterly financial statements as well as updates of institutional presentations are sent by E-mail to all bona fide shareholders, analysts, investors, banks and journalists who request them.
The company believes the procedures described above ensure permanent contact with the market and respect for the principles of equal treatment of shareholders and equal access to information by investors.
In publicly quoted companies, the Shareholders' General Meeting may appoint a Shareholders' Remuneration Committee with the same term of office as the other governing bodies. Its mission is to approve the remuneration of members of the governing bodies. In the company, the current Shareholders' Remuneration Committee is made up of two shareholders, Efanor Investimentos, SGPS, SA and Imparfin – Investimentos e Participações Financeiras, SGPS, SA, elected at the Shareholders' General Meeting in accordance with paragraph 2 of Article twenty five of the company's articles of association. These shareholders are represented by Professor José Neves Adelino and Bruno Walter Lehmann, respectively, who are not members of the Board of Directors.
The company's auditors are Deloitte, who, in 2006 and 2005, billed the company and its affiliated and associated companies the following amounts:
| Amounts in thousand euro | 2006 | % | 20053 | % |
|---|---|---|---|---|
| Statutory Audit | 1,537 | 50.2 | 2,163 | 57.8 |
| Other Assurance | 272 | 8.9 | 240 | 6.4 |
| Tax Consultancy | 452 | 14.7 | 676 | 18.1 |
| Other Services | 803 | 26.2 | 663 | 17.7 |
| Total | 3,064 | 100 | 3,743 | 100 |
| of which Billed to Foreign Affiliated companies | 1,136 | 37.1 | 1,700 | 45.4 |
In other services' fees, in 2006, are included consultancy fees for advice on tax incentives (18.5% of total fees), on human resources (2.2% of total fees) and consultancy fees relating to training in International Financial Reporting Standards and in US GAAP (2% of total fees).
Tax consultancy services and other services are provided by different teams from those who are involved in audit, thus contributing to the independence of the auditor.
The articles of association of the company only allow participation in the Shareholder's General Meeting to shareholders who provide proof of their title as shareholders at least 8 days in advance of each meeting4 . This proof of title must be issued by a financial institution where records of title are kept by the shareholders.
One vote corresponds to each group of one thousand shares, and each shareholder has as many votes as results from dividing the total number of shares he/she owns by one thousand, rounded down to the nearest whole number.
Shareholders who are private individuals can be represented at Shareholders' General Meetings by their spouse or direct family, a director or other shareholder, by sending a letter to the Chairman of the Board of the Shareholders' Meeting, stating the name and
3 Os valores de 2005 incluem honorários debitados a filiais alienadas (Sonae Distribuição Brasil) e objecto de cisão (Sonae Indústria).
4 This is not in compliance with recommendation number 2 of the Portuguese Securities Market Commission (CMVM). The Board of Directors will present a proposal to the next Shareholders General Meeting to change the articles of association in order to reduce this period to 5 days, in line with that recommendation.
address of the representative and the date of the meeting. Corporate entities may be represented by a person nominated by them by written letter whose authenticity will be verified by the Chairman of the Board of the Shareholders' General Meeting.
For as long as the company is listed on the Stock Exchange, shareholders can vote by correspondence but only in relation to changes to the articles of association and election of governing bodies5 . Correspondence votes will only be taken into account when received at the company's headquarters by registered mail addressed to the Chairman of the Board of the Shareholders' General Meeting, and received at least three days before the meeting, subject to proof of title of the related shares. The voting declaration should be signed by the holder of the shares or by his legal representative and, in the case of a private individual should be accompanied by an authenticated copy of his/her identity card, and in the case of a corporate entity, the signature should be authenticated by a public notary certifying his/her status and powers. It is the responsibility of the Chairman of the Board of the Shareholders' General Meeting, or the person substituting him, to verify correspondence voting declarations, eliminating any votes relating to declarations that are not accepted. Up to now, shareholders have never used this facility. A voting ballot by post form is available on the company's web site (www.sonae.pt/files/mdocs/mdoc_117_uk.pdf) for correspondence votes.
The right to vote electronically is not contemplated in the company's articles of association.
Proposals to be considered at the Shareholders' General Meeting are made available to shareholders at the head office within the timescales required by law, together with reports, documents and other information that should legally accompany them. These documents are also made available on the company's website.
Sonae's values and principles are widely spread and deeply rooted in the company culture. The key aspects are a business culture (leadership, openness to change, loyalty and rigour, transparency), responsibility towards employees (equal treatment, professional development, safety), social responsibility (social and environmental awareness, openness to society, trust and ethics) and political independence. As a publicly listed company, Sonae is particularly aware of its duties of diligence and confidentiality in its dealings with third parties, and for the need to protect its position in situations of conflict of interest.
The Sonae values and principles can be consulted on the Company's website.
On 16 January 2004, Sonae adhered to the Global Compact initiative launched by the United Nations on 26 July 2000. In our values and daily practice we share the ten principles of responsible corporate citizenship approved by a wide range of institutions all over the world. On 15 January 2007 Sonae's Chairman published a statement of progress
5 This is not in compliance with recommendation number 2 of the Portuguese Securities Market Commission (CMVM).
on compliance with the United Nations Global Compact principles, which is available on our website.
Further detail on issues relating to eco-efficiency, human capital and stakeholder dialogue are included in the 2006 Sustainability Report which is published in parallel with this report.
The Sonae Group has always made available, through its website (www.sonae.pt), to staff and to the general public, direct access to the Sonae Group ombudsman, who reports directly to the Chairman of the Sonae Group. This has proven to be an effective means of facilitating the report of complaints, which are followed up internally by a director of Sonae, SGPS, SA to make sure that independence and freedom of opinion are guaranteed and that all issues are treated equally and fairly. The Sonae Group ombudsman received throughout 2006 1,573 complaints, mostly from customers (99% of total complaints received). Average response time was 34 days (2 days less than in 2005), and decreased steadily throughout the year, with a reduction of 22 days between the first and the last quarter. In all our businesses employees, are encouraged to contribute with their suggestions and to openly communicate with management on any issues which may impair their responsibilities or may contribute to their well being.
As mentioned in paragraph 1.1 above, one of the functional departments of Sonae, SGPS, SA is the Internal Audit and Risk Management Department. This function also exists in the main Sonae businesses.
As referred to in the paragraph on Internal Audit and Risk Management in the Report of the Board of Directors, this department accompanied and promoted the development of structured and systematic management of business process risks, appropriately integrated into the operational and strategic planning cycles of Group Companies.
In the day to day operations and strategic management of the company and its affiliated and associated companies, active risk management policies are pursued in the different aspects of its businesses. To this end Internal Audit and Risk Management Departments support and promote (in a structured and systematic way) relevant operational and risk management practices.
The Sonae Group is exposed to a variety of financial risks including interest rates, transaction and translation foreign currency exchange rates, liquidity, counterparty and credit risk, commodities and raw materials price and debt and equity financial markets fluctuations.The Group financial risk management policy seeks to minimize potential adverse effects of volatility of financial markets.
The Group's attitude to financial market risk management is conservative and cautious, using derivative instruments to hedge certain exposures related to its operating business, therefore the Group does not enter into derivatives or other financial instruments that are unrelated to its operating business.
Apart from the number of shares that correspond to one vote and the shareholder representation rules mentioned in paragraph 2 above, there are no other limitations on voting rights.
The Board of Directors has no knowledge of any special rights or shareholders agreements in which shareholders of the Company are involved.
The Company has not taken any measures that would hinder the success of a public tender offer for the purchase of its shares.
The Board of Directors is made up of 9 members, of which 4 are Non-Executive Directors, 3 of which are Independent Directors. The Board of Directors was elected at the Shareholders' General Meetings on 31 March 2003 (Executive Directors) and 31 March 2004 (Non-Executive Directors). The mandate of the Board of Directors is four years and ended on 31 December 2006. The Directors were elected from a single list. No alternative list was presented by any shareholder. The Shareholders' General Meeting convened for 3 May 2007 is due to elect new governing bodies.
The current members of the Board of Directors are:
| Executive | Non Executive |
Independent6 | ||
|---|---|---|---|---|
| Belmiro Mendes de Azevedo | Chairman and CEO |
X | ||
| Álvaro Carmona e Costa Portela | X | |||
| Álvaro Cuervo Garcia | X | X | ||
| Ângelo Gabriel Ribeirinho dos Santos Paupério |
CFO | X | ||
| Duarte Paulo Teixeira de Azevedo | X | |||
| Luíz Felipe Palmeira Lampreia | X | X | ||
| Michel Marie Bon | X | X | ||
| Nuno Manuel Moniz Trigoso Jordão | X | |||
| Nuno Miguel Teixeira de Azevedo | X |
6 Independent member under the terms of Regulation nr. 10/2005 of the Portuguese Stock Market Regulator (CMVM).
and have been appointed as follows:
| Appointed for the first time in |
End of Mandate | |
|---|---|---|
| Belmiro Mendes de Azevedo | 1989 | 2006 |
| Álvaro Carmona e Costa Portela | 1999 | 2006 |
| Álvaro Cuervo Garcia | 2004 | 2006 |
| Ângelo Gabriel Ribeirinho dos Santos Paupério | 2000 | 2006 |
| Duarte Paulo Teixeira de Azevedo | 2000 | 2006 |
| Luíz Felipe Palmeira Lampreia | 2004 | 2006 |
| Michel Marie Bon | 2004 | 2006 |
| Nuno Manuel Moniz Trigoso Jordão | 1999 | 2006 |
| Nuno Miguel Teixeira de Azevedo | 2004 | 2006 |
A list of the main companies in which each Director holds office, is shown in paragraph 4.3 of this report. The same paragraph also includes summarised curriculum vitae of each Director, as well as details of the number of shares they held on 31 December 2006 in Sonae, SGPS, SA or any of its affiliated companies.
The Non-Executive Directors bring together wide experience in the world of business, finance, academia and politics, and exercise an important influence on the decision making process and in the development of company strategy.
The Board normally meets at least four times a year. The quorum for any Board meeting requires that the majority of members are present or represented. Each member has equal voting rights and decisions are taken by a simple majority of votes cast. The duties of the Board of Directors are as defined by Portuguese law. During 2006, the Board met 11 times with all of the Directors present at four meetings, three Directors were represented by the Chairman at three meetings and participated by phone in one meeting, and the Chairman represented one Director at one meeting and another Director at two meetings. Minutes are recorded in the respective minute book. The Board of Directors receives information on subjects on the agenda of the meeting at least 48 hours before the meeting is held.
The current members of the Executive Committee are:
The Executive Committee has been delegated the powers and responsibilities to manage and execute the day-to-day operations of the Company except:
Executive Committee Decisions are taken by a simple majority of votes cast The Executive Committee currently meets at least once every month. During 2006, the Executive Committee met 16 times with all of its members present. Minutes are recorded in the respective minute book. The Executive Committee receives information on subjects on the agenda of the meeting at least 48 hours before the meeting is held.
To ensure that the Board of Directors is kept informed of Executive Committee activity, all significant decisions taken by the Executive Committee are systematically extracted from the minutes of their meetings and are reported, in writing, to the Board of Directors.
The Board of Directors appointed a Board Audit and Finance Committee (BAFC) composed of the following Non-Executive Directors:
During 2006, the BAFC met 5 times. All members have been present at all meetings, with the exception of one member in one meeting. Amongst its tasks and powers, the BAFC is responsible for monitoring and reviewing the Company's financial reporting processes and accounting policies adopted, for evaluating risks associated with the Company's activities on behalf of the Board, and overseeing Corporate Governance. The BAFC meets directly with the External Auditor and the internal audit team.
A Board Nomination and Remuneration Committee (BNRC) was also appointed, consisting of the following directors:
During 2006, the BNRC met once. It is responsible for supervising the preparation of proposals on remuneration and other compensation of Executive and Non-Executive Directors and liaises with the Shareholders' Remuneration Committee (Comissão de Vencimentos).
No list of incompatibilities has been defined nor has any restriction been established in relation to the maximum number of offices that may be held in other companies. The Company's Executive Directors hold offices and exercise management duties in companies belonging to the same subholding company that make up a homogeneous business portfolio.
During 2006, members of the Board of Directors were attributed the following remuneration by the company or by affiliated or associated companies:
| Amounts in euros | Fixed Remuneration |
Performance Bonuses |
Total 2006 |
Total 2005 |
|---|---|---|---|---|
| Individual breakdown | ||||
| Chairman and CEO | 606,080 | 645,574 | 1,251,654 | 1,270,128 |
| Average of the remaining 4 Executive Directors | 392,118 | 427,944 | 820,062 | 839,617 |
| Average of the 4 Non-Executive Directors | 39,750 - 39,750 |
54,056 | ||
| Aggregate | ||||
| Executive Directors (5) | 2,174,550 | 2,357,350 | 4,531,900 | 4,628,598 |
| Non-Executive Directors (4) | 159,000 | - | 159,000 | 216,223 |
| 2,333,550 | 2,357,350 | 4,690,900 | 4,844,821 |
The performance bonus is indexed to a group of financial indicators that best align the interests of Executive Directors with those of the Company and its shareholders. Half of this bonus is deferred (see 1.6. above) and will only be paid 3 years after attribution date, and may increase or decrease depending on share price performance. No indemnities were paid to Directors and there were no supplementary pension schemes or early retirement schemes for Directors.
It should be noted that a part of the above-mentioned remuneration is also disclosed in the Reports on Corporate Governance of affiliated companies when Sonae, SGPS, SA Directors are also members of the Board of Directors of those companies.
7 The disclosure made does not comply with recommendation number 8 of the Portuguese Securities and Exchange Regulator (CMVM). The Board of Directors believes that the information disclosed concerning remuneration is sufficient and that to give details for all Directors on an individual basis, as recommended by the CMVM, goes beyond the general principles governing the duty to inform and is of marginal additional benefit to shareholders. Presently there is no Executive Compensation Policy approved by the General Meeting of Shareholders as required by recommendation number 8-A of the Portuguese Securities and Exchange Regulator (CMVM). A proposal to this effect will be presented at the next General Meeting of Shareholders.
PLACE OF BIRTH: Marco de Canaveses DATE OF BIRTH: 17-02-1938 MARRIED CHILDREN: 3
| 1963 | Graduation in Chemical Engineering - Porto University |
|---|---|
| 1973 | PMD (Programme for Management Development) - Harvard Business School |
| 1985 | Financial Management Programme - Stanford University |
| 1987 | Strategic Management - Wharton University |
| 1963-1964 | Technical Career in textile chemical industries |
|---|---|
| 1965-1967 | Managing Director of Sonae |
| 1967-1984 | President of Sonae Group of companies |
| 1985-1988 | CEO of Sonae Indústria e Investimentos, SA |
| 1989-1999 | Chairman and CEO of Sonae Investimentos, SGPS, SA |
| Since 1999 | Chairman and CEO of Sonae SGPS, SA |
Member of the European Union Hong-Kong Business Cooperation Committee Member of the International Advisory Board of Allianz AG Member of the Harvard Business School European Advisory Board Member of the Management Board of Cotec – Portugal Member of the European Round Table of Industrialists Founding Member of Manufuture Portugal Forum.
"Grã Cruz da Ordem do Infante D. Henrique" bestowed by His Excellence the President of the Republic of Portugal
"Encomienda de Numero de la Orden del Mérito Civil" bestowed by His Majesty the King D. Juan Carlos of Spain.
"Ordem do Cruzeiro do Sul" bestowed by His Excellence the President of the Republic of Brazil
Honorary Fellow of the London Business School
Sonae, SGPS, SA – 14,901 shares Sonaecom, SGPS, SA – 75,537 shares
Chairman of the Board of Directors of:
Sonae Indústria, SGPS, SA Modelo Continente, SGPS, SA Sonae Sierra, SGPS, SA Sonaecom, SGPS, SA Sonae Capital, SGPS, SA Efanor Investimentos, SGPS, SA
| PLACE OF BIRTH: Porto | DATE OF BIRTH: 04-07-1951 |
|---|---|
| MARRIED | CHILDREN: 3 |
| 1974 | Graduate in Mechanical Engineering - Porto University |
|---|---|
| 1983 | Master of Business Administration - MBA (Universidade Nova de Lisboa) |
| 1997 | AMP / ISMP - Harvard Business School |
| 1972-1976 | Director at Laboratórios BIAL (Pharmaceutical Industry) |
|---|---|
| 1974-1977 | Lecturer at Department of Mechanics - Porto University |
| 1976-1979 | Chairman and CEO of Laboratórios BIAL (Pharmaceutical Industry) |
| 1979-1985 | Executive Director of Finance, Planning, Exports at COPAM - Companhia |
| Portuguesa de Amidos, SA (Maize derivatives industry) and affiliated companies | |
| 1985-1986 | Deputy Managing Director and later Managing Director of Módis (Logistics and Retail |
| Procurement at Sonae Distribuição) | |
| 1986-1991 | Managing Director, later CEO and later Chairman of Sonae Distribuição, SGPS, SA |
| Since 1990 | CEO of Sonae Sierra, SGPS, SA |
| Since 1999 | Executive Vice President of Sonae, SGPS, SA |
8 Shares owned directly or owned by direct relatives.
9 This is not a complete list of all offices held but only of the most significant.
Since 2006 Member of the Board of Directors of Modelo Continente, SGPS, SA
| 1999-2002 | Co-founder and Board Member of EPRA- European Public Real Estate Association |
|---|---|
| 1996-2001 | Member at ICSC Europe Jury Award |
| Since 2004 | Trustee of European Shopping Centre Trust |
| Since 2004 | Member of Eurohypo International Advisory Board |
| Since 2005 | Trustee of the International Council of Shopping Centres |
Sonae, SGPS, SA – 25,934 shares Sonaecom, SGPS, SA – 5,000 shares
Member of the Board of Directors of:
Sonae Sierra, SGPS, SA Modelo Continente, SGPS, SA Sonae Capital, SGPS, SA
Chairman of the Board of Directors of most companies controlled by or majority owned by Sonae Sierra, SGPS, SA (these companies are listed in notes 4 to 7 in the Notes to the Consolidated Financial Statements).
PLACE OF BIRTH: Asturias, Spain DATE OF BIRTH: 30-05-1942 MARRIED CHILDREN: 4
10 Shares owned directly or owned by direct relatives. 11 This is not a complete list of all offices held but only of the most significant.
Professor of Business Economics at Universidad Complutense Madrid Member of the Academic Council of the Real Colegio Complutense at Harvard University Member of the Consulting Council on Privatization of the Spanish Government Member of the Board of Directors of ACS, SA Member of the Board of Directors of Thyssen Krupp, SA (Spain) Member of the Board of Directors of Sonae, SGPS, SA, of Sonae Indústria, SGPS, SA and Deputy Chairman of Tafisa Member of the Board of Directors of Bolsas y Mercados Españoles
Editor in Chief of Universia Business Review Author of several books and numerous articles published in Spanish and foreign journals Member of the scientific and advisory committee of several journals
Rey Jaime I prize in Economics Infanta Cristina prize in Economics Honorary Doctorate – Universidad de Oviedo Honorary Doctorate – Universidad de Leon Honorary Doctorate – Universidad de Castilla-La Mancha
None.
Member of the Board of Directors of:
Sonae Industria, SGPS, SA Tableros de Fibras, SA ACS, SA BA – Fábrica de Vidrio, SA Thyssen Krupp, SA Bolsas y Mercados Españoles
12 Shares owned directly or owned by direct relatives. 13 This is not a complete list of all offices held but only of the most significant.
PLACE OF BIRTH: Vila Nova de Gaia DATE OF BIRTH: 14-09-1959 MARRIED CHILDREN: 4
| 1982 | Graduate in Civil Engineering - Porto University |
|---|---|
| 1988 | Master of Business Administration - MBA (ISEE - Porto University) |
| 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 | Director of Strategic Planning and Control at Sonae Investimentos, SGPS, SA | |||
| Since 1994 | Director in several of Sonae Distribuição, SGPS, SA's affiliates (Retail) | |||
| Since 1996 | CFO of Sonae Distribuição, SGPS, SA and Director in Modelo Continente, SGPS, SA and several of its affiliates (Retail) |
|||
| Since 2000 | Executive Vice President and CFO of Sonae, SGPS, SA, Director of Sonae Sierra, SGPS, SA, CEO of Sonae Capital, SGPS, SA and Chairman of Sonae, SGPS, SA's Finance Committee |
Since 1989 Board member of APGEI (Business/University Association of Engineering and Management) … Lecturer of Business Policy (ISEE - Porto University)
Sonae, SGPS, SA – 4,564 shares Sonaecom, SGPS, SA – 60,070 shares
14 Shares owned directly or owned by direct relatives.
Member of the Board of Directors of:
Modelo Continente, SGPS, SA Sonae Sierra, SGPS, SA Sonae Capital, SGPS, SA Sonae Turismo, SGPS, SA Sonae Investments BV
Member of the Board of Directors of most companies controlled by or majority owned by Modelo Continente, SGPS, SA, Sonae Capital, SGPS, SA and Sonae Turismo, SGPS, SA (these companies listed in notes 4 to 7 in the Notes to the Consolidated Financial Statements).
MARRIED CHILDREN: 3
PLACE OF BIRTH: Porto DATE OF BIRTH: 31-12-1965
| 1986 | Graduation in Chemical Engineering - Ecole Polytechnique Féderále de Lausanne |
|---|---|
| 1989 | Master of Business Administration - MBA (ISEE - Porto University) |
| 1994 | Executive Retailing Program - Babson College |
| 1996 | Strategic Uses of Information Technology Program - Stanford Business School |
| 2002 | IMD - Breakthrough Program for Senior Executives - Lausanne |
| 1988-1990 | Analyst and Project manager of new investments at Sonae Tecnologias de Informação |
|---|---|
| 1990-1993 | Organizational Development project manager and New business Commercial Director |
| at Sonae Indústria (Wood Based Panels) | |
| 1993-1996 | Director of Strategic Planning and Control at Sonae Investimentos, SGPS, SA |
| 1996-1998 | Board Director of Modelo Continente Hipermercados. (Retail) |
| 1998-2000 | CEO of Optimus (Mobile Operator). |
| Since 2000 | CEO of Sonaecom, SGPS, SA and Executive Vice President of Sonae, SGPS, SA. |
15 This is not a complete list of all offices held but only of the most significant.
| Since 1988 | Member of APGEI (Business/University Association of Engineering and |
||||||
|---|---|---|---|---|---|---|---|
| Management) | |||||||
| Since 2000 | Founding member of EGP – Porto Business School | ||||||
| 2001-2002 | President of Apritel - Association of Telecommunication Operators | ||||||
| 2003 | co-author of the book "Reformar Portugal" | ||||||
| Since 2004 | Member of the Advisory Board "Compromisso Portugal", an independent movement | ||||||
| to enforce political reform |
Sonae, SGPS, SA – 596,909 shares Sonaecom, SGPS, SA – 387,342 shares
Member of the Board of Directors of:
Sonae Indústria, SGPS, SA Modelo Continente, SGPS, SA Sonaecom, SGPS, SA Sonae Capital, SGPS, SA Efanor Investimentos, SGPS, SA Imparfin – Investimentos e Participações Financeiras, SGPS, SA
Chairman of the Board of Directors of Tableros de Fibras, SA and of most companies controlled by or majority owned by Sonaecom, SGPS, SA (these companies are listed in notes 4 to 7 in the Notes to the Consolidated Financial Statements).
Chairman of the Supervisory Board of Glunz AG
16 Shares owned directly or owned by direct relatives. 17 This is not a complete list of all offices held but only of the most significant.
PLACE OF BIRTH: Rio de Janeiro, Brazil DATE OF BIRTH: 19-10-1941 MARRIED CHILDREN: 3
1963 Graduation from Instituto Rio Branco (Brazilian Diplomatic Academy)
| 1963-1995 | Diplomat serving: | ||||
|---|---|---|---|---|---|
| 1966-1971 | In the Brazilian Mission to the United Nations in New York and Geneva | ||||
| 1979-1983 | Deputy Ambassador in Washington | ||||
| 1983-1985 | Ambassador to Suriname | ||||
| 1990-1992 | Ambassador to Portugal | ||||
| 1993-1995 | Ambassador to GATT/WTO in Geneva | ||||
| 1988-1990 | Under-Secretary for Political Affairs | ||||
| 1992-1993 | Secretary General of the Foreign Ministry | ||||
| 1995-2001 | Foreign Minister | ||||
| Presently | Non-Executive Director of Sonae, SGPS, SA and of Partex (Brazil) | ||||
| Presently | Director of Sousa Cruz (BAT Group) | ||||
| Presently | Director of Ampla Energy Corporation (Brazil) | ||||
| Presently | Member of the Advisory Boards of Novartis Brazil | ||||
| Presently | Member of the International Advisory Board of Coca Cola, of Unilever (Latin | ||||
| America), of Kissinger, McLarty and Associates and Toyota Motor Corporation | |||||
| Presently | Adviser to Bracelpa (Brazilian Paper and Pulp Industry Association) | ||||
| Presently | President of Lampreia Consultores Internacionais |
| Presently | Member of the International Advisory Board of the Council on Foreign Relations |
|---|---|
| (New York) | |
| Presently | Member of the Inter American Dialogue |
| Presently | Deputy Chairman of the Brazilian Center for Foreign Relations |
Grã Cruz da Ordem Nacional do Mérito - Brazil Grã Cruz da Ordem do Rio Branco - Brazil Grã Cruz da Ordem de Cristo - Portugal Grã Cruz da Ordem de Santiago - Portugal Grand Officier de la Légion d'Honneur - France
Sonae, SGPS, SA – 10,000 shares
Member of the Board of Directors of Sousa Cruz SA (BAT Brazilian affiliate) Director of Ampla Energy Corporation (Brazil)
Member of the Advisory Board of:
Unilever PLC The Coca-Cola Company Toyota Motor Company Kissinger McLarty Associates Novartis do Brazil
Director of Partex do Brazil Deputy Chairman of the Board of Directors of CEBRI
President of Lampreia Consultores Internacionais
PLACE OF BIRTH: Grenoble, France DATE OF BIRTH: 05-07-1943 MARRIED CHILDREN: 4
| 1966 | Graduation in Business Administration - ESSEC |
|---|---|
| 1971 | Graduation at École National d'Administration |
| 1986 | Stanford Executive Program – Stanford University |
18 Shares owned directly or owned by direct relatives. 19 This is not a complete list of all offices held but only of the most significant.
| 1971-1975 | Inspecteur de Finances 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 Carrefour (Retail) | ||
| 1993-1995 | Head of the Agence Nationale Pour l'Emploi (French state agency for employment). | ||
| 1995-2002 | Chairman and CEO of France Telecom. | ||
| 2003-2005 | Chairman of Institut Pasteur | ||
| Presently | Chairman of the Supervisory Board of Editions du Cerf (Book Publisher) | ||
| Presently | Chairman of the Supervisory Board of Devoteam (Information Technologies) | ||
| Presently | Director of Lafarge (Cements), Banque Transatlantique (Bank), Sonepar (Electrical supply retail) |
||
| Presently | Non-Executive Director of Sonae, SGPS, SA and Esmertec (High Technologies) | ||
| Presently | Member of the Conseil d'Orientation Stratégique de RATP | ||
| Presently | Senior Advisor to Dôme Close Brothers (Investment Bank), Permira (Investment | ||
| Fund) and Roland Berger (Strategic Consulting) |
| 1991-2002 | Chairman of ESSEC (Business School) |
|---|---|
| 1998-2002 | Co-chairman of the French American Business Council |
| Presently | Director of the French American Foundation |
| Presently | Founder and Director of Transparency International (France) |
| Presently | Director of Institute Catholique de Paris |
| Presently | Director of Institut Pierre Mendès France |
| Presently | Director of International Domenican Foundation |
Officier de la Légion d´Honneur (France) Four nominations as Manager of the Year. The Houghton Award of the French American Foundation Stratégies Man of the Year 2001
Sonae, SGPS, SA – 45,363 shares
20 Shares owned directly or owned by direct relatives.
Senior Advisor of Dôme Close Brothers Senior Advisor of Permira Chairman of the Supervisory Board of Les Editions du Cerf Chairman of the Supervisory Board of Devoteam
Member of the Board of Directors of: Esmertec Banque Transatlantique Lafarge Sonepar Asterop (non-voting director)
Member of the Advisory Board of RATP
MARRIED CHILDREN: 4
PLACE OF BIRTH: Lisbon DATE OF BIRTH: 27-04-1956
1978 Graduate in Economics ISCTE (Lisbon University)
| 1984-1986 | Sales Manager of Pingo Doce Supermercados (Retail) |
|---|---|
| 1986-1987 | Manager of the Amadora Continente Hypermarket (Retail) |
| 1988-1989 | General Manager of Modelo Continente Hipermercados (Retail) |
| Since 1990 | Board member of Modelo Continente, SGPS, SA (Retail) |
| Since 1991 | CEO of Modelo Continente, SGPS, SA and several of its affiliates (Retail) |
| Since 2000 | Executive Vice President of Sonae, SGPS, SA |
None
21 This is not a complete list of all offices held but only of the most significant. 22 Shares owned directly or owned by direct relatives.
Member of the Board of Directors of:
Modelo Continente, SGPS, SA Sonae Capital, SGPS, SA Sonae Turismo, SGPS, SA
Chairman of the Board of Directors of most companies controlled by or majority owned by Modelo Continente, SGPS, SA and Sonae Turismo SGPS, SA (these companies are listed in notes 4 to 7 in the Notes to the Consolidated Financial Statements).
MARRIED CHILDREN: 2
PLACE OF BIRTH: Porto DATE OF BIRTH: 11-09-1964
| 1989 | Graduation in Political Science - International Affairs - Université Catholique de |
|---|---|
| Louvain, Belgium | |
| 1996 | Diplôme d'Études Spécialisées en Sciences Politiques et Relations Internationales - |
| Université Catholique de Louvain, Belgium |
| 1990-1991 | Analyst Project Manager at Sonae Investimentos |
|---|---|
| 1991-1993 | Development Director at Módis (Retail) |
| 1993-1995 | Commercial Director of Modelo Continente, SGPS, SA (Retail) |
| 1996-2000 | Board Director of Sonae Imobiliária, SGPS, SA (Shopping Centres) and of Sonae |
| Retalho Especializado, SGPS, SA (Retail) | |
| 2002-2003 | Board Director of Sonae Indústria, SGPS, SA, Chairman of Glunz AG, of Isoroy and |
| of Tafisa UK (Wood Based Panels) | |
| Since 2000 | Member of the Board of Efanor Investimentos, SGPS, SA |
| Since 2004 | Non-Executive Director of Sonae, SGPS, SA. |
23 This is not a complete list of all offices held but only of the most significant.
| 2001-2002 | Member of the Board of Directors of Sociedade Porto 2001 |
|---|---|
| Since 2000 | Member of the Board of Directors of Fundação Portugal África |
| 2001-2006 | Member of the Board of Directors of Fundação de Serralves |
| Since 2006 | Executive Director of Fundação Casa da Música |
Sonae, SGPS, SA – 14,320 shares
Member of the Board of Directors of:
Efanor Investimentos, SGPS, SA Efanor – Serviços de Gestão, SA Imparfin – Investimentos e Participações Financeiras, SGPS, SA Praça Foz – Sociedade Imobiliária, SA Total Share, SGPS, SA Fundação Portugal-África
Executive Director of Fundação Casa da Música
Maia, 20 March 2007
The Board of Directors
Belmiro Mendes de Azevedo
Álvaro Carmona e Costa Portela
Álvaro Cuervo Garcia
Ângelo Gabriel Ribeirinho dos Santos Paupério
Duarte Paulo Teixeira de Azevedo
Luíz Felipe Palmeira Lampreia
Michel Marie Bon
Nuno Manuel Moniz Trigoso Jordão
Nuno Miguel Teixeira de Azevedo
24 Shares owned directly or owned by direct relatives. 25 This is not a complete list of all offices held but only of the most significant.
31 DECEMBER 2006
| IFRS | |||
|---|---|---|---|
| 31.12.2006 | 31.12.2005 | ||
| ASSETS | Notes | ||
| NON-CURRENT ASSETS: | |||
| Tangible assets | 9 | 2,074,575,897 | 1,908,134,473 |
| Intangible assets | 10 | 321,517,485 | 321,545,423 |
| Investment properties | 11 | 1,346,937,845 | 1,232,476,111 |
| Investment properties in progress | 11 | 173,273,414 | 124,944,974 |
| Goodwill | 12 e 49 | 250,842,655 | 245,578,246 |
| Investments | 6,7 e 13 | 264,647,797 | 157,628,576 |
| Deferred tax assets | 20 | 102,767,409 | 108,484,039 |
| Other non-current assets | 14 | 44,081,686 | 35,739,020 |
| Total Non-Current Assets | 4,578,644,188 | 4,134,530,862 | |
| CURRENT ASSETS: | |||
| Stocks | 15 | 481,185,712 | 460,480,885 |
| Trade account receivables | 16 | 257,023,821 | 244,825,275 |
| Other debtors | 17 | 119,632,514 | 390,664,051 |
| Taxes recoverable | 18 | 108,120,283 | 87,636,005 |
| Other current assets | 19 | 80,527,137 | 65,576,093 |
| Investments held for trading | 13 | 33,261,860 | 10,681,441 |
| Cash and cash equivalents | 21 | 662,475,440 | 912,294,316 |
| Total Current Assets | 1,742,226,767 | 2,172,158,066 | |
| TOTAL ASSETS | 6,320,870,955 | 6,306,688,928 | |
| EQUITY AND LIABILITIES | |||
| EQUITY: | |||
| Share capital | 22 | 2,000,000,000 | 2,000,000,000 |
| Own shares | 22 | (142,961,431) | (143,630,520) |
| Legal reserve | 157,623,915 | 152,721,161 | |
| Reserves and retained earnings | (963,843,056) | (1,381,170,752) | |
| Profit/(Loss) for the year attributable to the equity holders of sonae | 241,822,233 | 512,803,285 | |
| Equity attributable to the equity holders of Sonae | 1,292,641,661 | 1,140,723,174 | |
| Equity attributable to minority interests | 23 | 402,058,314 | 394,707,612 |
| TOTAL EQUITY | 1,694,699,975 | 1,535,430,786 | |
| LIABILITIES: | |||
| NON-CURRENT LIABILITIES: | |||
| Bank loans | 24 | 1,017,101,563 | 892,835,901 |
| Bonds | 24 | 1,086,979,932 | 910,949,438 |
| Obligation under finance leases | 24 e 25 | 31,124,322 | 36,194,019 |
| Other loans | 24 | 7,491,081 | 8,646,784 |
| Other non-current liabilities | 27 | 105,487,112 | 586,412,836 |
| Deferred tax liabilities | 20 | 272,056,372 | 238,184,261 |
| Provisions Total Non-Current Liabilities |
32 | 63,234,735 2,583,475,117 |
54,477,919 2,727,701,158 |
| CURRENT LIABILITIES: | |||
| Bank loans | 24 | 510,050,999 | 591,695,025 |
| Bonds | 24 | 74,777,292 | 89,725,193 |
| Obligation under finance leases | 24 e 25 | 9,279,339 | 11,030,610 |
| Other loans | 24 | 21,823,864 | 2,041,697 |
| Trade creditors | 29 | 829,754,736 | 808,680,981 |
| Other creditors | 30 | 198,850,003 | 195,245,950 |
| Taxes and contributions payable | 18 | 79,599,406 | 69,814,568 |
| Other current liabilities | 31 | 316,096,133 | 273,037,977 |
| Provisions | 32 | 2,464,091 | 2,284,983 |
| Total Current Liabilities | 2,042,695,863 | 2,043,556,984 | |
| TOTAL EQUITY AND LIABILITIES | 6,320,870,955 | 6,306,688,928 | |
The accompanying notes are part of these financial statements.
| IFRS | ||||
|---|---|---|---|---|
| 31.12.2006 | 31.12.2005 | |||
| Pro-forma | Total | |||
| Notes | Total Operations | (Note 1) | Operations | |
| Operational income | ||||
| Sales | 35 | 3,237,022,800 | 2,999,517,378 | 5,185,013,039 |
| Services rendered | 35 | 1,146,779,936 | 1,117,384,529 | 1,207,501,235 |
| Value created on investment properties | 36 | 129,961,306 | 98,025,767 | 194,071,914 |
| Other operational income | 37 | 422,881,638 | 411,837,051 | 587,776,879 |
| Total operational income | 4,936,645,680 | 4,626,764,725 | 7,174,363,067 | |
| Operational expenses | ||||
| Cost of goods sold and materials consumed | 15 | (2,530,272,888) | (2,366,472,700) | (3,737,853,812) |
| Changes in stocks of finished goods and work in progress | 10,992,907 | 1,215,961 | 4,751,021 | |
| External supplies and services | 38 | (1,146,639,474) | (1,077,207,982) | (1,519,575,348) |
| Staff costs | 39 | (570,647,945) | (540,174,538) | (824,373,991) |
| Depreciation and amortisation | 9 e 10 | (226,775,450) | (211,408,938) | (309,352,041) |
| Provisions and impairment losses | 32 | (27,956,063) | (17,866,577) | (31,129,556) |
| Other operational expenses | 40 | (88,129,312) | (79,819,760) | (138,773,424) |
| Total operational expenses | (4,579,428,225) | (4,291,734,534) | (6,556,307,151) | |
| Operational profit/(loss) | 49 | 357,217,455 | 335,030,191 | 618,055,916 |
| Net financial expenses | 41 | (99,534,053) | (84,782,863) | (153,362,424) |
| Share of results of associated undertakings | 13 | 10,425,088 | (1,715,813) | (1,129,580) |
| Investment income | 42 | 135,526,982 | 80,741,858 | 304,468,481 |
| Profit/(Loss) before taxation | 403,635,472 | 329,273,373 | 768,032,393 | |
| Taxation | 43 | (64,957,395) | (63,893,745) | (119,840,388) |
| Profit/(Loss) after taxation | 338,678,077 | 265,379,628 | 648,192,005 | |
| Profit/(Loss) for the year | 44 | 338,678,077 | 265,379,628 | 648,192,005 |
| Attributable to: | ||||
| Equity holders of Sonae | 241,822,233 | 186,467,016 | 512,803,285 | |
| Minority interests | 23 | 96,855,844 | 78,912,612 | 135,388,720 |
| Profit/(Loss) per share | ||||
| Basic | 46 | 0.129567 | 0.099931 | 0.274821 |
| Diluted | 46 | 0.129567 | 0.099931 | 0.274821 |
The accompanying notes are part of these financial statements.
| IFRS | |||||
|---|---|---|---|---|---|
| 2006 | 2005 | ||||
| th Quarter 4 |
th Quarter 4 Unaudited |
th Quarter 4 |
|||
| Unaudited | Pro-forma (Note 1) | Unaudited | |||
| Operational Income | |||||
| Sales | 937,174,247 | 878,202,457 | 1,120,720,073 | ||
| Services rendered | 289,483,837 | 288,523,061 | 329,001,084 | ||
| Value created on investment properties | 57,648,691 | 69,361,437 | 136,725,943 | ||
| Other operational income | 136,973,811 | 145,230,257 | 182,784,741 | ||
| Total operational income | 1,421,280,586 | 1,381,317,212 | 1,769,231,841 | ||
| Operational expenses | |||||
| Cost of goods sold and materials consumed | (730,673,041) | (692,201,682) | (881,115,624) | ||
| Changes in stocks of finished goods and work in progress | 1,055,627 | 102,388 | 188,902 | ||
| External supplies and services | (319,401,125) | (295,718,622) | (333,746,344) | ||
| Staff costs | (148,186,599) | (147,401,010) | (180,975,154) | ||
| Depreciation and amortisation | (59,669,849) | (57,059,466) | (60,173,686) | ||
| Provisions and impairment losses | (15,336,789) | (10,787,824) | (9,521,823) | ||
| Other operational expenses | (34,730,324) | (30,215,948) | (44,852,990) | ||
| Total operational expenses | (1,306,942,100) | (1,233,282,164) | (1,510,196,719) | ||
| Operational profit/(loss) | 114,338,486 | 148,035,048 | 259,035,122 | ||
| Net financial expenses | (34,521,425) | (21,024,422) | (26,039,437) | ||
| Share of results of associated undertakings | 7,037,010 | (3,358,250) | (3,229,562) | ||
| Investment income | 83,853,945 | 19,113,176 | 200,436,885 | ||
| Profit/(Loss) before taxation | 170,708,016 | 142,765,552 | 430,203,009 | ||
| Taxation | (17,580,686) | (32,580,582) | (56,540,852) | ||
| Profit/(Loss) after taxation | 153,127,330 | 110,184,970 | 373,662,156 | ||
| Profit/(Loss) for the year | 153,127,330 | 265,379,629 | 373,662,156 | ||
| Attributable to: | |||||
| Equity holders of Sonae | 119,080,179 | 75,118,887 | 318,988,862 | ||
| Minority interests | 34,047,151 | 35,066,083 | 54,673,294 | ||
| Profit/(Loss) per share | |||||
| Basic Diluted |
0.063796 | 0.040256 | 0.170946 | ||
| 0.063796 | 0.040256 | 0.170946 |
The accompanying notes are part of these financial statements.
| Attr ibut able Equ ity H olde f So to rs o nae |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Res nd R ined Ear ning eta erv es a s |
|||||||||||
| Sha re Cap ital |
Ow n Sha res |
Leg al Res erv e |
Hed ging Res erv e |
Cur ren cy Tra nsla tion Res erv e |
Oth Re er serv es and R ined eta Ear ning s |
Tot al |
Net Pro fit/( Los s) |
Tot al |
Min ority Inte rest s (No te 2 3) |
Tot al Equ ity |
|
| Bal 1 Ja ry 2 005 s at anc a e nua |
2,0 00,0 00,0 00 |
(14 4,5 37,5 97) |
152 ,113 ,582 |
(46 0,54 0) |
9,84 3,2 76 |
(1,1 95,5 80,2 40) |
(1,1 86, 197 ,504 ) |
283 ,52 1,01 0 |
1,10 4,8 99,4 91 |
785 ,515 ,290 |
1,89 0,4 14,7 81 |
| App riati f pr ofit of 2 004 rop on o : |
|||||||||||
| Tra nsfe le gal nd r ined ning to eta r rese rve s a ear s |
- | - | 607 ,579 |
- | - | 282 ,913 ,43 1 |
282 ,913 ,43 1 |
(28 0) 3,52 1,01 |
- | - | - |
| Div iden ds d istri bute d |
- | - | - | - | - | (37 ,316 ,440 ) |
(37 ,316 ,440 ) |
- | (37 ,316 ,440 ) |
(14 ,977 ,382 ) |
(52 ,293 ,822 ) |
| Cha s in nge rese rve s |
|||||||||||
| Cha s in the iod nge per |
- | - | - | 460 ,540 |
148 ,924 ,976 |
- | 149 ,385 ,516 |
- | 149 ,385 ,516 |
19,1 08,4 95 |
168 ,494 ,01 1 |
| Tra nsfe sult to rs re s |
- | - | - | - | (12 7,39 2,0 98) |
- | (12 7,39 2,0 98) |
- | (12 7,39 2,0 98) |
- | (12 7,39 2,0 98) |
| Sal f So Sie with cha of c olid atio etho d o e nae rra nge ons n m |
- | - | - | - | - | - | - | - | - | (55 6) 3,94 0,39 |
(55 6) 3,94 0,39 |
| Sal of affil liate d nde rtak ings es u |
- | - | - | - | - | - | - | - | - | (25 ,864 ,330 ) |
(25 ,864 ,330 ) |
| Aqu isiti f af fillia ted und king erta on o s |
- | - | - | - | - | - | - | - | - | 16,1 98, 094 |
16,1 98, 094 |
| Oth ch er ang es |
- | 907 ,077 |
- | - | - | (3,0 ) 38, 830 |
(3,0 ) 38, 830 |
- | (2,1 ) 31, 753 |
(1,9 95) 68,4 |
(4,1 48) 00,2 |
| Spi ff of Son Indú stria n-o ae |
- | - | - | - | - | (45 9,52 4,8 27) |
(45 9,52 4,8 27) |
- | (45 9,52 4,8 27) |
35,2 47, 616 |
(42 4,2 77,2 11) |
| Con soli dat ed P rofit /(Lo ss) for the lve nths twe mo end ed 1 D mbe 3 r 20 05 ece |
- | - | - | - | - | - | - | 512 ,803 ,285 |
512 ,803 ,285 |
135 ,388 ,720 |
648 ,192 ,005 |
| Bal Dec ber s at 31 200 5 anc a e em |
2,0 00,0 00,0 00 |
(14 0) 3,63 0,52 |
152 ,72 1,16 1 |
- | 31,3 76, 154 |
(1,4 ) 12,5 46, 906 |
(1,3 ) 81, 170 ,752 |
512 ,803 ,285 |
1,14 0,72 3,1 74 |
394 ,707 ,612 |
1,53 5,43 0,78 6 |
| Bal s at 1 Ja ry 2 006 anc a e nua App riati f pr ofit of 2 005 rop on o : |
2,0 00,0 00,0 00 |
(14 3,63 0,52 0) |
152 ,72 1,16 1 |
- | 31,3 76, 154 |
(1,4 12,5 46, 906 ) |
(1,3 81, 170 ,752 ) |
512 ,803 ,285 |
1,14 0,72 3,1 74 |
394 ,707 ,612 |
1,53 5,43 0,78 6 |
| Tra nsfe le gal nd r ined ning to eta r rese rve s a ear s |
- | - | 4,9 02,7 54 |
- | - | 507 ,900 ,53 1 |
507 ,900 ,53 1 |
(51 2,8 03,2 85) |
- | - | - |
| Div iden ds d istri bute d |
- | - | - | - | - | (46 ,650 ,596 ) |
(46 ,650 ,596 ) |
- | (46 ,650 ,596 ) |
(5,3 48, 382 ) |
(51 ,998 ,978 ) |
| Cha s in nge rese rve s |
|||||||||||
| Cha s in the iod nge per |
- | - | - | 2,02 3,1 88 |
(89 7,6 14) |
- | 1,12 5,5 74 |
- | 1,12 5,5 74 |
1,02 5,22 8 |
2,15 0,80 2 |
| Tra nsfe to sult s (N ote 42) rs re |
- | - | - | - | (11 ,563 ,098 ) |
- | (11 ,563 ,098 ) |
- | (11 ,563 ,098 ) |
(92 5,0 13) |
(12 ,488 ,11 1) |
| Sal of affil liate d nde rtak ings es u |
- | - | - | - | - | - | - | - | - | - | - |
| Aqu isiti f af fillia ted und king erta on o s |
- | - | - | - | - | - | - | - | - | (85 ,479 ,259 ) |
(85 ,479 ,259 ) |
| Oth ch er ang es |
- | 669 ,089 |
- | - | - | (33 ) ,484 ,715 |
(33 ) ,484 ,715 |
- | (32 ) ,815 ,626 |
1,22 2,28 4 |
(31 ) ,593 ,342 |
| Con soli dat ed P rofit /(Lo ss) for the lve nths twe mo end ed 3 1 D mbe r 20 06 ece |
- | - | - | - | - | - | - | 241 ,822 ,233 |
241 ,822 ,233 |
96,8 55,8 44 |
338 ,678 ,077 |
| Bal s at 31 Dec ber 200 6 anc a e em |
2,0 00,0 00,0 00 |
(14 2,9 61,4 31) |
157 ,623 ,915 |
2,02 3,1 88 |
18,9 15,4 42 |
(98 4,7 81, 686 ) |
(96 3,84 3,05 6) |
241 ,822 ,233 |
1,29 2,64 1,66 1 |
402 ,058 ,314 |
1,69 4,6 99,9 75 |
Theaccompanying notes are part of these financial statements.
| IFRS | ||||
|---|---|---|---|---|
| 31.12.2006 | 31.12.2005 | |||
| Total Operations | Pro-forma (Note 1) |
Total Operations | ||
| OPERATING ACTIVITIES Cash receipts from trade debtors Cash paid to trade creditors Cash paid to employees |
Notes | 4,437,214,009 (3,319,175,139) (563,454,600) |
4,156,297,233 (3,139,979,371) (520,562,226) |
6,404,805,764 (4,964,582,375) (796,992,858) |
| Cash flow generated by operations | 554,584,270 | 495,755,636 | 643,230,531 | |
| Income taxes (paid) / received Other cash receipts and (payments) relating to operating activities |
(34,230,704) (66,733,467) |
(28,297,477) (75,896,630) |
(43,530,687) 1,698,892 |
|
| Net cash flow from operating activities (1) | 453,620,099 | 391,561,529 | 601,398,736 | |
| INVESTMENT ACTIVITIES | ||||
| Cash receipts arising from: Investments Tangible assetsand investment properties Intangible assets Interest and similar income Loans granted Dividends Others |
47 | 382,440,632 35,542,816 256,849 20,406,748 49,451,711 2,713,634 11,270,127 |
196,456,942 21,058,237 49,644 30,658,955 203,753,765 14,496,140 254,959 |
727,657,784 93,352,919 282,104 42,583,237 39,749,307 14,546,203 251,197 |
| Cash Payments arising from: | 502,082,517 | 466,728,642 | 918,422,751 | |
| Investments Tangible assetsand investment properties Intangible assets Loans granted Others |
47 | (692,983,334) (471,537,528) (40,474,208) (22,895,618) (1,753,669) |
(302,604,115) (356,981,940) (47,332,483) (18,000,000) (69,654,561) |
(364,157,500) (530,247,929) (59,719,314) (18,000,000) (68,102,520) |
| (1,229,644,357) | (794,573,099) | (1,040,227,263) | ||
| Net cash used in investment activities (2) | (727,561,840) | (327,844,457) | (121,804,512) | |
| FINANCING ACTIVITIES Cash receipts arising from: Loans obtained Capital increases, additional paid in capital and share premiums Sale of own shares Others |
2,678,674,265 1,195,132 - - |
3,461,336,960 1,964,026 1,586,339 256,260 |
4,122,150,725 5,289,849 1,586,339 300,010 |
|
| Cash Payments arising from: | 2,679,869,397 | 3,465,143,585 | 4,129,326,923 | |
| Loans obtained Interest and similar charges Reimbursement of capital and paid in capital Dividends Purchase of own shares |
(2,479,480,347) (115,659,661) (894,491) (52,348,839) - |
(3,376,289,612) (113,958,449) - (43,178,089) - |
(3,806,510,538) (206,039,550) (1,564,636) (50,109,699) - |
|
| Others | (2,327,876) | (38,364,042) | (42,307,068) | |
| (2,650,711,214) | (3,571,790,192) | (4,106,531,491) | ||
| Net cash used in financing activities (3) | 29,158,183 | (106,646,607) | 22,795,432 | |
| Net increase in cash and cash equivalents (4) = (1) + (2) + (3) Effect of foreign exchange rate |
(244,783,558) 26,218 |
(42,929,535) (823,076) |
502,389,656 (10,636,479) |
|
| Cash and cash equivalents at the beginning of the period Cash and cash equivalents demerged |
893,621,050 - |
296,723,428 - |
461,477,652 (80,882,736) |
|
| Cash and cash equivalents at the end of the period | 21 | 648,811,274 | 254,616,969 | 893,621,051 |
The accompanying notes are part of these financial statements.
SONAE, SGPS, SA ("the Company" or "Sonae"), whose head-office is at Lugar do Espido, Via Norte, Apartado 1011, 4471-909 Maia, Portugal, is the parent company of a group of companies, as detailed in Notes 4 to 7 ("Sonae Group"). The Group's operations and business segments are described in Note 49.
The consolidated profit and loss account and the consolidated statement of cash flows for the twelve months ended as at 31 December 2006 are not directly comparable with the statements for the twelve months of 2005, because of: the spin-off of the Wood Based Panels business (with accounting effects from 1 October 2005), the sale of the Retail operations in Brazil (with accounting effects from 1 December 2005), the change in the method of consolidation of the Shopping Centres business from full to proportionate consolidation (following the sale to Grosvenor, on 29 December 2005, of 17.04% of share capital of Sonae Sierra) and the sale of the shareholding in Imocapital/Gescartão in the first quarter of 2005.
The pro-forma consolidated income statement and the consolidated statement of cash flows as at 31 December 2005 include the above mentioned changes in the consolidation perimeter as from 1 January 2005.
Total Operations as at 31 December 2005 include Continued operations (Retail Portugal, Shopping Centres, Telecommunications, Sonae Capital and Holding) and Discontinued operations (Wood Based Products and Retail Brazil), as disclosed in 2005.
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" – previously named International Accounting Standards – "IAS"), 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"), applicable to financial years beginning on 1 January 2006.
Interim financial statements are presented quarterly, in accordance with IAS 34 – "Interim Financial Reporting".
As at 31 December 2006, IFRS 7 "Financial Instruments: Disclosures" had already been issued, but its adoption is only required for periods beginning on or after 1 January 2007. Sonae decided not to engage in the early adoption of this statement, which, when adopted, may lead to additional disclosures.
The accompanying consolidated financial statements have been prepared from the books and accounting records of the companies included in the consolidation (Notes 4 to 6) on a going concern basis and under the historical cost convention, except for investment properties and financial instruments which are stated at fair value (Notes 2.4 and 2.14).
The consolidation methods adopted by the Group are as follows:
Investments in companies in which the Group 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 the Group), 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 Group company, 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 company 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 Group company are measured at their fair value at the date of acquisition. Any excess of the cost of acquisition over the Group's interest in the fair value of the identifiable net assets acquired is recognised as goodwill (Note 2.2.d)). Any excess of the Group'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, after reassessment of the estimated fair value. Minority interests include their proportion of the fair value of net identifiable assets and liabilities recognised on acquisition of Group companies.
The results of Group companies 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 Group companies are performed, whenever necessary, in order to adapt accounting policies to those used by the Group. All intra-group transactions, balances, income and expenses and distributed dividends are eliminated on consolidation.
Financial investments in companies excluded from consolidation are recorded at acquisition cost net of impairment losses (Note 7).
Whenever the Group 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 the profit or loss for the period of acquisition after reassessment of the estimated fair value of the net assets acquired.
The Group'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 the Group 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 the Group's share of changes in equity (including net profit) of associated companies and to dividends received.
Any excess of the cost of acquisition over the Group'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 the Group'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.
An assessment of investments in associated companies is performed when there is an indication that the asset might be impaired. Any impairment loss is disclosed in the income statement. Impairment losses recorded in prior years that are no longer justifiable, are reversed.
When the Group'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 the Group is committed beyond the value of its investment.
The Group'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 group, jointly controlled and associated companies over the Group's share in the fair value of the assets and liabilities of those companies at the date of acquisition is shown as Goodwill (Note 12) or as Investments in associated companies (Note 13). 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 Group's currency (Euro) is made using the closing exchange rate. Exchange rate differences arising from this translation are disclosed in Reserves and retained earnings.
Goodwill is not amortised, but it is subject to impairment tests on an annual basis. Impairment losses identified in the period are disclosed in the income statement under Provisions and impairment losses, and may not be reversed.
Any excess of the Group'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.
Goodwill arising from acquisitions made prior to the date of transition to IFRS (1 January 2004) is stated using the carrying amounts, net of accumulated amortisation, calculated in accordance with generally accepted accounting principals in Portugal, adjusted for intangible assets which do not meet IFRS criteria, and is subject to impairment tests. Impacts of these adjustments were recorded in Retained earnings, in accordance with IFRS 1. Goodwill arising from foreign companies was recalculated retrospectively using the functional currency of each such company. Exchange rate differences generated in the translation are also disclosed as Retained earnings (IFRS 1).
Assets and liabilities denominated in foreign currencies in the individual 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 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, accumulated exchange rate differences are recorded in the income statement as a gain or loss on the disposal, in the caption Investment income.
| 31.12.2006 | 31.12.2005 | |||
|---|---|---|---|---|
| End of period | Average of period End of period |
Average of period | ||
| Pound Sterling | 1.48920 | 1.46704 | 1.45921 | 1.46264 |
| Brazilian Real | 0.35564 | 0.36658 | 0.36443 | 0.33279 |
| Swiss Franc | 0.62232 | 0.63584 | 0.64305 | 0.64588 |
Source: Bloomberg
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.
Tangible assets acquired after that date are 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.
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 related 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 start being used.
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 operational income or Other operational expenses.
Investment properties consist of shopping centre buildings and other constructions that are held to earn rentals 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.
Investment properties are initially recorded at cost and then adjusted to 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.
Assets built and developed, which qualify as investment properties, are recognised as such only when they start being used. During the construction or development period of assets, which will qualify as investment properties, such assets are accounted for at cost in the caption Investment properties under development. At the end of the construction and development period, the difference between cost and the fair value at that date is accounted for in the income statement under the caption Value created on 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/improvements which will generate estimated additional future economic benefits are capitalised 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 the Group 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 the Group 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 are 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 capitalized as intangible assets.
Amortisation is calculated on a straight line basis, as from the date the asset is first used, over the expected useful life which normally is between 3 and 6 years, except for property occupation rights which are amortised over the duration of the contract which establishes these rights.
Brands and patents with indefinite useful lives are not amortised, but are subject to impairment tests on an annual basis.
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 a finance or an operating lease depends on the substance of the transaction rather than the form of the contract.
Tangible assets acquired through finance lease contracts are recorded as assets and corresponding obligations as liabilities in the balance sheet. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. 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. 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 which is established in the contract.
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 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.
Government grants are recorded at fair value when there is reasonable assurance that they will be received and that the Group 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 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 normally 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 are capitalised as part of the cost of the qualifying asset. Borrowing costs are capitalised from the time 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.
Non-current assets (or disposal groups) are classified as held for sale if the 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.
Consumer goods and raw materials are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis.
Finished goods and work in progress are stated at the lower of the weighted average production cost or net realisable value. Production cost includes cost of raw materials, labour costs and overheads (including depreciation of production equipment based on normal levels of activity). Net realisable value is the estimated selling price less estimated costs of completion and estimated costs necessary to make the sale.
Differences between cost and net realisable value, if negative, are shown as operating expenses under Cost of sales or Changes in stocks of finished goods and work in progress, depending on whether they refer to consumer goods and raw materials or finished goods and work in progress.
Income and costs associated with construction contracts are recorded using the stage of completion method. Under this method, at the end of each period, income and expenses are recognised by reference to the stage of completion of the contract activity. The stage of completion is determined by the ratio between costs incurred until the closing balance sheet date and total estimated contract costs. The difference between income determined by this ratio and total amounts invoiced is recorded in Other current assets or Other current liabilities.
Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recorded only to the extent of the amount of contract costs incurred that will probably be recoverable. Contract costs are recorded as expenses in the period in which they are incurred.
Revenue arising from contract variations, claims and completion premiums is recorded when these are agreed with the customer, or when negotiations are at an advanced stage and it is probable that these will be favourable to the Group.
Provisions are recognised when, and only when, the Group 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 the Group whenever a formal and detailed restructuring plan exists and that plan has been communicated to the parties involved.
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 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.
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.
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 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, included in Reserves and retained earning 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.
Held to maturity investments are carried at amortised cost using the effective interest rate, net of capital reimbursements and interest income received.
Receivables are stated at net realisable value, corresponding to their nominal value less impairment losses (recorded under the caption Impairment losses in accounts receivable).
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 2.9. 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.
The Group uses derivatives in the management of its financial risks, only to hedge such risks. Derivatives are not used by the Group for trading purposes.
Derivatives classified as cash flow hedge instruments are used by the Group mainly to hedge interest and exchange 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 Group's criteria for classifying a derivative instrument as a cash flow hedge instrument include:
Cash flow hedge instruments used by the Group to hedge the exposure to changes in interest and exchange rates of its loans are initially accounted for at cost 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 income statement.
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.
In those cases in which derivatives, in spite of having been negotiated to hedge financial risks inherent to the business (essentially, currency "forwards" to cover future imports), no longer meet the criteria for hedge accounting under IAS 39, changes in the fair value are recorded directly in the income statement.
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 contract, and this is not stated at fair value.
Equity instruments are those that represent a residual interest on the Group's net assets and are recorded at the amount received, net of costs incurred with their issuance.
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 under Other reserves.
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.
Commitments arising from retirement benefit plans in 2005 related to affiliated companies in Sonae Indústria, SGPS, SA. After the de-merger of Sonae Indústria, SGPS, SA these commitments are no longer shown in the consolidated balance sheet of Sonae, SGPS, SA.
Share-based payments result from Deferred Performance Bonus Plans that are referenced to the 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.
Share-based payment liabilities are measured at fair value on the date they are granted (normally in March of each year) and are subsequently remeasured at the end of each reporting period, based on the number of shares or share options granted and the corresponding fair value at the closing date. The fair value of share options is estimated based on the "Black-Scholes" model. These obligations are stated as Staff costs and Other 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, when the Group has the choice to settle the transaction in cash. In the case of equitysettled share-based payment transactions, these obligations are stated as Staff costs and Reserves and are recorded on a straight line basis between the date the shares are granted and their vesting date.
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.
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 the Group wants to reduce currency exposure, it negotiates hedging currency derivatives (Note 2.14.f)).
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 non-adjusting events are disclosed in the notes when material.
All business and geographic segments of the Group are identified annually.
Information regarding business and geographic segments identified is included in Note 49.
During the period there were no changes in accounting policies or prior period errors.
Group companies included in the consolidated financial statements, their head offices and percentage of share capital held by the Group as at 31 December 2006 and 2005 are as follows:
| Percentage of capital held | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 31.12.2006 | 31.12.2005 | |||||||||
| COMPANY | Head Office | Direct | Total | Direct | Total | |||||
| Sonae - SGPS, S.A. | Maia | HOLDING | HOLDING | HOLDING | HOLDING | |||||
| Modelo Continente | ||||||||||
| 2) | Bertimóvel - Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |||
| Best Offer-Prest. Inf. p/Internet, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| Bikini, Portal de Mulheres, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| Cacetinho-Com. Retalhista e Expl.Centros Com., SA |
a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| Canasta – Empreendimentos Imobiliários, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| Carnes do Continente -Ind. Distr. Carnes, SA |
a) | Santarém | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| Chão Verde - Soc.Gestora Imobiliária, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| Citorres-Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| Contibomba - Comérc. Distr. Combustiveis, SA |
a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| Contimobe-Imobil.Castelo Paiva, SA | a) | Castelo de Paiva | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| Cumulativa - Sociedade Imobiliária, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| Difusão-Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| Distrifin - Comercio y Prest.Servicios, SA |
a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| Efanor-Design e Serviços, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| Efanor-Indústria de Fios, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| 2) 4) Equador & Burnay, Lda | a) | Lisbon | 100.00% | 100.00% | 100.00% | 99.01% | ||||
| 2) | Equador & Mendes, Lda | a) | Lisbon | 75.00% | 75.00% | 75.00% | 74.25% | |||
| Estevão Neves-Hipermercados Madeira, SA |
a) | Madeira | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| 2) 4) Exit Travel, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 99.01% | ||||
| Fozimo-Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| Fozmassimo-Sociedade Imobiliária, SA |
a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| Fundo de Investimento Imobiliário Imosonae Dois |
a) | Maia | 100.00% | 100.00% | 99.98% | 98.03% | ||||
| Fundo Fechado de Investimento Imobiliário Efisa Imobiliário |
a) | Lisbon | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| Global S-Hipermercado, Lda | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% | ||||
| IGI-Investimento Imobiliário, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 98.06% |
| Igimo-Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
|---|---|---|---|---|---|---|---|
| Imoconti- Soc.Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% | |
| Imoestrutura-Soc.Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| Imomuro-Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% | |
| Imoponte-Soc.Imobiliaria, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| Imoresultado-Soc.Imobiliaria, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| Imosistema-Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| Infofield-Informática, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| 9) | Informeios - Projectos e | a) | Lisbon | 100.00% | 100.00% | 100.00% | 98.06% |
| Representacões, SA Inventory-Acessórios de Casa, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| Budapest | |||||||
| Marcas MC, zRT | a) | (Hungary) | 100.00% | 100.00% | 100.00% | 98.06% | |
| Max Office Artigos Serviços p/escrit., SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| MJLF – Empreendimentos Imobiliários, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| Modalfa-Comércio e Serviços, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| Modelo - Dist.de Mat. de Construção, SA |
b) | Maia | 50.00% | 50.00% | 50.00% | 49.03% | |
| Modelo Continente Hipermercados,SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% | |
| Modelo Continente, SGPS, SA | a) | Matosinhos | 100.00% | 100.00% | 98.06% | 98.06% | |
| Modelo Continente-Oper.Retalho | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% | |
| SGPS, SA Modelo Hiper Imobiliária, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| 3) | Modelo Investimentos (Brasil), Ltda | a) | São Paulo (Brazil) | 100.00% | 100.00% | 100.00% | 98.06% |
| Modelo,SGPS, SA Modelo.com-Vendas p/Correspond., |
a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| SA | a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| Modis Distribuição Centralizada, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% | |
| 5) | Modis Internacional Trading, SA | a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 98.06% |
| 2) | Nova Equador Internacional,Ag.Viag.T, Lda |
a) | Lisbon | 75.00% | 75.00% | 75.00% | 74.25% |
| OK Bazar-Comércio Geral, SA | a) | Ermesinde | 100.00% | 100.00% | 100.00% | 98.06% | |
| 1) | Parcium - Imobiliária, SA | a) | Porto | 100.00% | 100.00% | - | - |
| Peixes do Continente - Indústria e Distribuição de Peixes, SA |
a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% | |
| Predicomercial-Promoção Imobiliária, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| 2) 4) Santos Taborda & Carvalho,SU, Lda | a) | Lisbon | 100.00% | 100.00% | 100.00% | 99.01% | |
| Selifa – Empreendimentos Imobiliários, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| Sempre à Mão - Sociedade Imobiliária, SA |
a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% | |
| Sesagest-Proj.Gestão Imobiliária, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 98.06% | |
| SM Empreendimentos Imobiliários, | Porto Alegre | ||||||
| 6) | Ltda | a) | (Brazil) | 100.00% | 100.00% | 100.00% | 98.06% |
| Socijofra-Sociedade Imobiliária, SA | a) | Gondomar | 100.00% | 100.00% | 100.00% | 98.06% | |
| Sociloures-Soc.Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% | |
| Soflorin, BV | a) | Amsterdam (The Netherlands) |
100.00% | 100.00% | 100.00% | 98.06% | |
| 10) | Solaris - Supermercados, SA | a) | Viana do Castelo | 100.00% | 100.00% | 100.00% | 98.06% |
| 2) | Sonae Capital Brasil, Lda | a) | São Paulo (Brazil) | 100.00% | 100.00% | 100.00% | 100.00% |
| Sonae Retalho Espana-Servicios Gen., SA |
a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 98.06% | |
| Sondis Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| Sontária-Empreend.Imobiliários, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| Sonvecap, BV | a) | Amsterdam (The Netherlands) |
100.00% | 100.00% | 100.00% | 98.06% | |
| Sport Zone-Comércio Art.Desporto, SA |
a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% | |
| SRE-Projectos e Consultadoria, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 98.06% | |
| 2) | Star-Viagens e Turismo, SA | a) | Lisbon | 100.00% | 100.00% | 100.00% | 99.01% |
| Tlantic Sistemas de Informação, Ltda | a) | Porto Alegre (Brazil) |
100.00% | 100.00% | 100.00% | 98.06% | |
| Todos os Dias Com.Ret.Expl.C.Comer., SA |
a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% | |
| Worten-Equipamento para o Lar, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 98.06% |
| Sonaecom Digitmarket-Sistemas de Informação, |
a) | Maia | 75.10% | 38.99% | 75.10% | 46.98% | |
|---|---|---|---|---|---|---|---|
| SA | |||||||
| 7) | Enabler & Retail Consult, GmbH | a) | Germany | 85.00% | 37.38% | 85.00% | 37.88% |
| 7) | Enabler Brasil, Ltda | a) | Curitiba (Brazil) | 99.99% | 43.97% | 99.99% | 44.56% |
| 7) | Enabler France | a) | France | 100.00% | 43.97% | 100.00% | 44.56% |
| 7) | Enabler UK, Ltd | a) | U.K. | 100.00% | 43.97% | 100.00% | 44.56% |
| 7) | Enabler-Informática, SA | a) | Maia | 98.50% | 43.97% | 98.50% | 44.56% |
| M3G-Edições Digitais, SA Mainroad Serviços em Tecnologias de |
a) | Lisbon | 100.00% | 51.40% | 100.00% | 62.56% | |
| Informação, SA | a) | Maia | 100.00% | 51.92% | 100.00% | 62.56% | |
| Miauger-Org. Gestão Leilões El., SA | a) | Maia | 100.00% | 51.92% | 100.00% | 62.56% | |
| Novis Telecom, SA | a) | Maia | 100.00% | 51.92% | 100.00% | 62.56% | |
| Optimus Telecomunicações, SA | a) | Maia | 100.00% | 51.92% | 69.24% | 43.31% | |
| Optimus Towering-Explor. Torres Telecom, SA |
a) | Maia | 100.00% | 51.92% | 100.00% | 43.31% | |
| Per-Mar-Sociedade de Construções, SA |
a) | Maia | 100.00% | 51.92% | 100.00% | 43.31% | |
| Público-Comunicação Social, SA | a) | Porto | 99.00% | 51.40% | 99.99% | 62.56% | |
| 7) | Retailbox, BV | a) | Amsterdam (The Netherlands) |
75.50% | 44.64% | 75.50% | 45.24% |
| 1) | Saphety Level - Trusted Services, SA | a) | Maia | 100.00% | 51.92% | - | - |
| Sonae Matrix Multimédia, SGPS, SA | a) | Maia | 100.00% | 51.92% | 100.00% | 62.56% | |
| Sonae Telecom SGPS, SA | a) | Maia | 100.00% | 51.92% | 100.00% | 62.56% | |
| Sonaetelecom, BV | a) | Amsterdam (The Netherlands) |
100.00% | 51.92% | 100.00% | 62.56% | |
| Sonae.com,SGPS, SA | a) | Maia | 51.92% | 51.92% | 62,56% | 62.56% | |
| Sonae.com-Sistemas de Informação, | a) | Maia | 100.00% | 51.92% | 100.00% | 62.56% | |
| 1) | SGPS, SA Sonaecom BV |
a) | Amsterdam (The | 100.00% | 51.92% | - | - |
| We Do Brasil-Soluções Informáticas, | a) | Netherlands) Rio de Janeiro |
99.91% | 50.66% | 100.00% | 59.66% | |
| Ltda We Do Consulting-Sistemas de |
a) | (Brazil) Maia |
97.66% | 50.71% | 95.47% | 59.72% | |
| Informação, SA | |||||||
| Sonae Capital | |||||||
| Águas Furtadas - Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Aqualuz - Turismo e Lazer, Lda | a) | Lagos | 100.00% | 100.00% | 100.00% | 100.00% | |
| 15) | Aquapraia Investimentos Turísticos, | a) | Lisbon | 100.00% | 100.00% | 100.00% | 100.00% |
| SGPS, SA Aquapraia-Investimentos Turísticos, SA |
a) | Grândola | 100.00% | 100.00% | 100.00% | 100.00% | |
| Azulino Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| 13) | Becim - Corretora de Seguros, Lda | a) | Santa Maria da | 100.00% | 100.00% | 100.00% | 100.00% |
| Feira | |||||||
| Bloco Q-Sociedade Imobiliária, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Bloco W-Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Box Lines Navegação, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| 9) | Campimeios - Sociedade Imobiliária, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Casa da Ribeira - Hotelaria e Turismo, SA |
a) | Marco de Canaveses |
100.00% | 100.00% | 100.00% | 100.00% | |
| Centro Residencial da Maia,Urban., SA |
a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Cinclus Imobiliária, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Cinclus-Plan. e Gestão de Projectos, SA |
a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Contacto Concessões, SGPS, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Contacto-SGPS, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Contacto-Sociedade de Construções, | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| SA Country Club da Maia-Imobiliaria, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Cronosaúde – Gestão Hospitalar, SA | a) | Porto | 100.00% | 100.00% | 50.00% | 50.00% | |
| Elmo SGPS, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Empreend.Imob.Quinta da Azenha, | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| SA | |||||||
| Espimaia -Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Friengineering, SA Fundo de Investimento Imobiliário |
a) | Matosinhos | 100.00% | 50.10% | 100.00% | 50.10% | |
| 1) | Imosede | a) | Maia | 100.00% | 100.00% | - | - |
| 15) | Gestholdings-SGPS, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% |
| Golf Time - Golfe e Inv.Turisticos, SA | a) | Porto | 75.00% | 75.00% | 75.00% | 75.00% | |
|---|---|---|---|---|---|---|---|
| Imoareia Investimentos Turisticos, SGPS, SA |
a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Imobiliária da Cacela, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Imoclub-Serviços Imobilários, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Imodivor - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Imoferro-Soc.Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Imohotel-Emp.Turist.Imobiliários, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Imopenínsula - Sociedade Imobiliária, SA |
a) | Grândola | 100.00% | 100.00% | 100.00% | 99.78% | |
| Imoresort - Sociedade Imobiliária, SA | a) | Grândola | 100.00% | 100.00% | 100.00% | 99.78% | |
| Imosedas-Imobiliária e Seviços, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Implantação - Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Inparvi SGPS, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Insulatroia - Sociedade Imobiliária, SA | a) | Grândola | 100.00% | 100.00% | 100.00% | 99.78% | |
| Integrum-Serviços Partilhados, SA | a) | Maia | 100.00% | 35.07% | 100.00% | 35.07% | |
| Interlog-SGPS, SA | a) | Lisbon | 100.00% | 100.00% | 100.00% | 100.00% | |
| 8) | Invicta - Comércio Internacional, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| INVSAUDE - Gestão Hospitalar, SA | a) | Maia | 100.00% | 100.00% | 50.00% | 50.00% | |
| 9) | ISF - Imobiliário, Serviços e Participações |
a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% |
| Isoroy Casteljaloux | a) | Casteljaloux (France) |
100.00% | 100.00% | 100.00% | 100.00% | |
| Leroy Gabon, SA | a) | Libreville (Gabon) | 99.99% | 99.99% | 99.99% | 99.99% | |
| Libra Serviços, Lda | a) | Funchal | 100.00% | 100.00% | 100.00% | 100.00% | |
| Marimo -Exploração Hoteleira Imobiliária, SA |
a) | Grândola | 100.00% | 100.00% | 100.00% | 99.78% | |
| Marina de Troia, SA | a) | Troia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Marina Magic - Exploração de Centros Lúd, SA |
a) | Lisbon | 100.00% | 100.00% | 100.00% | 100.00% | |
| Marmagno-Expl.Hoteleira Imob., SA | a) | Grândola | 100.00% | 100.00% | 100.00% | 99.78% | |
| Martimope - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Marvero-Expl.Hoteleira Imob., SA | a) | Grândola | 100.00% | 100.00% | 100.00% | 99.78% | |
| MDS - Corretores de Seguros, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| NAB, Sociedade Imobiliária, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Parcomarco, Gest Parq Est Centros Comer |
a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Partnergiro-Empreendimentos Turisticos, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| PJP - Equipamento de Refrigeração, Lda |
a) | Matosinhos | 100.00% | 35.07% | 100.00% | 35.07% | |
| Placage d'Okoumé du Gabon | a) | Libreville (Gabon) | 99.88% | 99.88% | 99.88% | 99.88% | |
| Plysorol SAS | a) | Niort (France) | 100.00% | 100.00% | 100.00% | 100.00% | |
| 14) | Plysorol SNC | a) | Lisieux (France) | 100.00% | 100.00% | 98.01% | 98.01% |
| Porturbe-Edificios e Urbanizações, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Praedium II-Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Praedium III-Serviços Imobiliários, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Praedium-SGPS, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Prédios Privados Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Predisedas-Predial das Sedas, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Promessa Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Promosedas-Prom.Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Publimeios-Soc.Gestora Part. Finan., SA |
a) | Maia | 50.10% | 50.10% | 50.10% | 50.10% | |
| Quinta da Covilhã-Empr.Imobiliários, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Rochester Real Estate, Ltd | a) | Kent (U.K.) | 100.00% | 100.00% | 100.00% | 100.00% | |
| Safira Services-Limpeza Espaços Verd., SA |
a) | Porto | 51.00% | 25.55% | 51.00% | 25.55% | |
| Saúde Atlântica - Gestão Hospitalar, SA |
a) | Maia | 100.00% | 100.00% | 50.00% | 50.00% | |
| SC Insurance Risks Services, SGPS, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| SC-Consultadoria,SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Selfrio,SGPS, SA | a) | Matosinhos | 70.00% | 35.07% | 70.00% | 35.07% |
| Selfrio-Engenharia do Frio, SA | a) | Matosinhos | 100.00% | 35.07% | 100.00% | 35.07% | |
|---|---|---|---|---|---|---|---|
| SII - Soberana Investimentos Imobiliários, SA |
a) | Grândola | 100.00% | 100.00% | 100.00% | 99.78% | |
| Sistavac-Sist.Aquecimento,V.Ar C., SA |
a) | Matosinhos | 100.00% | 35.07% | 100.00% | 35.07% | |
| SKK-Central de Distr., SA | a) | Porto | 100.00% | 35.07% | 100.00% | 35.07% | |
| SKKFOR - Ser. For. e Desen. de Recursos, SA |
a) | Maia | 96.00% | 33.67% | 96.00% | 33.67% | |
| SMP-Serv. de Manutenção Planeamento, SA |
a) | Matosinhos | 100.00% | 35.07% | 100.00% | 35.07% | |
| Société de Tranchage Isoroy SAS | a) | França | 100.00% | 100.00% | 100.00% | 100.00% | |
| Société des Essences Fines Isoroy | a) | Honfleur (France) | 100.00% | 100.00% | 100.00% | 100.00% | |
| Soconstrução, BV | a) | Amsterdam (The Netherlands) |
100.00% | 100.00% | 100.00% | 100.00% | |
| Soira-Soc.Imobiliária de Ramalde, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Solinca III-Desporto e Saúde, SA | a) | Lisbon | 100.00% | 100.00% | 100.00% | 100.00% | |
| 15) | Solinca Lazer,SGPS, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% |
| Solinca-Investimentos Turísticos, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Solinfitness - Club Malaga, SL | a) | Malaga (Spain) | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sonae Capital,SGPS, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| 12) | Sonae Financial Participations, BV | a) | Amsterdam (The Netherlands) |
100.00% | 100.00% | 100.00% | 100.00% |
| Sonae International, Ltd | a) | London (U.K.) | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sonae Turismo - SGPS, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sonae Turismo Gestão e Serviços, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| 7) | Sontrade Lines, Ltd | a) | Hants (U.K.) | 63.75% | 63.75% | 63.75% | 63.75% |
| Sontur, BV | a) | Amsterdam (The Netherlands) |
100.00% | 100.00% | 100.00% | 100.00% | |
| Sopair, SA | a) | Madrid (Spain) | 60.00% | 30.06% | 60.00% | 30.06% | |
| Sótaqua - Soc. de Empreendimentos Turist, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Spinarq, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Spinveste - Promoção Imobiliária, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Spinveste-Gestão Imobiliária SGII, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| 9) | Terceiro Frente - Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Textil do Marco, SA | a) | Marco de Canaveses |
90.37% | 90.37% | 90.37% | 90.37% | |
| Torre São Gabriel-Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| 11) | Troiaresort - Investimentos Turisticos, SA |
a) | Grândola | 100.00% | 100.00% | 99.78% | 99.78% |
| Troiaverde-Expl.Hoteleira Imob., SA | a) | Grândola | 100.00% | 100.00% | 100.00% | 99.78% | |
| Tulipamar-Expl.Hoteleira Imob., SA | a) | Grândola | 100.00% | 100.00% | 100.00% | 99.78% | |
| 13) | Unibroker - Corretores de Seguros, SA |
a) | Santa Maria da Feira |
100.00% | 100.00% | 100.00% | 100.00% |
| Urbisedas-Imobiliária das Sedas, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Venda Aluga-Sociedade Imobiliária, | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| SA World Trade Center Porto, SA |
a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Others | |||||||
| 1) | Agloma Investimentos, SGPS, SA | a) | Maia | 100.00% | 100.00% | - | - |
| 2) | Aserraderos de Cuellar, SA Atlantic Ferries - Traf.Loc.Flu.e Marit., |
a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% |
| SA | a) | Grândola | 100.00% | 72.80% | 100.00% | 72.80% | |
| Casa Agrícola João e António Pombo, SA |
a) | Portel | 66.67% | 32.67% | 66.67% | 32.67% | |
| 1) | Espmen - Investimentos Imobiliários, SA |
a) | Porto | 100.00% | 100.00% | - | - |
| 1) | Esprit du Monde, SA | a) | Portel | 100.00% | 32.67% | - | - |
| Iginha-Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 49.00% | 100.00% | 49.00% | |
| 2) | Imoplamac Gestão de Imóveis, SA | a) | Santarém | 100.00% | 100.00% | 100.00% | 100.00% |
| Investalentejo, SGPS, SA | b) | Vila de Conde | 49.00% | 49.00% | 49.00% | 49.00% | |
| Ipaper-Industria Papeis Impregnados, SA |
a) | Maia | 100.00% | 24.99% | 100.00% | 28.25% | |
| Sete e Meio - Investimentos e Consultadoria, SA |
a) | Grândola | 100.00% | 49.00% | 100.00% | 49.00% |
| Sete e Meio Herdades - Investimentos Agricolas e Turismo, SA |
a) | Grândola | 100.00% | 49.00% | 100.00% | 49.00% | |
|---|---|---|---|---|---|---|---|
| Soltroia-Imob.de Urb.Turismo de Troia, SA |
a) | Lisbon | 100.00% | 73.99% | 100.00% | 73.99% | |
| 2) | Somit-Soc.Mad.Ind.Transformadas, SA |
a) | Oliveira do Hospital | 100.00% | 100.00% | 100.00% | 100.00% |
| Sonae Investments, BV | a) | Amsterdam (The Netherlands) |
100.00% | 100.00% | 100.00% | 100.00% | |
| Sonaegest-Soc.Gest.Fundos Investimentos, SA |
a) | Maia | 80.00% | 70.00% | 80.00% | 70.56% | |
| 1) | Sontel, BV | a) | Amsterdam (The Netherlands) |
100.00% | 100.00% | - | - |
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 2006 and 2005 are as follows:
| Percentage of capital held | ||||||
|---|---|---|---|---|---|---|
| 31.12.2006 | 31.12.2005 | |||||
| COMPANY | Head Office | Direct | Total | Direct | Total | |
| Sonae Sierra | ||||||
| 3DO Holding GmbH | Dusseldorf (Germany) |
100.00% | 50.00% | 100.00% | 50.00% | |
| 3DO ShoppingCentre 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 Constructions Real Estate and Development, SA |
Athens (Greece) | 100.00% | 25.00% | 100.00% | 25.00% | |
| ALEXA Administration Gmbh | Dusseldorf (Germany) |
100.00% | 24.75% | 99.00% | 24.75% | |
| ALEXA Holding GmbH | Dusseldorf (Germany) |
50.00% | 25.00% | 50.00% | 25.00% | |
| ALEXA Shopping Centre GmbH | Dusseldorf (Germany) |
100.00% | 25.00% | 100.00% | 25.00% | |
| ALEXA Site Gmbh & Co. KG | Dusseldorf (Germany) |
99.00% | 24.75% | 99.00% | 24.75% | |
| 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% | 50.00% | |
| Avenida M-40, SA | Madrid (Spain) | 100.00% | 25.05% | 100.00% | 50.00% | |
| Boavista Shopping Centre, BV | Amsterdam (The Netherlands) |
100.00% | 25.00% | 100.00% | 50.00% |
| Cascaishopping- Centro Comercial, SA | Maia | 100.00% | 12.53% | 100.00% | 12.53% | |
|---|---|---|---|---|---|---|
| Cascaishopping Holding I, SGPS, SA | Maia | 100.00% | 25.05% | 100.00% | 25.05% | |
| 11) | Cascaishopping Holding II, SGPS, SA | Maia | 50.00% | 12.53% | 50.00% | 12.53% |
| Centro Colombo- Centro Comercial, SA | Maia | 50.00% | 12.53% | 50.00% | 12.53% | |
| Centro Vasco da Gama-Centro Comercial, SA |
Maia | 50.00% | 12.53% | 50.00% | 12.53% | |
| Clérigoshopping- Gestão do C.Comerc., SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Coimbrashopping- Centro Comercial, SA | Maia | 100.00% | 25.05% | 100.00% | 25.05% | |
| 2) | Dortmund Tower Gmbh | Dusseldorf (Germany) |
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% | |
| 10) | El Rosal Shopping, SA | Madrid (Spain) | 70.00% | 35.00% | 70.00% | 35.00% |
| Estação Oriente-Gest.de Galerias Com., SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Estação Viana- Centro Comercial, SA | Maia | 100.00% | 25.05% | 100.00% | 25.05% | |
| Freccia Rossa- Shopping Centre, Srl | Sondrio (Italy) | 50.00% | 25.00% | 50.00% | 25.00% | |
| Fundo Investimento Imob. Shopping Parque D. Pedro Shopping, SA |
São Paulo (Brazil) | 100.00% | 24.13% | 100.00% | 48.95% | |
| 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% |
| Guimarãeshopping- Centro Comercial, SA | Maia | 100.00% | 25.05% | 100.00% | 25.05% | |
| Iberian Assets, SA | Madrid (Spain) | 49.78% | 12.47% | 49.78% | 12.47% | |
| Inparsa-Gestão de Galeria Comerc., SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| La Farga - Shopping Centre, SL | Madrid (Spain) | 100.00% | 12.47% | 100.00% | 12.47% | |
| 7) | Le Terrazze - Shopping Centre, Srl | Milan (Italy) | 50.00% | 25.00% | 50.00% | 25.00% |
| 8) | Lima Retail Park, SA | Viana do Castelo | 50.00% | 25.00% | 50.00% | 25.00% |
| Loureshopping- Centro Comercial, SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| 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 | 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% | |
| Monselice Center, Srl | Venice (Italy) | 100.00% | 25.05% | 100.00% | 25.05% | |
| NorteShop. 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% | |
| 2) | Oeste Retail Park - Gestão de G.Comer., SA | Maia | 100.00% | 50.00% | - | - |
| 1) | Oriogest, Srl | Sondrio (Italy) | 80.00% | 20.00% | 80.00% | 20.00% |
| 2) | Park Avenue Develop. of Shop. Centers, SA | Athens (Greece) | 100.00% | 25.00% | - | - |
| Parque Atlântico Shopping - Centro Comercial SA |
Ponta Delgada | 50.00% | 12.53% | 50.00% | 12.53% | |
| Parque D. Pedro 1, BV | Luxemburg | 100.00% | 25.00% | 100.00% | 50.00% | |
| Parque D. Pedro 2, BV | Luxemburg | 100.00% | 25.00% | 100.00% | 50.00% | |
| Parque de Famalicão - Empr. Imob., 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% | 23.30% | 100.00% | 48.85% | |
| Pátio Penha Shopping, Ltda | São Paulo (Brazil) | 99.99% | 23.30% | 99.99% | 50.00% | |
| 2) | Pátio São Bernardo Shopping Ltda | São Paulo (Brazil) | 100.00% | 23.30% | - | - |
| 2) | Pátio Sertório Shopping Ltda | São Paulo (Brazil) | 100.00% | 23.30% | - | - |
| Plaza Eboli - Centro Comercial, SA | Madrid (Spain) Amsterdam (The |
100.00% | 50.00% | 100.00% | 50.00% | |
| Plaza Eboli, BV | 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 Ocio, SA | Madrid (Spain) | 100.00% | 25.05% | 100.00% | 25.05% | |
| Plaza Mayor Shopping, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | |
| Plaza Mayor Shopping, SA | Maia | 75.00% | 37.50% | 75.00% | 37.50% | |
| Pridelease Investments, Ltd | Cascais | 100.00% | 50.00% | 100.00% | 50.00% | |
| Proj.Sierra Charagionis 1 -Dev.Sh.C., SA | Athens (Greece) | 100.00% | 25.00% | 100.00% | 25.00% |
| Project SC 1, BV | Amsterdam (The Netherlands) |
50.00% | 25.00% | 50.00% | 25.00% | |
|---|---|---|---|---|---|---|
| Project Sierra – Shopping Centre, GmbH | Vienne (Austria) | 100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra 1, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | |
| 2) | Project Sierra 2 - Shopping Centre Gmbh | Dusseldorf (Germany) |
100.00% | 50.00% | - | - |
| Project Sierra 2, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | |
| 2) | Project Sierra 3, BV | Amsterdam (The Netherlands) |
100.00% | 25.05% | - | - |
| 2) | Project Sierra 4, BV | Amsterdam (The Netherlands) Amsterdam (The |
100.00% | 50.00% | - | - |
| Project Sierra Brazil 1, BV Project Sierra Germany 1- Shopping |
Netherlands) Dusseldorf |
100.00% | 25.00% | 100.00% | 50.00% | |
| Centre, GmbH | (Germany) | 50.00% | 25.00% | 100.00% | 50.00% | |
| Project Sierra Holding Portugal IV, SGPS, SA Project Sierra Holding Portugal V, |
Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| 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% | |
| 2)6) Project Sierra Italy 3, Srl | Milan (Italy) | 100.00% | 50.00% | 25.00% | 12.50% | |
| Project Sierra Portugal I- C.Comercial, SA | Maia | 50.00% | 25.00% | 50.00% | 25.00% | |
| Project Sierra Portugal II-C.Comercial, SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Portugal III-C.Comercial, SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Portugal IV-C.Comercial, SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Portugal V-C.Comercial, SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Portugal VI - C. Comercial, SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| 4) | Project Sierra Portugal VII - C. Comercial, SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% |
| 5) | Project Sierra Portugal VIII - C 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, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Spain 2-C. Comerial, SA | Madrid (Spain) | 100.00% | 50.00% | 75.00% | 37.50% | |
| Project Sierra Spain 3, BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | 100.00% | 50.00% | |
| Project Sierra Spain 3-C. Comercial, SA | Madrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | |
| 2) | Project Sierra Spain 4 BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | - | - |
| 2) | Project Sierra Spain 5 BV | Amsterdam (The Netherlands) |
100.00% | 50.00% | - | - |
| Rio Sul - Centro Comercial, SA | Maia | 50.00% | 25.00% | 50.00% | 25.00% | |
| SC Aegean, BV | Amsterdam (The Netherlands) |
50.00% | 25.00% | 50.00% | 25.00% | |
| SC Mediterraneum Cosmos, BV | Amsterdam (The Netherlands) |
50.00% | 25.00% | 50.00% | 25.00% | |
| 1) | Segest, Srl | Sondrio (Italy) | 50.00% | 25.00% | 50.00% | 25.00% |
| Serra Shopping - Centro Comercial, S.A. | Lisbon | 50.00% | 25.00% | 100.00% | 25.00% | |
| Shopping Centre Parque Principado, BV | Amsterdam (The Netherlands) |
100.00% | 25.05% | 100.00% | 25.05% | |
| Shopping Penha, BV | Amsterdam (The Netherlands) |
100.00% | 25.00% | 100.00% | 50.00% | |
| Sierra Asset Management-Gest. Activos, SA |
Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Brazil 1, BV | Amsterdam (The Netherlands) |
100.00% | 25.00% | 100.00% | 50.00% | |
| Sierra Charagionis Develop. of Shop, Centers, SA |
Athens (Greece) | 50.00% | 25.00% | 50.00% | 25.00% | |
| Sierra Charagionis Propert.Management, SA | Athens (Greece) | 50.00% | 25.00% | 50.00% | 25.00% | |
| Sierra Corporate Services- Ap.Gestão, SA | Maia | 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 Develop.Iberia 1, Prom.Imob., SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| 2) | Sierra Developments Greece, SA Sierra Developments Germany Gmbh |
Athens (Greece) Dusseldorf |
100.00% 100.00% |
50.00% 50.00% |
- 100.00% |
- 50.00% |
| Sierra Developments Germany Holding, BV | (Germany) Amsterdam (The |
100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Developments Holding, BV | Netherlands) Amsterdam (The |
100.00% | 50.00% | 100.00% | 50.00% | |
| Netherlands) | ||||||
| Sierra Developments Italy, Srl Sierra Developments Spain |
Sondrio (Italy) Madrid (Spain) |
100.00% 100.00% |
50.00% 50.00% |
100.00% 100.00% |
50.00% 50.00% |
|
| Prom.C.Com., SL | ||||||
| Sierra Developments, SGPS, SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Developments-Serv. Prom.Imob., SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Enplanta, Ltda | São Paulo (Brazil) | 100.00% | 23.30% | 50.00% | 25.00% |
| Sierra European R.R.E. Assets Hold., BV | Amsterdam (The Netherlands) |
50.10% | 25.05% | 50.10% | 25.05% | |
|---|---|---|---|---|---|---|
| Sierra GP, Ltd | Guernsey (U.K.) | 100.00% | 49.99% | 100.00% | 50.00% | |
| 9) | Sierra Investimentos Brasil Ltda | São Paulo (Brazil) | 100.00% | 23.30% | 100.00% | 50.00% |
| 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 Man.New Tech.Bus.- Serv.Comu.CC, SA |
Lisbon | 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 C.C., SA | Lisbon | 100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Management Italy, Srl | Sondrio (Italy) | 100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Management Portugal-Gest. CC, SA | Lisbon | 100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Management Spain-Gestión C.Com., SA |
Madrid (Spain) | 100.00% | 50.00% | 100.00% | 50.00% | |
| Sierra Management, SGPS, SA | Maia | 100.00% | 50.00% | 100.00% | 50.00% | |
| 2) | Sol Retail Park - Gestão de G. Comerc., SA | Maia | 100.00% | 50.00% | - | - |
| Sonae Sierra Brasil, Ltda | São Paulo (Brazil) | 93.21% | 23.30% | 100.00% | 50.00% | |
| Sonae Sierra Brazil, BV | Luxemburg | 50.00% | 25.00% | 100.00% | 50.00% | |
| Sonae Sierra, SGPS, SA | Maia | 50.00% | 50.00% | 50.00% | 50.00% | |
| SRP-Parque Comercial de Setúbal, SA | Maia | 50.00% | 25.00% | 50.00% | 25.00% | |
| Torre Colombo Ocidente-Imobiliária, SA | Maia | 100.00% | 12.53% | 100.00% | 12.53% | |
| Torre Colombo Oriente-Imobiliária, SA | Maia | 100.00% | 12.53% | 100.00% | 12.53% | |
| Unishopping Administradora, Ltda | São Paulo (Brazil) | 100.00% | 23.30% | 99.99% | 25.00% | |
| Unishopping Consultoria Imob., Ltda | São Paulo (Brazil) | 99.98% | 23.30% | 99.98% | 25.00% | |
| Valecenter Srl | Venice (Italy) | 100.00% | 25.05% | 100.00% | 25.05% | |
| Via Catarina- Centro Comercial, SA | Maia | 50.00% | 12.53% | 50.00% | 12.53% | |
| Zubiarte Inversiones Inmob, SA | Madrid (Spain) | 49.83% | 12.48% | 49.83% | 24.91% |
2) Company acquired or incorporated in the period;
3) Ex - Project Sierra Italy 2-Shop.Centre, Srl;
4) Ex - Project Sierra Holding Portugal I,SGPS, SA;
5) Ex - Project Sierra Holding Portugal III, SA;
8) Ex - Limadarque, Retail Park, SA;
9) Ex - Parque Dom Pedro Shopping, SA;
10) Ex - Project Sierra Spain 1 - C.Comercial, SA;
11) Company merged into Cascaishopping - Centro Comercial, SA.
These entities are consolidated using the proportional consolidation method, as referred to in Note 2.2.b).
Aggregate amounts, excluding intragroup 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:
| 31.12.2006 | 31.12.2005 | ||
|---|---|---|---|
| Non-current assets | 3,373,955,684 | 3,076,799,370 | |
| Current assets | 410,950,166 | 566,999,550 | |
| Non-current liabilities | 1,536,668,427 | 1,416,384,042 | |
| Current liabilities | 321,914,057 | 552,252,436 | |
| 31.12.2005 | |||
| 31.12.2006 | Pro-forma | 31.12.2005 | |
| Income | 359,865,987 | 304,628,129 | 219,332,169 |
| Expenses | 238,446,235 | 207,754,241 | 134,524,337 |
Associated companies, their head offices and the percentage of share capital held as at 31 December 2006 and 2005 are as follows:
| Percentage of capital held | ||||||||
|---|---|---|---|---|---|---|---|---|
| 31.12.2006 | 31.12.2005 | Book Value | ||||||
| COMPANY | Head Office | Direct | Total | Direct | Total | 31.12.2006 | 31.12.2005 | |
| Modelo Continente | ||||||||
| 3) | Mundo Vip – Operadores Turísticos, SA |
Lisbon | 33.33% | 33.33% | 33.33% | 33.33% | 3,097,390 | 2,932,169 |
| Sempre a Postos - Produtos Alimentares e Utilidades, Lda |
Lisbon | 25.00% | 25.00% | 25.00% | 24.51% | 506,796 | 52,592 | |
| Sonae Sierra | ||||||||
| Campo Limpo Lda | S. Paulo (Brazil) | 20.00% | 5.00% | 20.00% | 5.00% | 851,744 | 478,942 | |
| Mediterranean Cosmos Shop. Centre Investments, SA |
Athens (Greece) | 39.90% | 9.98% | 39.90% | 9.98% | 9,196,940 | 3,378,644 | |
| SIC Indoor – Gest. Suportes Publicitários, SA |
Oeiras | 35.00% | 17.50% | 35.00% | 17.50% | - | - | |
| Sonaecom | ||||||||
| 2) | Net Mall SGPS, SA | Maia | 39.51% | 20.51% | 37.51% | 24.72% | - | - |
| 1) | Profimetrics - Software Solutions, SA | Maia | 30.00% | 15.58% | - | - | 29,530 | - |
| SIRS – Sociedade Independente de Radiodifusão Sonora, SA |
Porto | 45.00% | 23.13% | 45.00% | 28.15% | 143,674 | 231,680 | |
| Unipress - Centro Gráfico, Lda | Vila Nova de Gaia | 40.00% | 20.56% | 40.00% | 25.02% | 476,980 | 437,522 | |
| Sonae Capital | ||||||||
| Andar - Sociedade Imobiliária, SA | Maia | 50.00% | 50.00% | 50.00% | 50.00% | - | 25,060 | |
| 2) | Autocenter - Serviços, Acessórios e Peças para Viaturas, SA |
Maia | 50.00% | 25.00% | 50.00% | 25.00% | - | - |
| CarPlus – Comércio de Automóveis, SA |
Vila Nova de Gaia | 100.00% | 50.00% | 100.00% | 50.00% | - | - | |
| Change, SGPS, SA | Porto | 50.00% | 50.00% | 25.00% | 25.00% | 2,043,244 | 869,293 | |
| Choice Car - Comércio de Automóveis, SA |
Porto | 100.00% | 50.00% | 100.00% | 50.00% | - | - | |
| Choice Car SGPS, SA | Maia | 50.00% | 50.00% | 50.00% | 50.00% | 1,057,626 | - | |
| Developpement & Partenariat Assurances, SA |
Paris (France) | 35.00% | 35.00% | 35.00% | 35.00% | 1,338,660 | 1,240,518 | |
| 1) | Etablissement A. Mathe, SA | France | 27,74% | 27,74% | - | - | 57,475 | - |
| Finlog - Aluguer e Comércio de Automóveis, SA |
Matosinhos | 100.00% | 50.00% | 100.00% | 50.00% | - | - | |
| Guerin – Rent a Car (Dois), Lda | Lisbon | 100.00% | 50.00% | 100.00% | 50.00% | - | - | |
| Interclean, SA | Brazil | 49.99% | 12.77% | 49.99% | 12.77% | 436,750 | 434,157 | |
| Lazam Corretora, Ltda | Brazil | 45.00% | 45.00% | 45.00% | 45.00% | 2,278,646 | 1,951,678 | |
| Lidergraf - Artes Gráficas, Lda | Vila de Conde | 25.50% | 25.50% | 25.50% | 25.50% | 1,153,522 | 946,021 | |
| Luso Assistência - Gestão de Acidentes, SA |
Porto | 100.00% | 50.00% | 100.00% | 50.00% | - | - | |
| Norscut - Concessionária de Scut Interior Norte, SA |
Lisbon | 25.00% | 25.00% | 25.00% | 25.00% | - | - | |
| Operscut - Operação e Manutenção de Auto-estradas, SA |
Lisbon | 15.00% | 15.00% | 15.00% | 15.00% | 24,000 | 24,000 | |
| Pargeste SGPS, SA | Maia | 40.00% | 40.00% | 40.00% | 40.00% | 131 | 1,522 | |
| Sociedade de Construções do Chile, SA |
Lisbon | 100.00% | 50.00% | 100.00% | 50.00% | - | - | |
| Sociedade Imobiliária Troia - B3, SA | Grândola | 20.00% | 20.00% | 20.00% | 16,96% | 478,162 | 468,571 | |
| Sodesa, SA | Lisbon | 50.00% | 50.00% | 50.00% | 50.00% | 676,236 | 974,293 | |
| TP - Sociedade Térmica, SA | Porto | 50.00% | 50.00% | 50.00% | 50.00% | 7,743,948 | 6,450,643 | |
| Vastgoed One - Sociedade Imobiliária, SA |
Maia | 100.00% | 50.00% | 100.00% | 50.00% | - | - | |
| Vastgoed Sun - Sociedade Imobiliária, SA |
Maia | 100.00% | 50.00% | 100.00% | 50.00% | - | - | |
| Total (Note 13) | 31,591,454 | 20,897,305 |
1) Company acquired in the period;
2) Company sold in the period;
3) Company shown under Sonae Capital in the previous year.
Nil balances shown result from the reduction to acquisition cost of amounts determined by the equity method.
Associated companies are consolidated using the equity method, as referred to in Note 2.2.c).
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Total Assets | 1,383,264,475 | 1,038,988,772 |
| Total Liabilities | 1,207,976,396 | 939,354,749 |
| Income | 408,902,543 | 343,758,476 |
| Expenses | 360,623,116 | 334,316,299 |
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 2006 and 2005 are made up as follows:
| Percentage of capital held | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Reason | 31.12.2006 | 31.12.2005 | Book Value | ||||||
| COMPANY | for exclusion |
Head Office | Direct | Total | Direct | Total | 31.12.2006 | 31.12.2005 | |
| Modelo Continente | |||||||||
| Dispar – Distrib. de Participações, SGPS, SA |
Lisbon | 7.14% | 7.14% | 7.14% | 7.00% | 4,988 | 4,988 | ||
| Insco – Insular de Hipermercados, SA | Ponta Delgada | 10.00% | 10.00% | 10.00% | 9.81% | 748,197 | 748,197 | ||
| Sonae Sierra | |||||||||
| Ercasa Cogeneracion SA | Grancasa (Spain) | 10.00% | 1,25% | 32.01% | 1.60% | 23,949 | 23,933 | ||
| Sonaecom | |||||||||
| Altitude, SGPS, SA | Lisbon | 11.54% | 5.99% | 11.50% | 7.19% | 1,000,000 | 1,000,000 | ||
| Despegar.com | Porto | 5.50% | 2.86% | 5.50% | 3.44% | - | - | ||
| Lusa - Agência de Noticias de Portugal, SA |
Lisbon | 1.38% | 0.71% | 1.38% | 0.86% | 197,344 | 197,344 | ||
| Minhodigital.com - Inv. na Área Tecnológ., SA |
Porto | 4.76% | 2.41% | 4.76% | 2.84% | - | - | ||
| Outsystems, Software de Rede, SA | Oeiras | 1.50% | 0.75% | 1.50% | 0.90% | - | - | ||
| 3) | Portugal Telecom, SGPS, SA | Lisbon | 1.00% | 0.52% | - | - | 111,109,905 | - | |
| Sonae Capital | |||||||||
| 1)3) Bar-Bar-Idade Glass - Serviços de Gestão e Investimentos, SA |
Porto | 7.83% | 7.83% | 11.75% | 11.75% | 12,060,507 | 17,999,964 | ||
| Delphinus – Soc. de Tur. e Div. de Tróia, SA |
a) | Grândola | 79.00% | 79.00% | 79.00% | 79.00% | - | - | |
| Plysorol Contreplaques, SAS | a) | França | 100.00% | 100.00% | 100.00% | 100.00% | 37,000 | 37,000 | |
| 3) | Sonae Indústria, SGPS, SA | Maia | 6.80% | 6.80% | 5.95% | 5.95% | 71,414,143 | 53,263,065 | |
| Sonae RE, SA | a) | Luxemburg | 100.00% | 100.00% | 100.00% | 100.00% | 1,250,000 | 1,250,000 | |
| Fun International Entertainement, SA | a) | Porto | 50.00% | 50.00% | 50.00% | 50.00% | - | 825,001 | |
| Infratroia – Emp. de Infraest. de Troia, E.N. |
a) | Grândola | 25.90% | 25.90% | 25.90% | 25.90% | 55,662 | 55,659 | |
| Net, SA | Lisbon | 2.80% | 2.80% | 2.80% | 2.80% | 11,132 | 11,132 | ||
| Sear - Sociedade Europeia de Arroz, SA |
Santiago do Cacém |
15.00% | 15.00% | 15.00% | 15.00% | 150,031 | 150,031 | ||
| Societé Naturel de Bois Gabonais | Gabon | 4.24% | 4.24% | 4.24% | 4.24% | - | - | ||
| Spidouro S.P.E.I. Douro e Trás-os Montes, SA |
Vila Real | 8.30% | 8.30% | 8.30% | 8.30% | - | - | ||
| Others | |||||||||
| Sonae Investimentos América Latina, Lda |
a) | São Paulo (Brazil) | 99.99% | 99.99% | 99.99% | 99.99% | 25,687 | 25,687 | |
| First Assur, SA | France | 11.08% | 11.08% | 11.01% | 11.01% | 959,724 | 959,647 | ||
| 2)3) Sonae Indústria, SGPS, SA | Maia | - | - | 0.71% | 0.71% | - | 6,400,000 | ||
| Other investments (Note 13) | 34,008,074 | 53,779,623 | |||||||
| 233,056,343 | 136,731,271 |
a) Group company, jointly controlled company or associated company for which, at the date of the issuance of these financial statements, complete financial information was not available;
Nil balances shown above result from deduction of impairment losses from related investments (Note 13).
The caption other investments includes 32,500,370 euro (53,000,000 euro as at 31 December 2005) of deposits in an Escrow Account. Amounts in the escrow account are invested in funds with superior rating (Note 13).
Main disposals of companies over the twelve months period ended 31 December 2006 are as follows:
| Percentage of capital held | |||
|---|---|---|---|
| 31.12.2006 | |||
| COMPANY | Head Office | Direct | Total |
| Sonae Sierra | |||
| Oriogest, Srl | Milan (Italy) | 80.00% | 20.00% |
| Segest , Srl | Milan (Italy) | 50.00% | 25.00% |
| Sonaecom | |||
| Enabler & Retail Consult, GmbH | Germany | 85.00% | 37.38% |
| Enabler Brasil, Ltda | Curitiba (Brazil) | 99.99% | 43.97% |
| Enabler France | France | 100.00% | 43.97% |
| Enabler UK, Ltd | U.K. | 100.00% | 43.97% |
| Enabler-Informática, SA | Maia | 98.50% | 43.97% |
| Retailbox, BV | Amsterdam (The Netherlands) |
75.50% | 44.64% |
| Sonae Capital | |||
| Sontrade Lines, Ltd | Hants (U.K.) | 63.75% | 63.75% |
Net assets of group companies sold and the corresponding carrying amounts as at the date of disposal and as at 31 December 2005 are as follows:
| Date of disposal | 31.12.2005 | |
|---|---|---|
| Net assets disposed of | ||
| Tangible and intangible assets | 659,125 | 1,352,610 |
| Deferred tax assets | 66,198 | 7,129 |
| Other assets | 9,782,038 | 9,080,692 |
| Cash and cash equivalents | 4,972,842 | 4,903,819 |
| Other liabilities | (6,353,057) | (8,288,804) |
| Provisions | (350,282) | (10,873) |
| 8,776,864 | 7,044,573 | |
| Goodwill | 1,936,347 | 1,962,882 |
| Intercompany results | (2,990,859) | - |
| Minority interests (Note 23) | (925,013) | (320,259) |
| 6,797,339 | 8,687,196 | |
| Gain/(loss) on sale | 26,465,274 | |
| Total consideration | 33,262,613 | |
| Cash received | 27,471,591 | |
| Amounts receivable | 5,791,022 | |
| 33,262,613 | ||
| Net cash inflow arising from disposals | ||
| Cash consideration received | 27,471,591 | |
| Cash and cash equivalents disposed of | (4,972,842) | |
| 22,498,749 | ||
| Date of disposal | 31.12.2005 | |
|---|---|---|
| Turnover | 11,725,262 | 23,689,831 |
| Other operational income | 3,427,304 | 7,897,785 |
| Other operational expenses | (13,837,767) | (28,585,944) |
| Net financial expenses | 65,553 | 40,523 |
| Investment income and share of results in associated undertakings | 63,376 | (567,907) |
| Profit before taxation | 1,443,728 | 2,474,288 |
| Taxation | (313,425) | (1,174,571) |
| Profit for the period | 1,130,303 | 1,299,717 |
During the periods ended 31 December 2006 and 2005, movements in Tangible assets as well as depreciation and accumulated impairment losses, are made up as follows:
| Tangible assets | |||||||
|---|---|---|---|---|---|---|---|
| Tangible | Total | ||||||
| Land and | Plant and | Fixtures and | assets | Tangible | |||
| Buildings | Machinery | Vehicles | Fittings | Others | in progress | Assets | |
| Gross cost: | |||||||
| Opening balance as at 1 January 2005 | 1,727,616,246 | 2,958,818,634 | 41,778,244 | 297,540,531 | 48,906,050 | 111,637,032 | 5,186,296,737 |
| Changes in consolidation perimeter | 283,892 | 563,297 | 108,171 | 235,027 | 261,243 | 2,971 | 1,454,601 |
| Capital expenditure | 27,658,714 | 21,444,159 | 1,473,017 | 6,658,356 | 692,308 | 286,532,285 | 344,458,839 |
| Acquisition of companies | 184,072,599 | 2,516,380 | 143,095 | 740,826 | 137,280 | - | 187,610,180 |
| Disposals | (64,430,631) | (54,997,287) | (2,854,387) | (15,978,564) | (1,807,205) | (1,703,683) | (141,771,757) |
| Disposal of companies | (155,542,723) | (349,763,203) | (9,817,048) | (40,735,446) | (8,321,144) | (14,397,293) | (578,576,857) |
| De-merger | (411,539,735) | (1,642,402,938) | (13,162,240) | (44,113,261) | (19,500,932) | (31,448,771) | (2,162,167,877) |
| Change in consolidation method | (732,114) | (745,928) | (47,178) | (1,482,387) | (416,630) | (46,981) | (3,471,218) |
| Exchange rate effect | 52,932,617 | 123,438,533 | 1,796,099 | 10,880,143 | 140,183 | 1,745,193 | 190,932,768 |
| Transfers | 81,578,947 | 131,724,635 | 1,551,785 | 22,371,571 | 3,092,158 | (267,150,995) | (26,831,899) |
| Opening balance as at 1 January 2006 | 1,441,897,812 | 1,190,596,282 | 20,969,558 | 236,116,796 | 23,183,311 | 85,169,758 | 2,997,933,517 |
| Changes in consolidation perimeter | - | (2,417,191) | (128,896) | (597,274) | (283,318) | (3,426,679) | |
| Capital expenditure | 37,357,947 | 7,077,935 | 830,857 | 9,675,100 | 936,202 | 332,355,479 | 388,233,520 |
| Disposals | (25,784,291) | (24,203,750) | (1,046,459) | (12,053,426) | (517,291) | (3,541,902) | (67,147,119) |
| Exchange rate effect | (110,448) | (35,474) | (5,065) | (19,206) | (815) | (4,012) | (175,020) |
| Transfers | 88,135,327 | 181,479,249 | 1,696,808 | 13,511,869 | 2,338,576 | (288,738,564) | (1,576,735) |
| Closing balance as at 31 December 2006 | 1,541,496,347 | 1,352,497,051 | 22,316,803 | 246,633,859 | 25,656,665 | 125,240,759 | 3,313,841,484 |
| Accumulated depreciation | |||||||
| and impairment losses | |||||||
| Opening balance as at 1 January 2005 | 344,754,929 | 1,483,094,824 | 32,853,358 | 168,658,896 | 38,870,053 | 713,997 | 2,068,946,057 |
| Changes in consolidation perimeter | 55,526 | 278,494 | 91,273 | 225,278 | 219,104 | - | 869,675 |
| Charge for the period | 45,497,723 | 185,141,999 | 2,291,944 | 32,912,697 | 3,304,293 | 15,965 | 269,164,621 |
| Acquisition of companies | 225,619 | 472,613 | 71,003 | 420,660 | 70,888 | - | 1,260,783 |
| Disposals | (11,133,800) | (30,755,699) | (2,274,729) | (12,835,691) | (1,539,355) | - | (58,539,274) |
| Disposal of companies | (29,706,234) | (173,467,842) | (7,146,335) | (23,294,886) | (7,636,351) | - | (241,251,648) |
| De-merger | (90,447,768) | (861,922,450) | (9,039,639) | (28,943,382) | (15,532,694) | - | (1,005,885,933) |
| Change in consolidation method | (593,602) | (603,690) | (48,631) | (1,007,631) | (366,718) | - | (2,620,272) |
| Exchange rate effect | 6,468,219 | 46,876,375 | 1,188,233 | 5,587,593 | 97,931 | - | 60,218,351 |
| Transfers | (623,872) | (18,214,822) | (226,219) | 16,776,677 | 383,714 | (458,795) | (2,363,317) |
| Opening balance as at 1 January 2006 | 264,496,740 | 630,899,802 | 17,760,258 | 158,500,211 | 17,870,865 | 271,167 | 1,089,799,043 |
| Changes in consolidation perimeter | - | (2,082,886) | (36,564) | (393,711) | (267,136) | - | (2,780,297) |
| Charge for the period | 39,630,694 | 118,099,322 | 1,327,746 | 26,352,624 | 2,188,106 | 7,295 | 187,605,787 |
| Disposals | (6,060,162) | (17,037,801) | (839,761) | (11,276,405) | (361,629) | - | (35,575,758) |
| Exchange rate effect | 377 | (6,827) | (818) | (5,263) | (1,644) | - | (14,175) |
| Transfers | 1,200,252 | (3,225,745) | 3,882 | 1,203,134 | 20,857 | 1,028,607 | 230,987 |
| Closing balance as at 31 December 2006 | 299,267,901 | 726,645,865 | 18,214,743 | 174,380,590 | 19,449,419 | 1,307,069 | 1,239,265,587 |
| Carrying amount | |||||||
| As at 31 de December de 2005 | 1,177,401,072 | 559,696,480 | 3,209,300 | 77,616,585 | 5,312,446 | 84,898,591 | 1,908,134,473 |
| As at 31 de December de 2006 | 1,242,228,446 | 625,851,186 | 4,102,060 | 72,253,269 | 6,207,246 | 123,933,690 | 2,074,575,897 |
The acquisition cost of Tangible assets held by the Group under finance lease contracts amounted to 69,066,878 euro and 75,338,082 euro as of 31 December 2006 and 2005, respectively, and their net book value as of those dates amounted to 56,277,539 euro and 60,530,122 euro, respectively (Note 25).
Major amounts included in the caption Tangible assets in progress, refer to the following projects:
| 31.12.2005 | 31.12.2005 | |
|---|---|---|
| Refurbishment and expansion of stores located in Portugal | 15,542,726 | 22,545,971 |
| New projects in Portugal of the Retail business segment | 6,267,577 | 17,687,515 |
| Deployment of mobile network | 13,135,575 | 7,897,191 |
| Deployment of fixed network | 6,138,254 | 3,213,590 |
| Troia project | 20,649,721 | 11,269,829 |
| Ferrie boat project | 7,718,969 | - |
| Hotel Aqualuz refurbishment | 13,006,768 | - |
| Others | 41,474,100 | 22,284,495 |
| 123,933,690 | 84,898,591 |
Depreciation charge for the period includes impairment losses on tangible assets amounting to 2,071,830 euro.
During the period ended 31 December 2006 and 2005, movements in Intangible assets as well as amortisation and accumulated impairment losses, are made up as follows:
| Patents and other assets similar rights Software Others in progress Gross cost: Opening balance as at 1 January 2005 236,158,799 241,469,834 30,585,616 13,183,745 Capital expenditure 12,769,064 1,231,380 1,415,909 34,459,336 Acquisition of companies 23,882 - 91,283 - Disposals (852,997) (1,149,527) (662,549) (82,101) Disposal of companies (13,765,280) (10,401,826) (2,690,560) (2,017,088) De-merger (4,036,351) (223,951) (2,467,773) (74,659) Change in consolidation method (1,987,510) (29,292) (4,886,079) - Exchange rate effect 1,582,453 2,280,662 227 - Transfers 860,444 26,746,118 147,159 (29,999,580) Opening balance as at 1 January 2006 230,752,504 259,923,398 21,533,233 15,469,653 Changes in consolidation perimeter (32,345) (389,021) - - Capital expenditure 942,095 1,452,693 231,253 38,138,795 Disposals (500,216) (24,135) (164,958) (675,254) Exchange rate effect (54) (3,183) - - Transfers 4,743,668 30,517,554 (1,501,755) (31,199,789) Closing balance as at 31 December 2006 235,905,652 291,477,306 20,097,773 21,733,405 Accumulated depreciation and impairment losses Opening balance as at 1 January 2005 14,448,820 155,409,049 16,210,752 - Charge for the period 15,111,873 24,486,694 2,656,161 - Acquisition of companies 47,376 - 3,320 - Disposals (620,896) (601,502) (324,464) - Disposal of companies (1,174,160) (8,984,428) (2,420,158) - De-merger (3,901,731) (167,962) (1,719,722) - Change in consolidation method (1,403,354) (10,939) (1,317,533) - Exchange rate effect 149,557 1,445,412 136 - Transfers 824,355 (2,069,679) 56,388 - Opening balance as at 1 January 2006 23,481,840 169,506,645 13,144,880 - Changes in consolidation perimeter (22,345) (355,488) - - Charge for the period 14,698,752 24,889,524 1,653,217 - Disposals (697,286) (886,311) (7,985) - Exchange rate effect - (892) - - Transfers 543,187 1,222,890 526,023 - Closing balance as at 31 December 2006 38,004,148 194,376,368 15,316,135 - Carrying amount As at 31 de December de 2005 207,270,664 90,416,753 8,388,353 15,469,653 As at 31 de December de 2006 197,901,504 97,100,938 4,781,638 21,733,405 |
Intangible | Total | ||
|---|---|---|---|---|
| Intangible | ||||
| Assets | ||||
| 521,397,994 | ||||
| 49,875,689 | ||||
| 115,165 | ||||
| (2,747,174) | ||||
| (28,874,754) | ||||
| (6,802,734) | ||||
| (6,902,881) | ||||
| 3,863,342 | ||||
| (2,245,859) | ||||
| 527,678,788 | ||||
| (421,366) | ||||
| 40,764,836 | ||||
| (1,364,563) | ||||
| (3,237) | ||||
| 2,559,678 | ||||
| 569,214,136 | ||||
| 186,068,621 | ||||
| 42,254,728 | ||||
| 50,696 | ||||
| (1,546,862) | ||||
| (12,578,746) | ||||
| (5,789,415) | ||||
| (2,731,826) | ||||
| 1,595,105 | ||||
| (1,188,936) | ||||
| 206,133,365 | ||||
| (377,833) | ||||
| 41,241,493 | ||||
| (1,591,582) | ||||
| (892) | ||||
| 2,292,100 | ||||
| 247,696,651 | ||||
| 321,545,423 | ||||
| 321,517,485 |
Intangible assets in progress, as at 31 December 2006, were mainly composed of software projects and software development.
As at 31 December 2006, the amount under the caption Patents and other similar rights includes net assets related with UMTS technology, 114,996,798 euro (127,774,219 euro as at 31 December 2005), and the fair value attributed to a group of brands with indefinite useful lives, among which the "Continente" brand, 75,000,000 euro (the same amount as at 31 December 2005).
The movement in Investment Properties during the years ended 31 December 2006 and 2005 was as follows:
| Investment Properties | ||||
|---|---|---|---|---|
| In Operation | Fit Out | In progress | Total | |
| Opening balance as at 1 January 2005 | 1,983,931,383 | - | 220,915,032 | 2,204,846,415 |
| Increases | 6,870,789 | 7,307,718 | 222,710,010 | 236,888,517 |
| Write-offs | - | - | (9,450,500) | (9,450,500) |
| Transfers | - | - | (119,733) | (119,733) |
| Transfers from investment properties | ||||
| in progress: | ||||
| Construction and other costs | 140,836,650 | - | (140,836,650) | - |
| Adjustment to fair value (Note 36) | 64,805,913 | - | (1,693,678) | 63,112,235 |
| Change in fair value of investment properties | ||||
| in operation (Note 36): | ||||
| - Gains | 165,725,617 | - | - | 165,725,617 |
| - Losses | (34,765,938) | - | - | (34,765,938) |
| Increases trough concentration of business activities | 112,000,000 | - | 4,297,936 | 116,297,936 |
| Change in consolidation method | (1,228,949,160) | (3,653,859) | (124,985,718) | (1,357,588,737) |
| Sale of investment properties | (20,121,000) | - | (45,911,634) | (66,032,634) |
| Disposal of companies | (9,650,000) | - | - | (9,650,000) |
| Currency translation differences | 48,137,998 | - | 19,909 | 48,157,907 |
| Opening balance as at 1 January 2006 | 1,228,822,252 | 3,653,859 | 124,944,974 | 1,357,421,085 |
| Increases | 6,946,420 | 427,160 | 101,733,460 | 109,107,040 |
| Write-offs | - | - | (11,605,863) | (11,605,863) |
| Reimbursements | - | (342,672) | - | (342,672) |
| Transfers | 125,000 | (125,000) | (39,212) | (39,212) |
| Transfers from investment properties | ||||
| in progress: | ||||
| Construction and other costs | 27,784,412 | 393,750 | (28,178,162) | - |
| Adjustment to fair value (Note 36) | 5,563,980 | (143,000) | - | 5,420,980 |
| Change in fair value of investment properties | ||||
| in operation (Note 36): | ||||
| - Gains | 129,663,984 | 469,922 | 130,133,906 | |
| - Losses | (5,199,436) | (394,143) | (5,593,579) | |
| Changes in consolidation percentage | (53,472,672) | (13,591,254) | (67,063,926) | |
| Brazil restruturation | 5,096,316 | 11,523 | 5,107,839 | |
| Sale of investment properties | (1,050,000) | (1,050,000) | ||
| Currency translation differences | (1,282,287) | (2,052) | (1,284,339) | |
| Closing balance as at 31 December 2006 | 1,342,997,969 | 3,939,876 | 173,273,414 | 1,520,211,259 |
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 Group over the period of the lease. The accounting treatment of fit outs is similar to the one used for other investment properties.
As at 31 December 2005, an impairment loss of 9,450,500 euro (Note 40) was recorded for the project in progress "Aegean Park".
As at 31 December 2006, the total amount invested to that date in the 3do Shopping and Leisure Centre Project (11,605,863 euro) has been written-off (Note 40).
As at 31 December 2006 and 2005, 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:
| 31.12.2006 | 31.12.2005 | |||
|---|---|---|---|---|
| Amount | Yield | Amount | Yield | |
| Portugal | 840,682,401 | 5,50% e 6,50% | 718,685,026 | 6,25% e 7,25% |
| Spain | 381,610,876 | 5,00% e 7,15% | 357,728,006 | 5,25% e 7,50% |
| Italy | 67,332,500 | 5,15% e 6,50% | 58,257,500 | 6,50% e 7,50% |
| Brazil | 57,312,068 | 10,50% e 11,50% | 97,805,579 | 11,00% e 12,50% |
| 1,346,937,845 | 1,232,476,111 |
The fair value of each investment property and fit out was determined by a valuation as at 31 December 2006, performed by an independent entity, based on valuation criteria generally accepted in the real estate business.
As at 31 December 2006 and 2005, Investment properties can be detailed as follows:
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Portugal: | ||
| Alverca | 2,858,800 | 2,838,625 |
| Cacém Shopping | 937,807 | 875,176 |
| Caldas da Rainha Shopping | 623,843 | - |
| Lima Retail Park | 2,918,714 | 2,148,968 |
| Parque de Famalicão | 1,498,238 | 1,427,234 |
| Rio Sul | - | 16,534,179 |
| Setubal Retail Park | 784,989 | 736,764 |
| Torres Colombo | 920,697 | 4,271,352 |
| VIII Avenida | 10,509,651 | - |
| Others | 295,116 | 605,518 |
| Germany: | ||
| 3DO | - | 7,932,227 |
| Alexa | 54,525,305 | 36,016,961 |
| Weiterstadt | 15,416,661 | - |
| Others | 10,586 | - |
| Brazil: | ||
| Others | 77,882 | 114,655 |
| Spain: | ||
| Dos Mares - expansão | 1,660,352 | 1,650,387 |
| El Rosal | 32,249,181 | 20,337,249 |
| Granada | 1,289,297 | - |
| Plaza Mayor Shopping | 11,580,899 | 6,319,577 |
| Greece: | ||
| Aegean Park | 4,771,822 | 4,725,071 |
| Star Dome | 1,106,965 | - |
| Others | 11,445 | 10,160 |
| Italy: | ||
| Freccia Rossa | 19,419,339 | 13,930,831 |
| Gli Orsi | 8,671,559 | 4,071,824 |
| Le Terraze | 960,723 | - |
| Others | 173,543 | 398,219 |
| 173,273,414 | 124,944,974 |
Investment properties in progress include borrowing expenses incurred during the construction period. As of 31 December 2006 and 2005, total borrowing expenses capitalised amounted to 5,689,438 euro and 5,786,876 euro respectively.
During the periods ended 31 December 2006 and 2005, income (fixed rents net of discounts, variable rents, common spaces rents, key income and cession rents) and corresponding direct operating expenses (property taxes, insurance expenses, maintenance expenses, management fees, asset management fees and other direct operating expenses), relating to investment properties of the Group, may be detailed as follows:
| Rents | Operational direct expenses | |||
|---|---|---|---|---|
| 31.12.2006 | 31.12.2005 Pro-forma |
31.12.2006 | 31.12.2005 Pro-forma |
|
| Portugal | 57,950,932 | 55,296,219 | 4,780,288 | 6,279,551 |
| Spain | 23,030,063 | 21,590,484 | 861,312 | 1,446,282 |
| Italy | 3,613,458 | 2,181,593 | 259,760 | 122,548 |
| Brazil | 10,638,536 | 9,232,807 | 761,760 | 922,248 |
| 95,232,989 | 88,301,103 | 6,663,120 | 8,770,629 |
As at 31 December 2006, the following investment properties were mortgaged:
| 3DO | La Farga |
|---|---|
| Airone | El Rosal |
| Alexander Platz | Loureshopping |
| Algarveshopping | Luz del Tajo |
| Arrabidashopping | Madeirashopping |
| Avenida M40 | Maiashopping |
| Cascaishopping | Norteshopping |
| Centro Colombo | Parque Atlântico |
| Centro Vasco da Gama | Parque Principado |
| Coimbrashopping | Plaza Éboli |
| Dos Mares | Plaza Mayor |
| Estação Viana | Plaza Mayor Shopping |
| Freccia Rossa | Rio Sul |
| Gaiashopping | Serra Shopping |
| Grancasa | Valecenter |
| Guimarãeshopping | Valle Real |
| Kareaga | Viacatarina |
| Zubiarte |
As at 31 December 2006 and 2005, there were no significant purchase obligations relating to investment properties in construction or under development, apart from the ones mentioned above.
During the periods ended 31 December 2006 and 2005, movements in goodwill, as well as in the corresponding impairment losses, are as follows:
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Gross value: | ||
| Opening balance | 248,887,726 | 453,242,056 |
| New companies | - | 28,425,917 |
| Increases | 21,187,104 | 81,762,041 |
| Decreases | (5,662,931) | (239,731,503) |
| De-merger | - | (49,255,959) |
| Sale with change in consolidation method | - | (25,554,825) |
| Closing balance | 264,411,899 | 248,887,726 |
| Accumulated impairment | ||
| losses: | ||
| Opening balance | 3,309,480 | - |
| Increases (Note 32) | 10,259,764 | 3,309,480 |
| Decreases | - | - |
| Closing balance | 13,569,244 | 3,309,480 |
| Carrying amount: | 250,842,655 | 245,578,246 |
During the period, increases in shareholdings generated goodwill amounting to 14,745,310 euro (20,330,762 euro as at 31 December 2005).
Decreases in Goodwill include 1,936,347 euro arising from sale of subsidiaries (227,071,232 euro as at 31 December 2005). The remaining amount relates to the impact of decreases in shareholdings.
As at 31 December 2006 and 2005, this caption is made up as follows:
| 31.12.2006 | 31.12.2005 | |||
|---|---|---|---|---|
| Non current | Current | Non current | Current | |
| Investment in associated companies | ||||
| Opening balance as at 1 January | 18,782,884 | - | 29,392,647 | - |
| Acquisitions in the period | 3,311,440 | - | 5,206,088 | - |
| Disposals in the period | (844,640) | - | (34,951,297) | - |
| Equity method effect | 8,087,588 | - | 21,696,600 | - |
| De-merger | - | - | (3,878,823) | - |
| Transfers | (704,369) | - | 1,317,669 | - |
| Closing balance as at 31 December | 28,632,903 | - | 18,782,884 | - |
| Goodwill transferred to Investments | 2,958,551 | 2,958,551 | ||
| Accumulated impairment losses (Note 32) | - | - | (844,130) | - |
| Investment in associated companies (Note 6) | 31,591,454 | - | 20,897,305 | - |
| Investments in group companies, jointly controlled companies | ||||
| or associated companies excluded from consolidation Opening balance as at 1 January |
11,438,259 | - | 74,113,537 | - |
| Acquisitions in the period | 1,452,294 | - | 7,409,474 | - |
| Disposals in the period | - | - | (15,719,727) | - |
| De-merger | - | (44,045,314) | ||
| Transfers | (219,213) | (10,319,711) | ||
| Closing balance as at 31 December | 12,671,340 | - | 11,438,259 | - |
| Accumulated impairment losses (Note 32) | (9,077,744) | - | (7,958,083) | - |
| 3,593,596 | - | 3,480,176 | - | |
| Investments held for sale | ||||
| Fair value (net of impairment losses) as at 1 January | 133,251,095 | 10,620,966 | 33,073,103 | 2,233,267 |
| Acquisitions in the period | 119,222,591 | 1,927,188 | 53,135,461 | 10,979,724 |
| Disposals in the period | (17,409,488) | (874,547) | (34,406,994) | (494,410) |
| Increase/(Decrease) in fair value | 17,717,293 | (258,263) | 34,980,725 | - |
| De-merger | - | - | (47,398) | (2,097,615) |
| Transfers | (23,318,744) | 21,797,058 | 46,516,198 | - |
| Fair value (net of impairment losses) as at 31 December | 229,462,747 | 33,212,402 | 133,251,095 | 10,620,966 |
| Other Investments (Note 7) | 233,056,343 | 33,212,402 | 136,731,271 | 10,620,966 |
| Derivative financial instruments (Note 26) | ||||
| Fair value as at 1 January | - | 60,475 | - | 87,325,645 |
| Acquisitions in the year | - | 2,580,917 | - | 301,900 |
| Disposals in the year | - | (2,591,934) | - | (87,567,070) |
| Increase/(Decrease) in fair value | - | - | - | - |
| Fair value as at 31 December | - | 49,458 | - | 60,475 |
| 264,647,797 | 33,261,860 | 157,628,576 | 10,681,441 |
Investments held for sale are disclosed above net of accumulated impairment losses (Note 32) amounting to 2,740,064 euro (2,770,033 euro as at 31 December 2005).
The use of the equity method had the following impacts: 10,425,088 euro are recorded in Share of results of associated undertakings (- 1,715,813 euro at 31 December 2005) and -2,337,500 euros are recorded as Other changes in Reserves (23,412,413 euro at 31 December 2005).
The caption Investments held for sale includes 65,000,740 euro of deposits in an Escrow Account, of which 32,500,370 euro disclosed as current assets and 32,500,370 euro as non-current assets, in accordance with the time schedule of the guarantee. Amounts in the escrow account are invested in investment funds with superior rating and guarantee contractual contingent liabilities which may arise from the sale of the Brazilian subsidiaries.
In 2005, at the moment of the sale of Brazilian subsidiaries, was recorded a provision of 27,000,000 euro for future commitments, the balance of this provision is 21,978,393 euro at 31 December 2006 (Note 32).
As at 31 December 2006 and 2005, Other non-current assets are detailed as follows:
| 31.12.2006 | 31.12.2005 | |||||
|---|---|---|---|---|---|---|
| Accumulated | Accumulated | |||||
| impairment | Carrying | impairment | Carrying | |||
| Gross Value | losses (Note 32) | Amount | Gross Value | losses (Note 32) | Amount | |
| Loans granted to related parties | ||||||
| Bar-Bar-Idade Glass - Serviç.de Gest.e Invest., SA | 6,402,717 | - | 6,402,717 | 12,000,000 | - | 12,000,000 |
| Andar - Sociedade Imobiliária, SA | 2,953,673 | - | 2,953,673 | 2,650,673 | - | 2,650,673 |
| Norscut - Concessionária de Scut Interior Norte, SA | 6,019,613 | - | 6,019,613 | 2,208,335 | - | 2,208,335 |
| Others | 1,932,716 | (270,489) | 1,662,227 | 2,207,966 | (294,805) | 1,913,161 |
| 17,308,719 | (270,489) | 17,038,230 | 19,066,974 | (294,805) | 18,772,169 | |
| Trade accounts receivable and other debtors | ||||||
| Legal deposits | 803,525 | - | 803,525 | 823,385 | - | 823,385 |
| Assets arising from to the sale of financial investmen | 12,444,829 | - | 12,444,829 | 1,911,424 | - | 1,911,424 |
| Lisbon and Malaga Town Councils | 4,400,585 | - | 4,400,585 | 4,723,019 | - | 4,723,019 |
| Rent deposits from tenants | 4,077,459 | - | 4,077,459 | 2,434,733 | - | 2,434,733 |
| Others | 1,714,853 | (721,326) | 993,527 | 9,808,363 | (4,722,917) | 5,085,446 |
| 23,441,251 | (721,326) | 22,719,925 | 19,700,924 | (4,722,917) | 14,978,007 | |
| Derivative financial instruments (Note 26) | 4,035,714 | - | 4,035,714 | - | - | - |
| Other non-current assets | 287,817 | - | 287,817 | 1,988,844 | - | 1,988,844 |
| 45,073,501 | (991,815) | 44,081,686 | 40,756,742 | (5,017,722) | 35,739,020 | |
As at 31 December 2006 and 2005, Stocks are detailed as follows:
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Raw materials and consumables | 22,163,157 | 17,097,930 |
| Goods for resale | 410,465,489 | 404,016,004 |
| By-products | 120 | 525 |
| Finished goods | 14,532,140 | 14,438,654 |
| Work in progress | 58,595,440 | 49,610,520 |
| Payments on account | 527,581 | 548,174 |
| 506,283,927 | 485,711,807 | |
| Accumulated impairment losses on Stocks (Note 32) | (25,098,215) | (25,230,922) |
| 481,185,712 | 460,480,885 |
Cost of goods sold as at 31 December 2006 and 2005 amounted to 2,530,272,888 euro and 3,737,853,812 euro, respectively, and may be detailed as follows:
| 31.12.2006 | 31.12.2005 | |||
|---|---|---|---|---|
| Total operations |
Total operations Pro-forma |
Total operations |
||
| Opening Stocks | 421,113,934 | 366,661,256 | 576,085,581 | |
| Exchange rate effect | (4,456) | - | 38,497,976 | |
| Changes in consolidation perimeter | - | - | (248,307,831) | |
| Acquisitions | 2,552,349,155 | 2,434,557,056 | 3,810,070,565 | |
| Adjustments | (13,017,111) | (18,462,174) | (22,128,814) | |
| Closing Stocks | 432,628,646 | 419,954,674 | 421,113,934 | |
| 2,527,812,876 | 2,362,801,464 | 3,733,103,543 | ||
| Impairment losses (Note 32) | 8,776,348 | 4,608,310 | 6,791,544 | |
| Reversion of impairment losses | (6,316,336) | (937,074) | (2,041,275) | |
| 2,530,272,888 | 2,366,472,700 | 3,737,853,812 |
As at 31 December 2006 and 2005, Trade accounts receivable are detailed as follows:
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Trade accounts receivable | ||
| Retail | 27,854,964 | 17,758,626 |
| Shopping Centres | 12,542,578 | 14,690,903 |
| Telecommunications | 147,172,976 | 136,893,800 |
| Other segments | 65,450,082 | 76,605,860 |
| 253,020,600 | 245,949,189 | |
| Trade Debtors, bills receivable | 7,527,908 | 6,383,363 |
| Doubtful debtors | 83,956,451 | 88,560,436 |
| 344,504,959 | 340,892,988 | |
| Accumulated impairment losses on Trade Debtors (Note 32) | (87,481,138) | (96,067,713) |
| 257,023,821 | 244,825,275 |
In the normal course of activity collection risks may arise in trade debtors. The amounts presented on the face of the balance sheet are net of impairment losses, which were estimated based on the Group's past experience and on the assessment of present economic conditions. As a result, amounts disclosed in Trade Debtors reflect their fair value.
Credit risk is not concentrated because of the significant number of trade debtors.
As at 31 December 2006 and 2005, Other debtors are made up as follows:
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Other debtors | ||
| Trade suppliers - debit balances | 27,236,144 | 32,445,023 |
| Special regime for payment of tax and social security debts | 14,576,053 | 14,576,053 |
| VAT recoverable on retail estate assets | 16,805,134 | 8,572,458 |
| Accounts receivable from the sale of tangible assets | 3,136,367 | 4,336,373 |
| Accounts receivable from the sale of investments | 14,009,841 | 260,410,243 |
| Securitisation of receivables | 3,421,873 | 1,684,510 |
| Amount to be received on the sale of Brazilian subsidiaries | 4,425,465 | 8,550,000 |
| Others | 34,919,991 | 49,691,201 |
| 118,530,868 | 380,265,861 | |
| Advances to trade creditors | 2,861,231 | 4,877,763 |
| Other loans granted | 8,875,129 | 19,758,938 |
| 130,267,228 | 404,902,562 | |
| Accumulated impairment losses on Other current Assets (Note 32) | (10,634,714) | (14,238,511) |
| 119,632,514 | 390,664,051 |
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 the Group and expects court decisions to be in favour of the Group. As a result, reimbursement of these taxes is expected.
In 2005, the main item in Accounts receivable from the sale of investments refers to the amount received from the sale of 17.04% of Sonae Sierra, SGPS, SA (226,260,029 euro).
As at 31 December 2006 and 2005, Taxes recoverable and taxes and contributions payable are made up as follows:
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Tax recoverable | ||
| Income taxation - payments on account and amounts withheld | 26,005,882 | 19,860,624 |
| VAT | 77,856,516 | 63,381,176 |
| Other taxes | 4,257,885 | 4,394,205 |
| 108,120,283 | 87,636,005 | |
| Taxes and contributions payable | ||
| Income taxation | 16,256,779 | 21,267,569 |
| VAT | 41,061,049 | 26,032,550 |
| Staff income tax withheld | 3,889,067 | 4,752,997 |
| Social security contributions | 14,337,437 | 14,371,354 |
| Other taxes | 4,055,074 | 3,390,098 |
| 79,599,406 | 69,814,568 |
As at 31 December 2006 and 2005, Other current assets are made up as follows:
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Invoices to be issued | 49,928,069 | 37,549,383 |
| Commercial discounts | 5,004,703 | 5,178,983 |
| Deferred cost - Rents | 3,533,571 | 3,527,674 |
| Deferred cost - External supplies and services | 10,669,057 | 11,771,694 |
| Other current assets | 11,391,737 | 7,548,359 |
| 80,527,137 | 65,576,093 |
Deferred tax assets and liabilities as at 31 December 2006 and 2005 can be detailed as follows, split between the different types of temporary differences:
| Deferred tax assets | Deferred tax liabilities | |||
|---|---|---|---|---|
| 31.12.2006 | 31.12.2005 | 31.12.2006 | 31.12.2005 | |
| Difference between fair value and acquisition cost | - | - | 231,612,650 | 200,453,376 |
| Harmonisation adjustments | 221,230 | 282,358 | 23,557,165 | 24,696,174 |
| Provisions and impairment losses not accepted for tax purposes | 12,559,298 | 13,201,778 | 4,277,987 | 2,560,614 |
| Write off of tangible and intangible assets | 24,983,311 | 28,640,493 | - | - |
| Write off of deferred costs | 31,301,988 | 23,436,106 | 2,154,133 | 2,067,858 |
| Valuation of hedging derivatives | 106,066 | 320,595 | 1,182,960 | 16,631 |
| Revaluation of tangible assets | - | - | 2,973,586 | 3,838,774 |
| Tax losses carried forward | 33,155,303 | 42,886,889 | - | - |
| Reinvested capital gains/(losses) | - | - | 4,227,223 | 4,485,183 |
| Others | 440,213 | (284,180) | 2,070,668 | 65,651 |
| 102,767,409 | 108,484,039 | 272,056,372 | 238,184,261 |
During the periods ended 31 December 2006 and 2005, movements in Deferred tax are as follows:
| Deferred tax assets | Deferred tax liabilities | ||||
|---|---|---|---|---|---|
| 31.12.2006 | 31.12.2005 | 31.12.2006 | 31.12.2005 | ||
| Opening balance | 108,484,039 | 216,951,425 | 238,184,261 | 388,090,849 | |
| Effect in results: | |||||
| Difference between fair value and acquisition cost | - | - | 46,862,220 | 60,713,539 | |
| Amortization and Depreciation harmonisation adjustments | (56,475) | (1,256,961) | (17,149) | 8,102,805 | |
| Provisions and impairment losses not accepted for tax purposes | (360,952) | 4,288,769 | 1,803,132 | 3,683,627 | |
| Write-off of tangible and intangible assets | (1,765,363) | 6,328,243 | 15,731 | 161,899 | |
| Write-off of accruals | 9,051,139 | 2,667,524 | 260,004 | 333,025 | |
| Valuation of hedging derivatives | (86,206) | (2,944,390) | (3,030) | (3,082,220) | |
| Revaluation of tangible assets | - | - | (712,847) | (89,953) | |
| Tax losses carried forward | (6,187,936) | (14,537,202) | - | - | |
| Reinvested capital gains/(losses) | - | - | (81,669) | (81,669) | |
| Changes in tax rates | (5,098,255) | - | (14,459,820) | - | |
| Others | 1,828 | (1,455,584) | 1,709,211 | 535,410 | |
| (4,502,220) | (6,909,601) | 35,375,783 | 70,276,463 | ||
| Effect in reserves: | |||||
| Difference between fair value and acquisition cost | - | - | (63,377) | 798,325 | |
| Valuation of hedging derivatives | (358,785) | (12,114,929) | 960,262 | (538,903) | |
| Exchange rate effect | (90,697) | 12,625,874 | (242,793) | 7,963,708 | |
| Fair value allocation in acquired companies | - | - | - | 1,362,272 | |
| De-merger | - | (54,795,890) | - | (40,794,379) | |
| Change in tax rate | (5,421) | 321,469 | (75,107) | (176,557) | |
| Others | 930,970 | 2,944,441 | 734,368 | (11,117,068) | |
| 476,067 | (51,019,035) | 1,313,353 | (42,502,602) | ||
| Changes in consolidation method | - | (12,411,493) | - | (199,255,986) | |
| Acquisitions of companies | - | 4,646,928 | - | 27,285,754 | |
| Disposals of companies | (1,690,477) | (42,774,185) | (2,817,025) | (5,710,217) | |
| Closing balance | 102,767,409 | 108,484,039 | 272,056,372 | 238,184,261 |
In Portugal, with the approval of the Local Finances Law, the municipal income tax will change from 2007 onwards, to a maximum of 1.5% on Taxable Profit. In the past this tax was payable as 10% of income tax. In Spain, with the change to Corporate Income Tax Law, corporate income tax rate, currently 35%, will change to 32.5% in 2007 end 30% in 2008.
As a consequence, Portuguese and Spanish companies included in the consolidation updated calculations of their deferred tax assets and liabilities using these new income tax rates. The effect of these changes has been recorded in the consolidated income statement under the caption Income tax or in the consolidated statement of changes in equity under the caption Hedging reserve in the case of deferred taxes arising from derivatives.
In accordance with the tax statements presented by companies that recorded deferred tax assets arising from tax losses carried forward, as at 31 December 2006 and 2005, and using exchange rates effective at that time, tax losses carried forward can be summarised as follows:
| 31.12.2006 | 31.12.2005 | |||||
|---|---|---|---|---|---|---|
| Tax losses carried forward |
Deferred tax assets | Time limit | Tax losses carried forward |
Deferred tax assets | Time limit | |
| With limited time use | ||||||
| Generated in 2000 | - | - | 2006 | 1,860,520 | 464,590 | 2006 |
| Generated in 2001 | 2,985,335 | 746,334 | 2007 | 7,365,362 | 2,010,374 | 2007 |
| Generated in 2002 | 21,471,094 | 5,367,773 | 2008 | 61,090,945 | 16,727,473 | 2008 |
| Generated in 2003 | 30,965,815 | 7,741,453 | 2009 | 32,257,714 | 9,013,529 | 2009 |
| Generated in 2004 | 4,448,448 | 1,112,113 | 2010 | 5,295,699 | 1,317,769 | 2010 |
| Generated in 2005 | 12,472,541 | 3,118,136 | 2011 | 10,614,908 | 2,926,903 | 2011 |
| Generated in 2006 | 14,719,573 | 3,679,893 | 2012 | - | - | |
| 87,062,806 | 21,765,702 | 118,485,148 | 32,460,638 | |||
| Without limited time use | 11,098,655 | 3,626,486 | 9,122,035 | 3,250,519 | ||
| With a time limit different from the above mentioned | 25,509,200 | 7,763,115 | 20,502,091 | 7,175,732 | ||
| 36,607,855 | 11,389,601 | 29,624,126 | 10,426,251 | |||
| 123,670,661 | 33,155,303 | 148,109,274 | 42,886,889 |
As at 31 December 2006 and 2005, 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 profits will arise which may be offset against available tax losses or against deductible temporary differences.
As at 31 December 2006, tax losses carried forward, amounting to 1,219,575,278 euro, have not originated deferred tax assets for prudential reasons. These may be summarised as follows:
| 31.12.2006 | 31.12.2005 | |||||
|---|---|---|---|---|---|---|
| Tax losses carried forward |
Deferred tax credit | Time limit | Tax losses carried forward |
Deferred tax credit | Time limit | |
| With limited time use | ||||||
| Generated in 2000 | - | - | 2006 | 67,743,331 | 18,629,417 | 2006 |
| Generated in 2001 | 117,286,551 | 29,321,637 | 2007 | 125,518,521 | 34,517,593 | 2007 |
| Generated in 2002 | 500,522,978 | 125,130,749 | 2008 | 679,213,519 | 186,783,717 | 2008 |
| Generated in 2003 | 58,549,755 | 14,637,441 | 2009 | 65,091,201 | 18,520,346 | 2009 |
| Generated in 2004 | 39,704,702 | 9,926,178 | 2010 | 41,053,702 | 11,326,503 | 2010 |
| Generated in 2005 | 208,993,098 | 52,248,279 | 2011 | 229,033,258 | 62,990,282 | 2011 |
| Generated in 2006 | 58,965,992 | 14,741,500 | 2012 | - | - | |
| 984,023,076 | 246,005,784 | 1,207,653,532 | 332,767,858 | |||
| Without limited time use | 195,577,768 | 59,103,221 | 133,678,160 | 46,113,016 | ||
| With a time limit different from the above mentioned | 39,974,434 | 13,464,826 | - | - | ||
| 1,219,575,278 | 318,573,831 | 1,341,331,692 | 378,880,874 |
As at 31 December 2006 and 2005, Cash and cash equivalents can be detailed as follows:
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Cash at hand | 4,173,072 | 2,799,622 |
| Bank deposits | 527,873,385 | 795,834,935 |
| Treasury applications | 130,428,983 | 113,659,759 |
| Cash and cash equivalents on the balance sheet | 662,475,440 | 912,294,316 |
| Bank overdrafts (Note 24) | (13,664,166) | (18,673,265) |
| Cash and cash equivalents on the statement of cash flows | 648,811,274 | 893,621,051 |
Bank overdrafts are disclosed in the balance sheet under Current bank loans.
As at 31 December 2006, 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 remuneration, with a nominal value of 1 euro each. As at that date, the company and group companies held 133,418,572 own shares (133,976,146 shares as at 31 December 2005), at a cost of 142,961,431 euro (143,630,520 euro as at 31 December 2005).
As at 31 December 2006, the following entities held more than 20% of the subscribed share capital:
| Entity | % |
|---|---|
| Efanor Investimentos, SGPS, SA and associated companies | 52.94 | |
|---|---|---|
| -- | --------------------------------------------------------- | ------- |
Movements in minority interests in the periods ended 31 December 2006 and 2005 are as follows:
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Opening balance as at 1 January | 394,707,612 | 785,515,290 |
| Dividends | (5,348,382) | (14,977,382) |
| Changes resulting from currency translation | (140,357) | 19,108,495 |
| Acquisition of companies | - | 16,198,094 |
| Disposal of companies | (925,013) | (25,864,330) |
| Sale of Sonae Sierra with change in consolidation method | - | (553,940,396) |
| De-merger of Sonae Indústria | - | 35,247,616 |
| Increased shareholding by acquisitions | (85,479,259) | - |
| Changes in hedge and fair value reserves | 1,165,585 | - |
| Others | 1,222,284 | (1,968,495) |
| Profit for the period attributable to minority interests | 96,855,844 | 135,388,720 |
| Closing balance as at 31 December | 402,058,314 | 394,707,612 |
As at 31 December 2006 and 2005, Borrowings are made up as follows:
| 31.12.2006 | 31.12.2005 | ||||||
|---|---|---|---|---|---|---|---|
| Outstanding amount | Outstanding amount | ||||||
| Amount limit | Current | Non Current | Amount limit | Current | Non Current | Repayable on | |
| Bank loans | |||||||
| Sonae, SGPS, SA - commercial paper | 350,000,000 | 260,500,000 | - | 350,000,000 | 340,950,000 | - | Aug/2014 |
| Modelo Continente, SGPS,SA - commercial paper | 163,000,000 | 160,000,000 | - | - | - | Sep/2009 | |
| a)b) Filiais da Sonae Sierra | 517,922,005 | 13,396,517 | 358,307,169 | 480,737,488 | 9,933,335 | 363,688,431 | Jan/2007 to May/2027 |
| a)c) Filiais da Sonae Sierra | 408,176,674 | 4,280,961 | 263,292,660 | 265,528,904 | 10,336,188 | 144,467,761 | May/2010 to Dec/2025 |
| Valecenter S.p.a. | - | - | 26,000,000 | 26,000,000 | - | - | |
| Optimus | 450,000,000 | - | 324,458,200 | 450,000,000 | - | 324,458,200 | Jun/2009 |
| Sonae Investments BV | 32,154,000 | 6,150,940 | 4,613,205 | 32,154,000 | 6,150,940 | 10,764,146 | Sep/2008 |
| Sonae Investments BV | 47,385,800 | - | - | 47,385,800 | - | - | Dec/2007 |
| d) Imoareia |
34,791,153 | - | - | 34,791,153 | 34,791,153 | - | Sep/2006 |
| e) Sonae Turismo - commercial paper |
110,000,000 | - | 73,050,000 | - | - | - | Aug/2009 |
| d) Investalentejo |
40,000,000 | 40,000,000 | - | 40,000,000 | - | 40,000,000 | Fev/2007 |
| Others | 12,636,383 | 8,078,556 | 145,316,357 | 28,714,745 | |||
| 496,964,801 | 1,031,799,790 | 573,477,973 | 912,093,283 | ||||
| Bank overdrafts (Note 21) | 13,664,166 | - | 18,673,265 | - | |||
| Amortised cost for bank loans and bonds | (577,968) | (14,698,227) | (456,212) | (19,257,382) | |||
| Bank loans | 510,050,999 | 1,017,101,563 | 591,695,025 | 892,835,901 | |||
| Bonds: | |||||||
| Bonds Sonae / 97 | 74,819,686 | - | 74,819,686 | 74,819,684 | Oct/2007 | ||
| Bonds Sonae / 05 | - | 100,000,000 | - | 100,000,000 | Mar/2013 | ||
| Bonds Sonae 2006/2011 | - | 250,000,000 | - | - | May/2011 | ||
| Bonds Modelo Continente / 2003 | - | 82,000,000 | - | 82,000,000 | Oct/2011 | ||
| Bonds Modelo Continente / 2004 | - | 100,000,000 | - | 100,000,000 | Mar/2009 | ||
| Bonds Modelo Continente / 2005 | - | 265,000,000 | - | 265,000,000 | Aug/2010 | ||
| Bonds Modelo Continente / 2005 | - | 150,000,000 | - | 150,000,000 | Aug/2012 | ||
| Bonds Sonae Imobiliária / 99 | - | - | 15,000,000 | - | Dec/2006 | ||
| Bonds Sonaecom / 2005 | - | 150,000,000 | - | 150,000,000 | Jun/2013 | ||
| Amortised cost for bank loans and bonds | (42,394) | (10,020,068) | (94,493) | (10,870,246) | |||
| 74,777,292 | 1,086,979,932 | 89,725,193 | 910,949,438 | ||||
| Other loans | 21,707,821 | 7,369,965 | 1,082,647 | 8,164,831 | |||
| Hedging derivatives (Note 26) | 116,043 | 121,116 | 959,050 | 481,953 | |||
| Other loans | 21,823,864 | 7,491,081 | 2,041,697 | 8,646,784 | |||
| Obligations under finance leases (Note 25) | 9,279,339 | 31,124,322 | 11,030,610 | 36,194,019 | |||
| 615,931,494 | 2,142,696,898 | 694,492,525 | 1,848,626,142 |
Credit facilities at Optimus bear interest at a rate equal to Euribor plus a spread linked to Optimus' financial performance, measured amongst others by the ratio of Net Debt to EBITDA. The guarantee facility used to secure loans made by the European Investment Bank (EIB) will be repaid in 2 instalments (30% in June 2008 and 70% in June 2009). The revolving credit facility will be repaid in June 2009.
Interest rate of the bonds are equal to Euribor 6 months plus a spread between 0.70% and 1.15%. In the non current bonds are included 665,000,000 euro that have the option to make whole or partial reimbursements in certain conditions.
Derivatives are recorded at fair value (Note 26).
The repayment schedule of the nominal value of borrowings may be summarised as follows:
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| N+1 a) | 616,442,048 | 694,084,181 |
| N+2 | 129,570,172 | 144,560,638 |
| N+3 | 424,233,376 | 126,167,422 |
| N+4 | 334,879,674 | 349,217,525 |
| N+5 | 354,825,551 | 333,764,184 |
| After N+5 | 923,779,069 | 924,562,049 |
| 2,783,729,890 | 2,572,355,997 |
a) Includes amounts drawn under commercial paper programmes.
As at 31 December 2006 and 2005, Obligations under finance leases are made up as follows:
| Obligations under finance leases | Minimum finance lease payments | Present value of minimum finance lease payments |
|||
|---|---|---|---|---|---|
| Amounts under finance leases: | 31.12.2006 | 31.12.2005 | 31.12.2006 | 31.12.2005 | |
| N+1 | 10,756,241 | 12,374,539 | 9,279,339 | 11,030,610 | |
| N+2 | 11,121,259 | 7,787,861 | 9,981,509 | 6,722,693 | |
| N+3 | 6,788,613 | 8,903,230 | 5,918,560 | 8,030,152 | |
| N+4 | 5,848,189 | 5,299,193 | 5,223,436 | 4,576,721 | |
| N+5 | 3,127,173 | 5,207,812 | 2,675,062 | 4,655,132 | |
| After N+5 | 8,282,745 | 13,498,785 | 7,325,755 | 12,209,321 | |
| 45,924,220 | 53,071,420 | 40,403,661 | 47,224,629 | ||
| Interest | -5,520,559 | -5,846,791 | |||
| 40,403,661 | 47,224,629 | ||||
| Current obligations under finance leases |
9,279,339 | 11,030,610 | |||
| Non-current obligations under finance leases | 31,124,322 | 36,194,019 |
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.
As at 31 December 2006, the fair value of finance leases is close to its accounting value.
Obligations under finance leases are guaranteed by related assets.
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Assets acquired under finance leases | ||
| Land and Buildings | 37,767,008 | 44,829,095 |
| Plant and machinery | 8,471,749 | 4,665,686 |
| Vehicles | 38,026 | 94,984 |
| Tools | 134,608 | 38,239 |
| Fixtures and Fittings | 9,866,148 | 10,161,235 |
| Other assets | - | 2,721 |
| Assets in progress | - | 738,162 |
| Total tangible assets (Note 9) | 56,277,539 | 60,530,122 |
| Investment properties | 9,253,000 | 8,628,500 |
| 121,808,078 | 129,688,744 |
The Group uses exchange rate derivatives, essentially to hedge future cash flows.
The Group contracted several exchange rate forwards and options in order to manage its exchange rate exposure.
As at 31 December 2006, the fair value of exchange rate derivatives, calculated based on present market value of equivalent financial instruments, is of 116,043 euro and is included in Current liabilities and 49,458 euros (60,475 euro as at 31 December 2005) on the caption Current investments.
Losses in the period arising from changes in the fair value of instruments that do not qualify for hedging accounting treatment, amounting to 127,060 euro, were recorded directly in the income statement in the caption Net financial expenses.
As at 31 December 2006, derivatives used by the Group essentially refer to "swaps" and interest rate options ("cash flow hedges"). These were negotiated to hedge the interest rate risk of loans amounting to 315,050,239 euro (255,692,090 euro as at 31 December 2005). The fair value of these derivatives amounts to 3,914,598 euro (-1,441,003 euro as at 31 December 2005), and is disclosed as Investments 4,035,714 euro and as current liabilities 121,116 euro. As at 31 December 2006 all derivatives are hedge derivatives. As at 31 December 2005 the value of 454.221 euro relates to derivatives on loans which no longer qualify as hedge derivatives, in spite of continuing to hedge interest risks.
These interest rate derivatives are valued at fair value, at the balance sheet date, based on valuations performed by the Group 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.
The hedging principles used by the Group when negotiating these financial derivatives are as follows:
Counterparts issuing derivative financial instruments are selected based on financial strength and credit risk established by internationally recognised rating agencies. These counterparts are nationally and internationally recognised first class financial institutions.
As at 31 December 2006 no contracts existed related to interest rate and exchange rate derivatives.
| Investments | Borrowings | |||
|---|---|---|---|---|
| 31.12.2006 | 31.12.2005 | 31.12.2006 | 31.12.2005 | |
| Derivatives not qualified as hedging | 49,458 | 60,475 | 116,043 | 454,221 |
| Hedging derivatives | ||||
| Exchange rate | - | - | - | - |
| Interest rate | 4,035,714 | - | 121,116 | 986,782 |
| Interest and exchange rate | - | - | - | - |
| Other derivatives | - | - | - | - |
| 4,085,172 | 60,475 | 237,159 | 1,441,003 |
As at 31 December 2006 and 2005 Other non-current liabilities were made up as follows:
| 31.12.2006 | 31.12.2005 | ||
|---|---|---|---|
| Shareholder loans | 39,583,455 | 50,411,714 | |
| Investments grants | - | - | |
| Fixed assets suppliers | 12,134,380 | 25,410,132 | |
| Other non-current liabilities | 34,158,804 | 481,162,421 | |
| Share based payments (Note 28) | 19,610,473 | 29,428,569 | |
| 105,487,112 | 586,412,836 |
The caption Shareholder loans relates to loans in affiliated undertakings in the Shopping Centres segment.
The caption Other non-current liabilities included 460,085,361 euro as at 31 December 2005 which corresponded to the present value of the consideration paid by the Santander Group for Modelo Continente, SGPS, SA shares.
On 9 May 2002, the company sold shares representing 19.95% of the share capital of its affiliated company Modelo Continente, SGPS, S.A. to Banco Santander Central Hispano and related companies (the Santander Group). This sale was part of agreements entered into with the Santander Group on 8 February 2002 to launch a tender offer for the whole of the share capital of that affiliated company not yet owned by Sonae, and the sales price per share was the offer price (1.85 euro).
At the same time, agreements with the Santander Group were signed, giving Sonae an option to repurchase the shares mentioned in the previous paragraph (open to be exercised during 4 years by an affiliated company appointed on 16 December 2002 for that purpose) and the Santander Group an option to sell them (open between the end of the 3rd year up to the end of the 4th year to be exercised by an affiliated company appointed on 16 December 2002 for that purpose). The share prices for these options are specified in the agreements and are indexed to the sales price and to financial variables.
In January 2003 the Santander Group subscribed shares representing 5.7% of the capital increase of Modelo Continente, SGPS, SA, under the same contractual arrangements. Consequently, the Santander Group changed its shareholding to 18.65% of the share capital of this company.
On 16 November 2004, the agreements mentioned above were renegotiated including a portion of the Modelo Continente, SGPS, S.A. shares acquired during the year. Consequently, as at 31 December 2004, the Santander Group held 30% of the share capital of that affiliated company.
The terms of the renegotiation maintained the share call option held by Sonae over the shares owned by the Santander Group which can be exercised at any moment, as well as the put option held by the Santander Group which can only be exercised after 30 November 2008. The share prices for these options are specified in the agreements and are indexed to the sales price and to financial variables.
On 19 May 2005, in an over the counter transaction, Sonae, SGPS, SA acquired 83,375,000 shares (7.58% of the share capital) of its affiliate Modelo Continente, SGPS, SA, for 150.4 million euro, under the terms of the Call Option contract signed on 16 November 2004.On 20 April 2006, the Group acquired, under the same terms, shares representing 13.3295% of the share capital of its affiliate Modelo Continente, SGPS, SA for 265,792,158.65 euro. On 9 September 2006, the Group acquired, under the same terms, shares representing 9.09% of the share capital of Modelo Continente, SGPS, SA, corresponding to the remaining shares held by the Santander Group under this contract, which as a result ceased to exist.
In 2006 and in previous years, the Sonae Group 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. The company has the choice to settle in cash instead of shares. The option can only be exercised if the employee still works for the Group on the vesting date.
As at 31 December 2006 and 2005, the market value of total liabilities arising from share-based payments, which have not yet vested, may be summarised as follows:
| Year of | Vesting | Number of | Fair value | ||
|---|---|---|---|---|---|
| grant | year | participants | 31.12.2006 | 31.12.2005 | |
| Shares | |||||
| 2003 | 2006 | 11 | 1,092,254 | 15,973,503 | |
| 2004 | 2007 | 424 | 11,900,666 | 9,654,065 | |
| 2005 | 2008 | 449 | 10,292,929 | 8,446,941 | |
| 2006 | 2009 | 488 | 8,178,748 | - | |
| 31,464,597 | 34,074,509 | ||||
| Options | |||||
| 2002 | 2005 | - | - | 4,203,376 | |
| 2003 | 2006 | - | - | - | |
| 2004 | 2007 | - | - | - | |
| 2005 | 2008 | - | - | - | |
| 2006 | 2009 | - | - | - | |
| 0 | 4,203,376 | ||||
| Total | 31,464,597 | 38,277,885 |
As at 31 December 2006 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:
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Staff costs | 14,685,014 | 16,397,493 |
| Retained earnings | 7,896,110 | 13,031,076 |
| 22,581,124 | 29,428,569 | |
| Other current liabilities | 2,970,651 | - |
| Other non-current liabilities | 19,610,473 | 29,428,569 |
| 22,581,124 | 29,428,569 |
The movement in the number of options open in the nine months period ended 31 December 2006 is as follows:
| 31.12.2006 | |
|---|---|
| Opening balance | 2,406,224 |
| Granted in the period | - |
| Exercised in the period | (1,803,129) |
| Expired and not exercised in the period | (14,691) |
| Closing balance | 588,404 |
| Vesting date | 2004 | 2005 | 2006 | 2007 | 2008 | Total |
|---|---|---|---|---|---|---|
| Exercisable until: | 31.03.05 | 31.03.06 | 31.03.07 | 31.03.08 | 31.03.09 | |
| Exercise price (defined at date of grant) |
3.014 € | 1.694 € | - | - | - | |
| Total liability | - | - | - | - | - | - |
| Recorded liability | - | - | - | - | - | - |
| Number of options open | - | 588,404 | - | - | - | 588,404 |
| Number of options exercised in the period |
(285,406 ) | (1,517,723 ) | - | - | - | (1,803,129 ) |
| Number of options expired but not exercised in the period |
- | (14,691 ) | - | - | - | (14,691 ) |
| Average market-price of options exercised in the period |
4.087 € | 4.295 € |
As at 31 December 2006 and 2005, Trade accounts payable were made up as follows:
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Trade creditors current account | ||
| Retail | 469,164,814 | 454,106,013 |
| Shopping Centres | 6,961,989 | 9,188,401 |
| Telecommunications | 105,648,256 | 100,207,056 |
| Other segments | 68,497,330 | 76,168,660 |
| 650,272,389 | 639,670,130 | |
| Trade creditors - Invoices Accruals | 166,431,648 | 158,565,925 |
| Trade creditors - Bills payable | 13,050,699 | 10,444,926 |
| 829,754,736 | 808,680,981 |
As at 31 December 2006 and 2005, this caption relates only to trade payables due in the normal course of Group companies activities. The Board of Directors believes that the fair market value of these payables is approximate to the book value.
As at 31 December 2006 and 2005, Other creditors were made up as follows:
| 31.12.2006 | 31.12.2005 | ||
|---|---|---|---|
| Related undertakings | 8,742,299 | 29,107,161 | |
| Fixed asset suppliers | 117,671,933 | 79,751,869 | |
| Others debts | 72,435,771 | 68,104,841 | |
| Factoring | - | 18,282,079 | |
| 198,850,003 | 195,245,950 |
The caption Other debts includes a put option, amounting to 37,069,900 Brazilian reais (13 million euro), granted by the Group to shareholders of a company in the Retail segment, which has been disposed of during 2005, when the put option is exercised the Group will, as a result of agreements already signed, sell those shares for an amount of 4,425,464 euros.
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Property investments accruals | 10,099,852 | 3,733,301 |
| Holiday pay and bonuses | 101,953,829 | 98,573,788 |
| Interest payable | 19,120,931 | 12,409,099 |
| Invoices to be issued | 42,812,640 | 25,558,463 |
| Commissions | 10,255,583 | 12,605,394 |
| Marketing expenses | 10,723,832 | 12,085,832 |
| Other external supplies and services | 32,380,739 | 31,147,265 |
| Accrued income - trade debtors | 33,617,990 | 27,818,663 |
| Accrued income - rents | 4,597,545 | 4,628,367 |
| Subsidies | 668,395 | 615,621 |
| Pre-paid minutes not yet used | 18,324,662 | 18,442,888 |
| Others | 31,540,135 | 25,419,296 |
| 316,096,133 | 273,037,977 |
Movements in Provisions and impairment losses over the period ended 31 December 2006 and 2005 are as follows:
| Balance as at | Balance as at | |||
|---|---|---|---|---|
| 01.01.2006 | Increase | Decrease | 31.12.2006 | |
| Accumulated impairment losses on investments (Note 13) | 11,571,901 | 1,236,297 | (990,390) | 11,817,808 |
| Accumulated impairment losses on other non-current assets (Note 14) | 5,017,722 | 536,382 | (4,562,289) | 991,815 |
| Accumulated impairment losses on trade accounts receivable (Note 16) | 96,067,713 | 7,974,076 | (16,560,651) | 87,481,138 |
| Accumulated impairment losses on other debtors (Note 17) | 14,238,511 | 1,148,875 | (4,752,672) | 10,634,714 |
| Accumulated impairment losses on stocks (Note 15) | 25,230,922 | 9,459,929 | (9,592,636) | 25,098,215 |
| Non-current provisions | 54,477,919 | 20,222,825 | (11,466,009) | 63,234,735 |
| Current provisions | 2,284,983 | 564,261 | (385,153) | 2,464,091 |
| 208,889,671 | 41,142,645 | (48,309,800) | 201,722,516 |
| Changes in | |||||
|---|---|---|---|---|---|
| Balance as at | consolidation | Balance as at | |||
| 01.01.2005 | Increase | Decrease | perimeter | 31.12.2005 | |
| Accumulated impairment losses on investments (Note 13) | 53,682,218 | 1,063,973 | (150,471) | (43,023,819) | 11,571,901 |
| Accumulated impairment losses on other non-current assets (Note 14) | 22,061,191 | 2,439,051 | (432,541) | (19,049,979) | 5,017,722 |
| Accumulated impairment losses on trade accounts receivable (Note 16) | 124,202,723 | 12,569,006 | (14,102,531) | (26,601,485) | 96,067,713 |
| Accumulated impairment losses on other debtors (Note 17) | 16,554,191 | 809,318 | (2,257,789) | (867,209) | 14,238,511 |
| Accumulated impairment losses on stocks (Note 15) | 24,660,246 | 6,975,389 | (2,367,547) | (4,037,166) | 25,230,922 |
| Non-current provisions | 57,189,153 | 53,307,541 | (12,823,828) | (43,194,947) | 54,477,919 |
| Current provisions | 13,937,849 | 5,721,541 | (6,717,288) | (10,657,119) | 2,284,983 |
| 312,287,571 | 82,885,819 | (38,851,995) | (147,431,724) | 208,889,671 |
| 31.12.2005 | |
|---|---|
| Disposal of companies | (27,933,358) |
| De-merger of Sonae Indústria | (106,528,501) |
| Change in consolidation method of Sonae Sierra | (13,270,625) |
| Others | 300,760 |
| (147,431,724) |
| 31.12.2006 | |
|---|---|
| Provisions and impairment losses | 27,956,063 |
| Impairment losses not included in this note | |
| Goodwill (Note 12) | (10,259,764) |
| Tangible assets (Note 9) | (2,071,830) |
| Provisions for losses in investments | 1,120,000 |
| Provisions for dismantling telecommunication sites (a) | 12,222,080 |
| Provision for stock impairments | |
| Recorded in cost of goods sold (Note 15) | 8,776,348 |
| Recorded in changes in stocks | 683,581 |
| Others | 2,716,167 |
| 41,142,645 |
(a) These costs are capitalized as tangible assets and amortized over the expected useful life of related assets.
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Expenses to be incurred with the sale of the Brazilian subsidiaries in 2005 (Note 13) |
21,978,393 | 27,000,000 |
| Dismantling of telecommunication sites | 15,105,140 | 2,883,060 |
| Judicial claims | 9,508,036 | 7,523,848 |
| Client guarantees | 4,468,711 | 3,968,987 |
| Others | 14,638,546 | 15,387,007 |
| 65,698,826 | 56,762,902 |
Impairment losses are deducted from the book value of the corresponding asset.
As at 31 December 2006 and 2005, Contingent assets and liabilities were made up as follows:
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Guarantees given: | ||
| on tax claims | 59,497,367 | 64,279,059 |
| on judicial claims | 4,648,827 | 2,135,699 |
| on municipal claims | 17,678,401 | 8,439,969 |
| others | 126,839,733 | 257,411,155 |
Others include the following guarantees:
As at 31 December 2005, shares representing 31.83% of the share capital of Modelo Continente, SGPS, S.A. were pledged to the Santander Group as part of the contractual obligations arising from the call and put option agreements on Modelo Continente's shares. This pledge was cancelled as a result of the exercise of the related purchase option (Note 27).
Minimum lease payments (fixed income) arising from operational leases, in which the Group acts as a lessor, recognized as income during the period ended 31 December 2006 and 2005 amounted to 89,962,701 euro and 85,388,038 euro (pro-forma), respectively.
Additionally, as at 31 December 2006 and 2005, the Group had operational lease contracts, as a lessor, whose minimum lease payments (fixed income) had the following payment schedule:
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Due in: | ||
| N+1 automatically renewal | 672,397 | - |
| N+1 | 76,861,855 | 78,197,265 |
| N+2 | 67,850,637 | 70,368,094 |
| N+3 | 60,098,966 | 60,448,535 |
| N+4 | 44,393,267 | 52,554,422 |
| N+5 | 32,000,450 | 36,348,033 |
| After N+5 | 7,788,646 | 35,590,995 |
| 289,666,218 | 333,507,344 |
Rents arising from operational leases, in which the Group acts as a lessee, during the period ended 31 December 2006 amounted to 21,689,433 euro.
Additionally, as at 31 December 2006, the Group had operational lease contracts, as a lessee, whose minimum lease payments had the following payment schedule:
| 31.12.2006 | |
|---|---|
| Due in: | |
| N+1 automatically renewal | 8,145,900 |
| N+1 | 12,736,548 |
| N+2 | 10,797,480 |
| N+3 | 8,899,894 |
| N+4 | 5,306,161 |
| N+5 | 3,095,073 |
| After N+5 | 6,925,345 |
| 47,760,501 |
As at 31 December 2006 and 2005, Turnover is made up as follows:
| 31.12.2006 | 31.12.2005 | |||
|---|---|---|---|---|
| Total operations | Total operations Pro-forma |
Total operations | ||
| Sale of goods | 3,044,824,125 | 2,903,750,374 | 4,326,872,284 | |
| Sale of products | 192,198,675 | 95,767,004 | 858,140,755 | |
| 3,237,022,800 | 2,999,517,378 | 5,185,013,039 | ||
| Services Rendered | 1,146,779,936 | 1,117,384,529 | 1,207,501,235 | |
| Turnover | 4,383,802,736 | 4,116,901,907 | 6,392,514,274 |
As at 31 December 2006 and 2005, Value created on investment properties is made up as follows:
| 31.12.2006 31.12.2005 |
|||
|---|---|---|---|
| Total operations | Total operations Pro-forma |
Total operations | |
| Properties previously under development and opened | |||
| during the period (Note 11) | 5,420,980 | 34,307,078 | 63,112,235 |
| Property investment subsequent costs | - | - | - |
| Change in fair value of investment properties in | |||
| operation (Note 11) | |||
| Gains | 130,133,905 | 79,066,853 | 165,725,617 |
| Losses | (5,593,579) | (15,348,164) | (34,765,938) |
| 129,961,306 | 98,025,767 | 194,071,914 |
| 31.12.2006 | 31.12.2005 | ||
|---|---|---|---|
| Total operations | Total operations Pro-forma |
Total operations | |
| Supplementary income | 255,984,832 | 254,029,794 | 287,873,558 |
| Own work capitalised | 128,558,569 | 120,010,466 | 150,269,680 |
| Reversion of impairment losses | 12,813,979 | 11,010,928 | 10,748,203 |
| Gains on sales of assets | 6,189,993 | 3,122,952 | 85,241,883 |
| Key money | 5,830,606 | 6,552,018 | 13,104,222 |
| Subsidies | 2,672,597 | 1,005,679 | 6,799,927 |
| Taxes refunded | 239,495 | 93,330 | 4,533,436 |
| Others | 10,591,567 | 16,011,884 | 29,205,970 |
| 422,881,638 | 411,837,051 | 587,776,879 |
Supplementary income includes mainly income related with the share of suppliers in promotional campaigns in the retail business.
As at 31 December 2006 and 2005, External supplies and services are made up as follows:
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Total operations | Total operations Pro-forma |
Total operations |
| 551,711,852 | 513,851,485 | 538,443,125 |
| 113,794,069 | 95,853,479 | 148,414,522 |
| 113,566,059 | 112,776,760 | 150,086,758 |
| 78,219,013 | 86,098,427 | 109,650,808 |
| 58,718,041 | 54,580,660 | 57,986,095 |
| 41,250,331 | 37,254,871 | 130,286,895 |
| 39,389,874 | 31,843,464 | 98,723,675 |
| 31,046,202 | 31,564,871 | 83,257,768 |
| 20,270,454 | 18,325,356 | 26,973,132 |
| 98,673,579 | 95,058,609 | 175,752,570 |
| 1,146,639,474 | 1,077,207,982 | 1,519,575,348 |
As at 31 December 2006 and 2005, Staff costs are made up as follows:
| 31.12.2006 | 31.12.2005 | ||
|---|---|---|---|
| Total operations | Total operations Pro-forma |
Total operations | |
| Salaries | 450,059,871 | 428,907,339 | 637,656,047 |
| Social security contributions | 90,240,554 | 84,919,705 | 133,681,575 |
| Insurance | 9,619,424 | 8,569,126 | 9,851,689 |
| Welfare | 2,557,104 | 2,614,916 | 14,040,295 |
| Other staff costs | 18,170,992 | 15,163,452 | 29,144,385 |
| 570,647,945 | 540,174,538 | 824,373,991 |
| 31.12.2006 | 31.12.2005 | ||
|---|---|---|---|
| Total operations | Total operations Pro-forma |
Total operations | |
| ATM expenses | 19,447,908 | 18,900,554 | 28,699,626 |
| Other taxes | 19,008,766 | 20,130,539 | 37,316,481 |
| Write-off of investment properties (Note 11) | 11,605,863 | 4,725,250 | 9,450,500 |
| Losses on sales of assets | 6,612,265 | 6,285,218 | 13,341,349 |
| Property tax | 6,379,805 | 5,244,644 | 10,793,350 |
| Donations | 5,681,233 | 5,180,845 | 5,320,909 |
| Doubtful debts written-off | 3,367,405 | 4,218,928 | 5,512,632 |
| Others | 16,026,067 | 15,133,782 | 28,338,577 |
| 88,129,312 | 79,819,760 | 138,773,424 |
As at 31 December 2006 and 2005, Net financial expenses were made up as follows:
| 31.12.2006 | 31.12.2005 | ||
|---|---|---|---|
| Total operations | Total operations Pro-forma |
Total operations | |
| Expenses: | |||
| Interest payable | |||
| related with bank loans and overdrafts | (44,691,127) | (46,148,489) | (93,874,351) |
| related with non convertible bonds | (44,520,519) | (18,830,026) | (26,272,010) |
| related with financial leases | (1,747,987) | (1,411,023) | (1,678,850) |
| others | (6,546,553) | (17,951,094) | (23,192,667) |
| (97,506,186) | (84,340,632) | (145,017,878) | |
| Exchange losses | (3,665,461) | (1,838,625) | (14,761,552) |
| Payment discounts given | (912,474) | (1,501,309) | (13,121,052) |
| Losses on fair value of hedge derivatives | (127,060) | (7,851,091) | (7,851,281) |
| Other financial expenses | (24,899,047) | (23,862,439) | (48,085,588) |
| (127,110,228) | (119,394,096) | (228,837,351) | |
| Income: | |||
| Interest receivable | 20,357,229 | 20,371,513 | 26,220,456 |
| Exchange gains | 4,176,121 | 3,438,225 | 26,292,251 |
| Payment discounts received | 166,050 | 169,458 | 6,030,336 |
| Gains on fair value of hedge derivatives | 563,142 | 5,361,975 | 5,377,196 |
| Other financial income | 2,313,633 | 5,270,062 | 11,554,688 |
| 27,576,175 | 34,611,233 | 75,474,927 | |
| Net financial expenses | (99,534,053) | (84,782,863) | (153,362,424) |
As at 31 December 2006 and 2005, Investment income was made up as follows:
| 31.12.2006 31.12.2005 |
|||
|---|---|---|---|
| Total operations | Total operations Pro-forma |
Total operations | |
| Dividends | 1,797,003 | 14,496,140 | 14,543,198 |
| Adjustments to fair value on investments recorded at fair value through profit and loss |
92,821 | - | - |
| Roll up of Sonaecom | 58,775,803 | - | - |
| Sale of Retailbox BV | 26,494,202 | - | - |
| Sale of shares in Sonae Sierra Brazil | 19,377,866 | - | - |
| Sale of Hospimob | 12,334,800 | - | - |
| Partial sale of ba Vidro | 3,222,401 | 38,184,913 | 38,184,913 |
| Sale of Brazilian companies | - | - | 141,277,164 |
| Sale of Gescartão Group | - | - | 31,691,605 |
| Sale of shares in Tafisa | - | - | 9,763,770 |
| Sale of 17.04% of Sonae Sierra | - | - | 54,737,659 |
| Others | 14,552,086 | 28,517,004 | 14,981,998 |
| Income on the sale of investments | 134,757,158 | 66,701,917 | 290,637,109 |
| Impairment losses on investments | (1,120,000) | (456,199) | (711,826) |
| 135,526,982 | 80,741,858 | 304,468,481 |
In October 2006, Sonaecom, SGPS, SA made a share capital increase which was subscribed by means of a share for share exchange of shareholdings in Optimus for Sonaecom shares. This roll up generated a 58,775,803 euro gain in Sonae SGPS, SA's consolidated accounts, due to the decrease in the shareholding at Sonaecom SGPS, SA and to the increase in the shareholding at Optimus.
In October 2006, Sonae Sierra, SGPS, SA sold 50% of Sonae Sierra Brazil BV (which held, directly and indirectly, all subsidiaries of Sonae Sierra in Brazil) for 31,168,164 euro, considering the 50% impact in the Sonae SGPS, SA consolidated financial statements arising from the use of the proportionate method of accounting, thus generating a gain of 19,377,866 euro, already including the impact of the transfer of conversion reserves in the amount of 11,563,098 euro.
As at 31 December 2006 and 2005, Taxation is made up as follows:
| 31.12.2006 | 31.12.2005 | ||
|---|---|---|---|
| Total operations | Total operations Pro-forma |
Total operations | |
| Current tax | 26,262,038 | 29,911,577 | 42,654,324 |
| Deferred tax (Note 20) | 38,695,357 | 33,982,168 | 77,186,064 |
| 64,957,395 | 63,893,745 | 119,840,388 |
Deferred taxation includes 1,182,646 euro of a withholding tax credit on income received from participation units in the Real Estate Investment Fund Imosonae Dois.
The reconciliation between the profit before taxation and the tax charge for the period ended 31 December 2006 may be summarised as follows:
| 31.12.2006 | |
|---|---|
| Profit before income tax | 403,635,472 |
| Difference between accounting and tax of capital gains/(losses) | (35,705,716) |
| Results of associated undertakings | (10,390,538) |
| Impairment of goodwill | 10,259,764 |
| Provisions and impairment losses not accepted for tax purposes | (5,282,785) |
| Permanent differences | 43,606,028 |
| Taxable Profit | 406,122,225 |
| Use of tax losses carried forward | (272,420,042) |
| Recognition of tax losses that have not originated deferred tax assets | 166,030,806 |
| 299,732,989 | |
| Income tax rate in Portugal | 27.50% |
| 82,426,572 | |
| Effect of different income tax rates in other countries | 2,408,207 |
| Effect of change in tax income rate in the calculation of deferred taxes | (9,361,565) |
| Effect of increases or decreases in deferred taxes | (11,277,538) |
| Under / (over) taxation estimates | (465,223) |
| Autonomous taxes and tax benefits | 1,226,943 |
| Taxation | 64,957,396 |
As at 31 December 2006 and 2005, the reconciliation of consolidated net profit can be analysed as follows:
| 31.12.2006 | 31.12.2005 Pro-forma |
|
|---|---|---|
| Aggregate net profit | 1,158,198,606 | 691,896,273 |
| Use of the proportionate method | (473,709,920) | (366,184,890) |
| Harmonisation adjustments | (14,842,023) | (105,996,074) |
| Elimination of intragroup dividends | (323,646,188) | (387,333,679) |
| Elimination of intragroup capital gains and losses | (34,058,620) | 145,025,712 |
| Elimination of intragroup provisions | (28,629,328) | 673,905 |
| Consolidation adjustments to gains/(losses) on sales of investments |
56,410,900 | 280,458,562 |
| Others | (1,045,350) | 6,839,819 |
| Consolidated net profit for the year | 338,678,077 | 265,379,628 |
Balances and transactions during the periods ended 31 December 2006 and 2005 with related parties are detailed as follows:
| Sales and services rendered | Purchases and services obtained | |||
|---|---|---|---|---|
| Transactions | 31.12.2006 | 31.12.2005 | 31.12.2006 | 31.12.2005 |
| Parent company and group companies excluded from consolidation |
51,194,421 | 29,441,019 | 91,234 | 1,962,087 |
| Jointly controlled companies | 38,400,576 | 37,917,879 | 16,393,633 | 1,070,860 |
| Associated companies | 2,247,248 | 3,027,715 | 20,205,910 | 11,206,737 |
| Other partners in Group companies | 67,419,596 | 12,831,935 | 16,269,190 | 6,529,776 |
| 159,261,841 | 83,218,548 | 52,959,967 | 20,769,460 |
| Interest income | Interest expenses | |||
|---|---|---|---|---|
| Transactions | 31.12.2006 | 31.12.2005 | 31.12.2006 | 31.12.2005 |
| Parent company and group companies excluded from consolidation |
- | 29,646 | 419,113 | 52,960 |
| Jointly controlled companies | 4,568 | 331,050 | 971,631 | 7,458 |
| Associated companies | 27,698 | 5,950 | - | 45,955 |
| Other partners in Group companies | - | 474,277 | 2,501,884 | 6,096,746 |
| 32,266 | 840,923 | 3,892,628 | 6,203,119 | |
| Accounts receivable | Accounts payable | |||
| Balances | 31.12.2006 | 31.12.2005 | 31.12.2006 | 31.12.2005 |
| Parent company and group companies excluded from consolidation |
14,552,845 | 12,640,910 | 153,280 | 367,578 |
| Jointly controlled companies | 7,957,621 | 29,268,146 | 5,773,297 | 3,757,773 |
| Associated companies | 1,717,859 | 6,929,214 | 2,240,411 | 2,283,497 |
| Other partners in Group companies | 11,244,638 | 9,553,739 | 13,826,646 | 13,688,689 |
| 35,472,963 | 58,392,009 | 21,993,634 | 20,097,537 | |
| Loans | ||||
| Obtained | Granted | |||
| Balances | 31.12.2006 | 31.12.2005 | 31.12.2006 | 31.12.2005 |
| Parent company and group companies excluded from consolidation |
12,750,000 | 2,750,000 | 6,402,717 | 2,208,335 |
|---|---|---|---|---|
| Jointly controlled companies | 1,179,061 | 23,133,138 | 72,035 | 1,254,924 |
| Associated companies | - | - | 8,432,023 | 20,129,907 |
| Other partners in Group companies | 31,346,566 | 36,809,925 | - | - |
| 45,275,627 | 62,693,063 | 14,906,775 | 23,593,166 |
In 2006 and 2005, members of the Board of Directors were attributed the following remuneration:
| 31.12.2006 31.12.2005 |
||
|---|---|---|
| Fixed remuneration | 2,333,550 | 2,475,600 |
| Variable remuneration | 2,357,350 | 2,369,221 |
| 4,690,900 | 4,844,821 |
Remunerations attributed in 2006 to key management staff of main companies of the Sonae Group (excluding members of Sonae SGPS, SA Board of Directors) amounted to 8,522,676 euro, of which 4,625,460 euro are fixed remunerations and 3,897,216 euro are performance bonuses.
Earnings per share for the period, excluding the effect of discontinuing operations, were calculated taking into consideration the following amounts:
| 31.12.2006 | 31.12.2005 | |||
|---|---|---|---|---|
| Total operations | Total operations Pro-forma |
Total operations | ||
| Net profit Net profit taken into consideration to calculate basic earnings per share (Net profit for the nine months period attributable to equity holders of Sonae) |
241,822,233 | 186,467,016 | 512,803,285 | |
| Effect of dilutive potential shares | - | - | - | |
| Interest related to convertible bonds (net of tax) | - | - | - | |
| Net profit taken into consideration to calculate diluted earnings per share: |
241,822,233 | 186,467,016 | 512,803,285 | |
| Number of shares | ||||
| Weighted average number of shares used to calculated basic earnings per share |
1,866,382,294 | 1,865,952,847 | 1,865,952,847 | |
| Effect of dilutive potential ordinary shares from convertible bonds |
- | - | - | |
| Weighted average number of shares used to calculated diluted earnings per share |
1,866,382,294 | 1,865,952,847 | 1,865,952,847 | |
| Earnings per share (basic and diluted) | 0.129567 | 0.099931 | 0.274821 |
There are no convertible instruments included in Sonae, SGPS shares thereby, hence is no dilutive effect.
As at 31 December 2006 and 2005, cash receipts and cash payments related to investments can be analysed as follows:
| 31.12.2006 | 31.12.2005 Pro-forma | ||||
|---|---|---|---|---|---|
| Amount received | Amount received | Amount received | |||
| Sale of Eirles Three Junior Notes | 30,317,580 | - | - | - | |
| Sale of Hospimob - Imobiliária, SA | 21,034,800 | 8,700,000 | - | - | |
| Sale of 50% of Sierra Brazil Bv shares | 15,584,082 | - | - | - | |
| Sale of Retailbox BV | 27,471,591 | - | - | - | |
| Sale of 17% of Sonae Sierra shares in 2005 | 226,260,029 | - | - | - | |
| Partial sale of Barbalidade Glass | 4,472,044 | - | 115,824,709 | - | |
| Acquisition of Modelo Continente shares | - | 505,641,299 | - | 150,436,014 | |
| Acquisition of PT shares | - | 105,988,029 | - | - | |
| Acquisition of Sonaecom shares | - | 34,372,300 | - | - | |
| Acquisition of Sonae Sierra subsidiary shares | - | - | - | 64,992,010 | |
| Acquisition of Unibroker | - | - | - | 12,034,352 | |
| Acquisition of Optimus shares | - | - | - | 18,607,151 | |
| Others | 57,300,506 | 38,281,706 | 80,632,233 | 56,534,588 | |
| 382,440,632 | 692,983,334 | 196,456,942 | 302,604,115 |
In the Shareholders Annual General Meeting held on 6 April 2006, payment of a gross dividend of 0.025 euro per share (0.02 euro per share in 2005) was approved. This was paid on 5 May 2006, the total amount attributed being 46,650,596.35 euro (37,316,439.58 euro in 2005).
For 2006, the Board of Directors proposed a gross dividend of 0.03 euro per share. In view of the fact that the Board of Directors intends to maintain the number of own shares held until dividend is paid, total amount of dividends is estimated to be 55,997,442.84 euro. This dividend is subject to approval by shareholders in the Shareholders Annual Meeting.
In 2006 and 2005, the following were identified as primary business segments:
The geographic segments (secondary) identified in 2006 and 2005 are listed as follows:
The contribution of the business segments to the income statement for the periods ended on 31 December 2006 and 2005 can be detailed as follows:
| 31 December 2006 | Retail | Shopping | Telecomm. | Sonae | Holding | Consolidation | Total Operations |
|---|---|---|---|---|---|---|---|
| Centres | Capital | and Others | Adjustments | ||||
| Operational income | |||||||
| Sales | 2,959,484,816 | - | 79,043,855 | 188,429,113 | 10,065,016 | - | 3,237,022,800 |
| Services rendered | 124,349,516 | 136,861,526 | 733,907,666 | 150,592,423 | 1,068,805 | - | 1,146,779,936 |
| Value created on investments properties | - | 129,961,306 | - | - | - | - | 129,961,306 |
| Other operational income | 218,660,336 | 17,810,803 | 31,220,350 | 160,483,594 | 1,445,186 | (6,738,631) | 422,881,638 |
| 3,302,494,668 | 284,633,635 | 844,171,872 | 499,505,130 | 12,579,007 | (6,738,631) | 4,936,645,681 | |
| Inter-segment income | 62,479,926 | 5,719,644 | 7,312,639 | 13,181,625 | 929,416 | (89,623,251) | - |
| 3,364,974,595 | 290,353,280 | 851,484,511 | 512,686,755 | 13,508,423 | (96,361,882) | 4,936,645,681 | |
| Operational cash-flow (EBITDA) | 253,531,120 | 192,095,113 | 146,161,267 | 18,172,498 | (7,368,908) | (3,456,101) | 599,134,989 |
| (79,807,896) | (1,429,868) | (135,671,316) | (9,093,591) | (1,597,131) | 824,352 | (226,775,450) | |
| Depreciation and amortisation | (1,753,010) | (1,472,256) | (10,073,531) | (4,283,630) | (114,468) | (10,259,168) | (27,956,063) |
| Provisions and impairment losses | |||||||
| Operational profit (EBIT) | 178,158,229 | 189,916,570 | 912,367 | 10,201,713 | (9,076,448) | (12,894,974) | 357,217,455 |
| Net financial expenses | (18,780,975) | (21,789,780) | (26,111,015) | (5,580,636) | (25,529,250) | (1,742,396) | (99,534,053) |
| Share of results of associated undertakings | - | 9,843 | - | - | - | 10,415,245 | 10,425,088 |
| Investment income | 12,507,873 | 6,945,218 | 28,441,607 | 2,219,287 | 2,748,653 | 82,664,343 | 135,526,982 |
| Profit before taxation | 171,885,127 | 175,081,851 | 3,242,958 | 6,840,364 | (31,857,045) | 78,442,217 | 403,635,472 |
| Taxation | (10,041,701) | (43,491,333) | (5,261,299) | (6,133,598) | (52,831) | 23,366 | (64,957,395) |
| Net profit for the period | 161,843,426 | 131,590,518 | (2,018,341) | 706,766 | (31,909,876) | 78,465,583 | 338,678,077 |
| - attributable to equity holders of Sonae | 241,822,233 | ||||||
| - attributable to minority interests | 96,855,844 | ||||||
| 31 December 2005 | Retail | Shopping | Telecomm. | Sonae | Holding | Consolidation | Total Operations |
| Centres | Capital | and Others | Adjustments | Pro-forma | |||
| Operational income | |||||||
| Sales | 2,726,110,499 | - | 93,468,598 | 178,421,701 | 1,516,579 | - | 2,999,517,378 |
| Services rendered | 12,985,004 | 127,868,363 | 725,066,512 | 250,558,913 | 905,738 | - | 1,117,384,529 |
| Value created on investments properties | 2,154,962 | 95,870,805 | - | - | - | - | 98,025,767 |
| Other operational income | 215,068,321 | 15,637,615 | 24,986,302 | 153,612,234 | 2,484,300 | 48,279 | 411,837,051 |
| 2,956,318,786 | 239,376,783 | 843,521,412 | 582,592,848 | 4,906,617 | 48,279 | 4,626,764,725 | |
| Inter-segment income | 58,264,952 | 5,699,301 | 12,775,028 | 9,687,021 | 1,723,759 | (88,150,061) | - |
| 3,014,583,738 | 245,076,084 | 856,296,440 | 592,279,869 | 6,630,376 | (88,101,782) | 4,626,764,725 | |
| Operational cash-flow (EBITDA) | 235,676,748 | 156,087,698 | 161,418,367 | 12,811,377 | (7,372,164) | (5,327,247) | 553,294,779 |
| Depreciation and amortisation | (68,599,849) | (3,482,561) | (128,222,823) | (9,441,288) | (554,635) | (1,107,782) | (211,408,938) |
| Provisions and impairment losses | (800,930) | (3,505,938) | (4,874,480) | (8,587,964) | - | (97,267) | (17,866,577) |
| Operational profit (EBIT) | 168,417,083 | 149,217,141 | 28,321,065 | 3,533,998 | (7,926,799) | (6,532,297) | 335,030,191 |
| Net financial expenses | (27,532,679) | (19,859,722) | (13,046,227) | (3,165,249) | (21,361,334) | 182,348 | (84,782,863) |
| Share of results of associated undertakings | - | (1,674,526) | - | - | - | (41,287) | (1,715,813) |
| Investment income | - | 16,833,816 | (9,762,791) | 72,443,078 | 21,590,393 | (20,362,638) | 80,741,858 |
| Profit before taxation | 140,884,404 | 144,516,709 | 5,512,047 | 72,811,827 | (7,697,740) | (26,753,874) | 329,273,373 |
| Taxation | (19,163,814) | (36,251,735) | (4,008,288) | (7,360,058) | (31,998) | 2,922,148 | (63,893,745) |
| Net profit for the period | 121,720,590 | 108,264,974 | 1,503,759 | 65,451,769 | (7,729,738) | (23,831,726) | 265,379,628 |
| - attributable to equity holders of Sonae | 186,467,016 | ||||||
| - attributable to minority interests | 78,912,612 |
| Shopping | Sonae | Holding | Consolidation | ||||
|---|---|---|---|---|---|---|---|
| 31 December 2006 | Retail | Centres | Telecomm. | Capital | and Others (2) | Adjustments | Consolidated |
| Fixed assets | |||||||
| Intangible | 149,164,530 | 3,898,736 | 183,128,579 | 1,692,559 | 87,552 | (16,454,471) | 321,517,485 |
| Tangible | 1,229,588,393 | 877,259 | 494,771,214 | 272,917,217 | 77,751,742 | (1,329,928) | 2,074,575,897 |
| Investment properties | - | 1,522,237,384 | - | - | - | (2,026,125) | 1,520,211,259 |
| Goodwill1 | - | - | - | - | - | 250,842,655 | 250,842,655 |
| Investments | 56,106,456 | 10,021,115 | 112,712,411 | 122,445,833 | 1,035,290 | (37,673,308) | 264,647,797 |
| Deferred tax assets | 23,413,248 | 13,657,457 | 61,786,653 | 3,908,399 | 8,808 | (7,156) | 102,767,409 |
| Other assets | 519,251,478 | 108,644,666 | 250,159,826 | 333,476,092 | 91,860,203 | (212,821,112) | 1,090,571,153 |
| Cash, Cash Equivalents and Current Investments | 392,676,510 | 109,714,339 | 126,766,719 | 28,334,380 | 132,240,352 | (93,995,000) | 695,737,300 |
| Total assets | 2,370,200,615 | 1,769,050,956 | 1,229,325,402 | 762,774,480 | 302,983,947 | (113,464,445) | 6,320,870,955 |
| Non-current liabilities | |||||||
| Borrowings | 601,531,168 | 620,655,759 | 462,215,429 | 91,073,464 | 367,424,693 | (203,615) | 2,142,696,898 |
| Deferred tax liabilities | 32,788,293 | 234,199,737 | - | 5,012,714 | - | 55,628 | 272,056,372 |
| Other non-current liabilities | 34,980,193 | 46,691,951 | 24,621,313 | 81,972,987 | 2,976,525 | (22,521,122) | 168,721,847 |
| Current liabilities | |||||||
| Borrowings | 167,863,379 | 21,873,536 | 1,783,529 | 38,525,298 | 385,890,938 | (5,186) | 615,931,494 |
| Other current liabilities | 850,778,495 | 93,912,978 | 321,745,867 | 225,053,325 | 210,437,408 | (275,163,704) | 1,426,764,369 |
| Total liabilities | 1,687,941,528 | 1,017,333,961 | 810,366,138 | 441,637,788 | 966,729,564 | (297,837,999) | 4,626,170,980 |
| Technical investment | 193,732,752 | 109,107,040 | 146,123,704 | 68,176,450 | 20,255,893 | - | 537,395,839 |
| Gross Debt | 769,394,547 | 642,529,295 | 463,998,958 | 129,598,762 | 753,315,631 | (208,801) | 2,758,628,392 |
| Net Debt | 376,718,037 | 532,814,956 | 337,232,239 | 101,264,382 | 621,075,279 | 93,786,199 | 2,062,891,092 |
| Shopping | Sonae | Holding | Consolidation | ||||
| 31 December 2005 | Retail | Centres | Telecomm. | Capital | and Others (2) | Adjustments | Consolidated |
| Fixed assets | |||||||
| Intangible | 65,218,165 | 4,160,407 | 192,082,594 | 4,975,442 | 75,036,753 | (19,927,938) | 321,545,423 |
| Tangible | 1,142,618,913 | 617,843 | 477,068,126 | 260,184,847 | 26,829,610 | 815,134 | 1,908,134,473 |
| Investment properties | - | 1,354,305,233 | - | - | - | 3,115,852 | 1,357,421,085 |
| Goodwill1 | - | - | - | - | - | 245,578,246 | 245,578,246 |
| Investments | 70,694,041 | 4,082,997 | 1,203,713 | 107,647,653 | 7,435,215 | (33,435,043) | 157,628,576 |
| Deferred tax assets | 24,126,376 | 13,782,635 | 66,239,164 | 4,346,515 | 59 | (10,710) | 108,484,039 |
| Other assets | 567,978,053 | 93,959,498 | 234,740,676 | 530,064,991 | 249,395,205 | (391,217,095) | 1,284,921,328 |
| Cash, Cash Equivalents and Current Investments | 574,416,472 | 92,125,872 | 210,736,401 | 18,920,165 | 200,731,299 | (173,954,452) | 922,975,757 |
| Total assets | 2,445,052,020 | 1,563,034,485 | 1,182,070,674 | 926,139,613 | 559,428,142 | (369,036,006) | 6,306,688,928 |
| Non-current liabilities | |||||||
| Borrowings | 602,203,218 | 524,673,796 | 457,749,927 | 39,270,702 | 224,938,272 | (209,773) | 1,848,626,142 |
| Deferred tax liabilities | 32,958,557 | 201,806,318 | - | 3,488,893 | 60 | (69,567) | 238,184,261 |
| Other non-current liabilities | 42,632,517 | 56,422,251 | 22,487,102 | 293,716,569 | 285,544,130 | (59,911,814) | 640,890,755 |
| Current liabilities | |||||||
| Borrowings | 168,411,146 | 66,162,280 | 3,311,456 | 64,215,282 | 392,397,457 | (5,096) | 694,492,525 |
| Other current liabilities | 764,242,052 | 86,467,255 | 280,916,320 | 224,365,380 | 483,821,187 | (490,747,735) | 1,349,064,459 |
| Total liabilities | 1,610,447,490 | 935,531,900 | 764,464,805 | 625,056,826 | 1,386,701,106 | (550,943,985) | 4,771,258,142 |
| Technical investment | 345,455,148 | 167,819,223 | 117,631,739 | 34,538,283 | 13,010,292 | - | 678,454,685 |
| Gross Debt | 770,614,364 | 590,836,076 | 461,061,383 | 103,485,984 | 617,335,729 | (214,869) | 2,543,118,667 |
| Net Debt | 196,197,892 | 498,710,204 | 250,324,982 | 84,565,819 | 416,604,430 | 173,739,583 | 1,620,142,910 |
a) Pro-forma investment in 2005.
| 31.12.2006 | 31.12.2005 |
|---|---|
| 115,121,467 | 114,470,775 |
| 64,781,973 | 67,356,455 |
| 21,660,229 | 12,135,698 |
| 40,247,059 | 43,044,510 |
| 9,031,927 | 8,570,808 |
| 250,842,655 | 245,578,246 |
2) Net Debt in "Holding and others" is made up as follows:
| 31.12.2006 | 31.12.2005 | |
|---|---|---|
| Inflows | ||
| Bank debt | 753,315,631 | 617,335,729 |
| Cash and cash equivalents | (132,240,352) | (200,731,299) |
| Net bank debit | 621,075,279 | 416,604,430 |
| Modelo Continente | - | 13,861,000 |
| Sonae Sierra | 55,894,440 | 43,894,440 |
| SonaeCom | 90,000,000 | 172,473,000 |
| Sonae Capital | - | 76,857,150 |
| Intercompany short term loans obtained | 145,894,440 | 307,085,590 |
| Total Inflows | 766,969,719 | 723,690,020 |
| Outflows | ||
| Sonae Capital | 40,208,280 | - |
| Others | 34,916 | 34,916 |
| Intercompany loans granted | 40,243,196 | 34,916 |
The contribution of the business segments to the cash flow statement for the periods ended on 31 December 2006 and 2005 (pro-forma) can be detailed as follows:
| 31 December 2006 | Retail | Shopping Centres |
Telecomm. | Sonae Capital |
Holding and Others |
Consolidated |
|---|---|---|---|---|---|---|
| Operating activities | 334,783,336 | 59,527,671 | 121,464,834 | (58,380,665) | (3,775,077) | 453,620,099 |
| Investment activities | (195,275,861) | (42,060,234) | (190,132,484) | (25,254,849) | (274,838,412) | (727,561,840) |
| Financing activities | (34,437,451) | 12,564,215 | (20,129,240) | 45,785,029 | 25,375,630 | 29,158,183 |
| Net increase/(decrease) in cash and cash equivalents |
105,070,024 | 30,031,652 | (88,796,890) | (37,850,485) | (253,237,859) | (244,783,558) |
| 31 December 2005 | Retail | Shopping | Telecomm. | Sonae | Holding | Consolidated |
| Centres | Capital | and Others | Pro-forma | |||
| Operating activities | 208,806,119 | 60,223,717 | 138,493,399 | 10,759,220 | (26,720,926) | 391,561,529 |
| Investment activities | (182,959,410) | (100,481,601) | (135,608,047) | 44,991,605 | 46,212,996 | (327,844,457) |
| Financing activities | (127,710,732) | 87,165,429 | 131,923,984 | (51,520,658) | (146,504,630) | (106,646,607) |
| Net increase/(decrease) in cash and cash equivalents |
(101,864,023) | 46,907,545 | 134,809,336 | 4,230,167 | (127,012,560) | (42,929,535) |
Turnover and operational profit by geographic segment can be detailed as follows:
| 31.12.2006 | 31.12.2005 Pro-forma | ||||
|---|---|---|---|---|---|
| Turnover | Operational profit | Turnover | Operational profit | ||
| Portugal | 4,060,117,760 | 312,324,861 | 3,813,509,195 | 302,539,231 | |
| Spain | 74,177,106 | 39,693,640 | 65,247,501 | 44,407,091 | |
| France | 100,149,878 | (1,506,020) | 91,649,198 | (5,187,935) | |
| United Kingdom | 23,238,789 | 754,842 | 29,326,657 | 1,250,972 | |
| Germany | 8,305,615 | (12,435,911) | 11,937,643 | (1,096,826) | |
| Brazil | 19,783,189 | 13,743,585 | 23,209,954 | 237,136 | |
| Other European countries | 78,334,934 | 5,440,856 | 63,802,521 | (7,023,141) | |
| Rest of the world | 19,695,465 | (798,398) | 18,219,238 | (96,337) | |
| 4,383,802,736 | 357,217,455 | 4,116,901,907 | 335,030,191 |
| 31.12.2006 | 31.12.2005 | |||||
|---|---|---|---|---|---|---|
| Total assets | Total liabilities | Total assets | Total liabilities | |||
| Portugal | 5,589,025,949 | 4,078,011,547 | 5,596,258,680 | 4,184,068,940 | ||
| Spain | 452,693,020 | 307,023,363 | 401,693,145 | 285,436,726 | ||
| France | 4,604,307 | 50,980,743 | 7,279,624 | 47,021,629 | ||
| United Kingdom | 4,856,540 | 43,999 | 9,236,383 | 1,693,616 | ||
| Germany | 66,717,020 | 46,481,473 | 34,590,136 | 15,675,145 | ||
| Brazil | 149,057,111 | 52,252,415 | 198,690,935 | 67,923,078 | ||
| Other European countries | 60,351,195 | 77,967,647 | 58,940,025 | 153,453,112 | ||
| Rest of the world | (6,434,187) | 13,409,793 | - | 15,985,896 | ||
| 6,320,870,955 | 4,626,170,980 | 6,306,688,928 | 4,771,258,142 |
Headcount can be detailed as follows:
| 31.12.2006 | |
|---|---|
| Retail | 21,329 |
| Shopping Centres | 660 |
| Telecommunications | 1,940 |
| Sonae Capital | 6,296 |
| Holding and others | 161 |
| 30,386 |
On 12 January 2007, the public tender offer for the whole of the share capital of Portugal Telecom launched by Sonaecom, SGPS, SA, was registered at the Securities Exchange Commission (CMVM). The respective prospectus was published on 16 January 2007. The compensation offered was raised to 10.5 euro per share on 15 February 2007. On 2 March 2007 the offer was automatically terminated, because changes to the articles of association of Portugal Telecom were not approved by a qualified majority of its shareholders.
The accompanying consolidated financial statements were approved by the Board of Directors on 20 March 2007, and will be presented for approval at the Shareholders Annual General Meeting.
31 DECEMBER 2006
| IFRS | |||
|---|---|---|---|
| ASSETS | Notes | 31.12.2006 | 31.12.2005 |
| NON-CURRENT ASSETS: | |||
| Tangible assets | 4 | 103,640 | 338,579 |
| Intangible assets | - | 2 | |
| Available for sale investments | 5 | 3,072,592,917 | 3,002,481,945 |
| Other non-current assets | 6 | 813,344,492 | 499,617,624 |
| Total non-current assets | 3,886,041,049 | 3,502,438,150 | |
| CURRENT ASSETS: | |||
| Trade accounts receivable | 7 | 790,914 | 1,207,534 |
| Other debtors | 8 | 78,136,738 | 239,473,376 |
| Taxes recoverable | 9 | 1,206,759 | 490,177 |
| Other current assets | 10 | 858,220 | 286,466 |
| Investments held for trading | 11 | - | 5,707,400 |
| Cash and cash equivalents | 12 | 130,514,092 | 197,441,606 |
| Total current assets | 211,506,723 | 444,606,559 | |
| TOTAL ASSETS | 4,097,547,772 | 3,947,044,709 | |
| EQUITY AND LIABILITIES | |||
| EQUITY: | |||
| Share capital | 13 | 2,000,000,000 | 2,000,000,000 |
| Own shares | 14 | (138,044,363) | (138,044,363) |
| Legal reserve | 15 | 157,623,915 | 152,721,161 |
| Fair value reserve, hedging reserve and other reserves | 16 | 1,206,326,830 | 827,322,335 |
| Retained earnings | 322,737 | 322,737 | |
| Profit/(Loss) for the period | 65,138,044 | 98,055,074 | |
| TOTAL EQUITY | 3,291,367,163 | 2,940,376,944 | |
| LIABILITIES: | |||
| NON-CURRENT LIABILITIES: | |||
| Bonds | 17 | 347,187,348 | 172,402,473 |
| Total non-current liabilities | 347,187,348 | 172,402,473 | |
| CURRENT LIABILITIES: | |||
| Bank loans | 18 | 260,500,000 | 340,973,523 |
| Bonds | 19 | 74,777,291 | 74,725,192 |
| Trade accounts payable | 300,191 | 386,703 | |
| Other creditors | 20 | 112,760,596 | 408,622,830 |
| Taxes payable | 21 | 457,862 | 901,462 |
| Other current liabilities | 22 | 10,197,321 | 8,655,582 |
| Total current liabilities | 458,993,261 | 834,265,293 | |
| TOTAL EQUITY AND LIABILITIES | 4,097,547,772 | 3,947,044,709 |
The accompanying notes are part of these financial statements.
| 31.12.2006 | 31.12.2005 | ||||
|---|---|---|---|---|---|
| Notes | 4th Quarter | Cumulative | 4th Quarter | Cumulative | |
| (Unaudited) | (Unaudited) | ||||
| Operational Income: | |||||
| Services rendered | 26 | 792,491 | 1,800,067 | 1,201,365 | 2,319,260 |
| Other operational income | 27 | 39,743 | 75,160,036 | 34,997 | 1,368,115 |
| Total operational income | 832,234 | 76,960,103 | 1,236,362 | 3,687,375 | |
| Operational Expenses: | |||||
| External supplies and services | 28 | (632,043) | (2,417,267) | (1,042,138) | (4,081,964) |
| Staff costs | 29 | (1,142,971) | (5,023,800) | (1,515,462) | (5,353,586) |
| Depreciation and amortisation | 4 | (67,476) | (263,138) | (64,235) | (255,170) |
| Other operational expenses | 30 | (107,033) | (572,760) | (128,769) | (425,894) |
| Total operational expenses | (1,949,523) | (8,276,965) | (2,750,604) | (10,116,614) | |
| Operational Profit/(Loss) | (1,117,289) | 68,683,138 | (1,514,242) | (6,429,239) | |
| Net financial expenses | 31 | 2,470,168 | 8,203,998 | (1,574,973) | (2,973,316) |
| Investment income | 32 | (93,836,154) | (11,736,143) | 78,156,637 | 107,471,670 |
| Profit/(Loss) before taxation | (92,483,275) | 65,150,993 | 75,067,422 | 98,069,115 | |
| Taxation | 33 | (12,948) | (12,949) | (14,041) | (14,041) |
| Profit/(Loss) after taxation | (92,496,223) | 65,138,044 | 75,053,381 | 98,055,074 | |
| Profit/(Loss) per share | |||||
| Basic | 34 | (0.049554) | 0.034901 | 0.040221 | 0.052550 |
| Diluted | 34 | (0.049554) | 0.034901 | 0.040221 | 0.052550 |
The accompanying notes are part of these financial statements.
| Not es |
Sha re Cap ital |
Ow n Sha res |
Leg al Re ser ve |
Fai lue r va Re ser ve |
He dg ing Re ser ve |
Oth er Re ser ves |
Re tain ed Ea rnin gs |
Ne t Pro fit/( Los s) |
Tot al |
|
|---|---|---|---|---|---|---|---|---|---|---|
| Bal t 1 Jan 200 5 anc e a s a uar y |
2,0 00, 000 ,00 0 |
( 143 ,98 4,2 21) |
152 ,11 3,5 82 |
( 426 ,07 5,8 47) |
( 281 ,60 8) |
1,4 05, 988 ,35 8 |
( 250 ,47 4) |
12, 724 ,78 3 |
3,0 00, 234 3 ,57 |
|
| App riat ion of p rofi t of 20 04: rop |
||||||||||
| Tra nsf er t o le l re ga ser ves |
15 | - | - | 607 ,57 9 |
- | - | - | - | ( 607 ,57 9) |
- |
| Div ide nds dis trib d ute |
- | - | - | - | - | ( 25, 772 ,44 6) |
- | ( 11, 543 ,99 3) |
( 37, 316 ,43 9) |
|
| Tra nsf er t o /( from ) re tain ed nin ear gs |
- | - | - | - | - | - | 573 ,21 1 |
(57 3,2 11) |
- | |
| ( Pur cha se) /Sa le o f ow har n s es |
- | 5,9 39, 858 |
- | - | - | ( 4,3 53, 519 ) |
- | - | 1,5 86, 339 |
|
| Inc / ( Dec se) in fair lue of d eriv ativ e h edg of net tax rea se rea va es, es |
- | - | - | - | 281 ,60 8 |
- | - | - | 281 ,60 8 |
|
| Inc / ( Dec se) in fair lue of a vai lab le f ale inve stm ent rea se rea va or s s |
- | - | - | 587 ,17 3,9 85 |
- | - | - | - | 587 ,17 3,9 85 |
|
| Dem f So Ind úst ria, SG PS , SA erg er o nae |
- | - | - | 90, 715 ,02 9 |
- | (75 6,1 58, 113 ) |
- | ( 665 ,44 3,0 84) |
||
| Tra nsf rofi t/( loss ) o f th erio d er t o p e p |
- | - | - | ( 44, 195 ,11 2) |
- | - | - | ( 44, 195 ,11 2) |
||
| Pro fit/( Los s) for the riod ded 31 De ber 20 05 pe en cem |
- | - | - | - | - | - | - | 98, 055 ,07 4 |
98, 055 ,07 4 |
|
| Oth ers |
- | - | - | - | - | - | - | - | - | |
| Bal t 31 De ber 20 05 anc e a s a cem |
2,0 00, 000 ,00 0 |
( 138 ,04 4,3 63) |
152 ,72 1,1 61 |
207 ,61 8,0 55 |
- | 619 ,70 4,2 80 |
322 ,73 7 |
98, 055 ,07 4 |
2,9 40, 376 ,94 4 |
|
| Bal t 1 Jan 200 6 anc e a s a uar y |
2,0 00, 000 ,00 0 |
( 138 ,04 4,3 63) |
152 ,72 1,1 61 |
207 ,61 8,0 55 |
- | 619 ,70 4,2 80 |
322 ,73 7 |
98, 055 ,07 4 |
2,9 40, 376 ,94 4 |
|
| App riat ion of p rofi t of 20 05: rop |
||||||||||
| Tra nsf er t o le l re ga ser ves |
15 | - | - | 4,9 02, 754 |
- | - | - | - | ( 4,9 02, 754 ) |
- |
| Div ide nds dis trib d ute |
- | - | - | - | - | - | - | ( 46, 650 ,59 6) |
( 46, 650 ,59 6) |
|
| Tra nsf er t o /( from ) re tain ed nin ear gs |
- | - | - | - | - | 46, 501 ,72 4 |
- | ( 46, 501 ,72 4) |
- | |
| ( Pur cha se) /Sa le o f ow har n s es |
- | - | - | - | - | - | - | - | - | |
| Inc / ( Dec se) in fair lue of d eriv ativ e h edg of net tax rea se rea va es, es |
- | - | - | - | - | - | - | - | - | |
| Inc / ( Dec se) in fair lue of a vai lab le f ale inve stm ent rea se rea va or s s |
- | - | - | 236 ,19 9,3 18 |
- | - | - | - | 236 ,19 9,3 18 |
|
| Tra nsf er t rofi t/( loss ) o f th erio d o p e p |
32 | - | - | - | 100 ,07 5,8 52 |
- | - | - | - | 100 ,07 5,8 52 |
| Pro fit/( Los s) for the riod ded 31 De ber 20 06 pe en cem |
- | - | - | - | - | - | - | 65, 138 ,04 4 |
65, 138 ,04 4 |
|
| Oth ers |
- | - | - | ( 3,7 72, 399 ) |
- | - | - | - | ( 3,7 72, 399 ) |
|
| Bal t 31 De ber 20 06 anc e a s a cem |
2,0 00, 000 ,00 0 |
( 138 ,04 4,3 63) |
157 ,62 3,9 15 |
540 ,12 0,8 26 |
- | 666 ,20 6,0 04 |
322 ,73 7 |
65, 138 ,04 4 |
3,2 91, 367 ,16 3 |
The accompanying notes are part of these financial statements.
| Notes | 31.12.2006 | 31.12.2005 | |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Cash receipts from trade debtors | 2,216,687 | 2,245,016 | |
| Cash paid to trade creditors | (2,530,287) | (4,023,528) | |
| Cash paid to employees | (5,790,809) | (4,069,125) | |
| Cash flow generated by operations | (6,104,409) | (5,847,637) | |
| Income taxes (paid) / received | (730,625) | (364,091) | |
| Other cash receipts and (payments) relating to operating activities | (878,296) | 487,098 | |
| Net cash flow from operating activities (1) | (7,713,330) | (5,724,630) | |
| INVESTMENT ACTIVITIES | |||
| Cash receipts arising from: | |||
| Investments | 35 | 525,936,694 | 129,287,060 |
| Tangible assets | 1,631 | 100 | |
| Intangible assets | - | 75,000,000 | |
| Dividends | 32 | 53,613,493 | 8,718,968 |
| Interest and similar income | 21,677,087 | 26,957,954 | |
| Others | 4,290,000 | - | |
| Loans granted | 988,078,416 | 709,450,574 | |
| 1,593,597,321 | 949,414,656 | ||
| Cash payments arising from: | |||
| Investments | 35 | (133,974,216) | (340,915,676) |
| Tangible assets | (21,662) | (20,137) | |
| Intangible assets | - | - | |
| Loans granted | (1,352,931,637) (1,486,927,515) |
(399,713,608) (740,649,421) |
|
| Net cash used in investment activities (2) | 106,669,806 | 208,765,235 | |
| FINANCING ACTIVITIES | |||
| Cash receipts arising from: | |||
| Loans obtained | 3,775,886,617 | 4,006,270,099 | |
| Sale of own shares | - | 1,586,339 | |
| Others | - | - | |
| 3,775,886,617 | 4,007,856,438 | ||
| Cash payments arising from: | |||
| Loans obtained | (3,866,811,052) | (3,913,677,803) | |
| Interest and similar charges | (28,287,641) | (23,242,524) | |
| Dividends | 37 | (46,648,391) | (37,307,385) |
| Others | - | (39,666,666) | |
| Net cash used in financing activities (3) | (3,941,747,084) (165,860,467) |
(4,013,894,378) (6,037,940) |
|
| Net increase in cash and cash equivalents (4) = (1) + (2) + (3) | (66,903,991) | 197,002,665 | |
| Cash and cash equivalents at the beginning of the period | 12 | 197,418,083 | 415,418 |
| Cash and cash equivalents at the end of the period | 12 | 130,514,092 | 197,418,083 |
The accompanying notes are part of these financial statements.
(Amounts expressed in euro)
SONAE, SGPS, SA ("the Company" or "Sonae"), whose head-office is at Lugar do Espido, Via Norte, Apartado 1011, 4471- 909 Maia, Portugal.
The principal accounting policies adopted in preparing the accompanying consolidated financial statements are as follows:
The accompanying financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS" – previously named International Accounting Standards – "IAS"), 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"), applicable to financial years beginning on 1 January 2006.
Interim financial statements were 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 which are stated at fair value (Note 2.6).
As at 31 December 2006, IFRS 7 "Financial Instruments: Disclosures" had already been issued, but its adoption is only required for periods beginning on or after 1 January 2007. Sonae decided not to engage in the early adoption of this statement, which, when adopted, may lead to additional disclosures.
Tangible assets acquired up to 1 January 2004 (transition date to IFRS) are recorded at acquisition cost, or revalued acquisition cost up to 1 January 2004, in accordance with generally accepted accounting principles in Portugal until that date, net of depreciation and accumulated impairment losses.
Depreciation charge for the period is calculated on a straight line basis over the useful life of each asset.
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 Group and if their cost can be reliably measured.
Borrowing costs are normally recognised as an expense in the period in which they are incurred.
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.
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 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. Investments in affiliated and associated companies are classified as available-for-sale investments.
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.
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 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 for the period.
Held to maturity investments are carried at amortised cost using the effective interest rate, net of capital reimbursements and interest income received.
Receivables are stated at net realisable value, corresponding to their nominal value less impairment losses (recorded under the caption Impairment losses in accounts receivable).
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 only to hedge such risks. Derivatives are not used by the Company for trading purposes.
Derivatives classified as cash flow hedge instruments are used by the Company mainly to hedge interest and exchange 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 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 and exchange rates of its loans are initially accounted for at cost 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.
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 contract, and this is not stated at fair value.
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 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 cash flow statement, cash and cash equivalents also include bank overdrafts, which are included in the balance sheet caption current bank loans.
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 taking into consideration the stage of completion of the transaction 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.
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 non-adjusting events are disclosed in the notes when material.
Share-based payments result from Deferred Performance Bonus Plans that are referenced to the Sonae share price.
Share-based payment liabilities are measured at fair value on the date they are granted (normally in March of each year) and are subsequently remeasured at the end of each reporting period, based on the number of shares granted and the corresponding fair value at the closing date. These obligations are stated 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 profit for the period.
During the period there were no changes in accounting policies or prior period errors.
As at 31 December 2006 and 2005 tangible assets are detailed as follows:
| 31.December.2006 | |||||
|---|---|---|---|---|---|
| Tangible Assets: | Opening balance |
Increase | Decrease | Transfers and write-offs |
Closing balance |
| Plant and machinery | 17,352 | - | - | - | 17,352 |
| Vehicles | 195,863 | - | - | - | 195,863 |
| Fixtures and fittings | 2,368,859 | 28,508 | 67,905 | - | 2,329,462 |
| Others | 723 | - | - | - | 723 |
| Total | 2,582,797 | 28,508 | 67,905 | - | 2,543,400 |
| 31.December.2005 | |||||
|---|---|---|---|---|---|
| Tangible Assets: | Opening balance |
Increase | Decrease | Transfers and write-offs |
Closing balance |
| Plant and machinery | 17,352 | - | - | - | 17,352 |
| Vehicles | 195,863 | - | - | - | 195,863 |
| Fixtures and fittings | 2,348,722 | 20,137 | - | - | 2,368,859 |
| Others | 723 | - | - | - | 723 |
| Total | 2,562,660 | 20,137 | - | - | 2,582,797 |
| 31.December.2006 | |||||
|---|---|---|---|---|---|
| Accumulated depreciation | Opening balance |
Increase | Decrease | Transfers and write-offs |
Closing balance |
| Plant and machinery | 16,054 | 1,298 | - | - | 17,352 |
| Vehicles | 195,864 | - | - | - | 195,864 |
| Fixtures and fittings | 2,031,747 | 261,812 | 67,596 | - | 2,225,963 |
| Others | 553 | 28 | - | - | 581 |
| Total | 2,244,218 | 263,138 | 67,596 | - | 2,439,760 |
| 31.December.2005 | |||||
|---|---|---|---|---|---|
| Accumulated depreciation | Opening balance |
Increase | Decrease | Transfers and write-offs |
Closing balance |
| Plant and machinery | 14,756 | 1,298 | - | - | 16,054 |
| Vehicles | 195,864 | - | - | - | 195,864 |
| Fixtures and fittings | 1,777,903 | 253,844 | - | - | 2,031,747 |
| Others | 525 | 28 | - | - | 553 |
| Total | 1,989,048 | 255,170 | - | - | 2,244,218 |
As at 31 December 2006 and 2005 investments are detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Investments in affiliated and associated undertakings | 3,072,543,037 | 2,962,316,974 |
| Other investments held for sale | 49,880 | 40,164,971 |
| 3,072,592,917 | 3,002,481,945 |
| 31.December.2006 | |||||||
|---|---|---|---|---|---|---|---|
| Companies | % Held | Opening | Increase | Decrease | Changes in | Transfers / | Closing |
| balance | fair value | demerger | balance | ||||
| Agloma Investimentos, SGPS, SA | 100.00% | - | - | - | - | 11,589,141 | 11,589,141 |
| Espmen - Investimentos Imobiliários, SA | 100.00% | - | 6,152,894 | - | - | - | 6,152,894 |
| Hospimob - Imobiliária, SA | - | - | 8,700,000 | 8,700,000 | - | - | - |
| Interlog, SGPS, SA | 1.02% | 106,686 | - | - | - | - | 106,686 |
| Investalentejo, SGPS, SA | 49.00% | 2,205,000 | - | - | - | - | 2,205,000 |
| Modelo Continente, SGPS, SA (a) | 74.98% | 1,647,342,970 | 84,649,022 | 214,410,953 | 173,219,622 | 1,690,800,661 | |
| SC Insurance Risk Services, SGPS, SA | - | - | - | 14,532,524 | - | 14,532,524 | - |
| Sonae Capital, SGPS, SA | 100.00% | 408,759,919 | - | - | - | (26,121,665) | 382,638,254 |
| Sonae Investimentos America Latina | 99.99% | 25,684 | - | - | - | - | 25,684 |
| Sonae Investments, BV | 100.00% | 18,151 | - | - | - | - | 18,151 |
| Sonae Sierra SGPS, SA (b) | 50.00% | 632,455,428 | - | - | 112,495,072 | - | 744,950,500 |
| Sonae Turismo, SGPS, SA | - | 127,174,947 | - | 127,174,947 | - | - | - |
| Sonaecom, SGPS, SA | 12.72% | 144,068,574 | 34,372,300 | - | 55,355,577 | - | 233,796,451 |
| Sonaegest, SA | 20.00% | 159,615 | - | - | - | - | 159,615 |
| Sontel, BV | 100.00% | - | 100,000 | - | - | - | 100,000 |
| Total | 2,962,316,974 | 133,974,216 | 364,818,424 | 341,070,271 | - | 3,072,543,037 |
(a) - Fair value of this investment is considered to be the price paid in the public tender offer for de-listing.
(b) - Market value was determined based on an independent valuation as at 31 December 2006 of assets held by this affiliated company, after deduction of associated net debt and of the share attributable to minority investments.
| 31.December.2005 | |||||||
|---|---|---|---|---|---|---|---|
| Companies | % Held | Opening | Increase | Decrease | Changes in | Transfers / | Closing |
| balance | fair value | demerger | balance | ||||
| Gescartão, SGPS, SA | - | - | 7,657,036 | 7,657,036 | - | - | - |
| Imocapital, SGPS, SA | - | 44,678,042 | - | 44,678,042 | - | - | - |
| Integrum- Serviços Partilhados, SA | - | 2,976,495 | - | 2,976,495 | - | - | - |
| Interlog, SGPS, SA | 1.02% | 106,686 | - | - | - | - | 106,686 |
| Investalentejo, SGPS, SA | 49.00% | - | 2,205,000 | - | - | - | 2,205,000 |
| Modelo Continente, SGPS, SA | 75.64% | 1,092,979,943 | 150,436,014 | - | 403,927,013 | - | 1,647,342,970 |
| Sonae Capital, SGPS, SA | 100.00% | 408,759,919 | - | - | - | - | 408,759,919 |
| Sonae Industria, SGPS, SA | - | 658,787,363 | - | - | 55,691,303 | (714,478,666) | - |
| Sonae Investimentos America Latina | 99.99% | 25,684 | - | - | - | - | 25,684 |
| Sonae Investments, BV | 100.00% | 18,151 | - | - | - | - | 18,151 |
| Sonae Sierra SGPS, SA | 50.00% | 530,992,017 | 180,617,626 | 160,007,726 | 80,853,511 | - | 632,455,428 |
| Sonae Turismo, SGPS, SA | 97.89% | 127,174,947 | - | - | - | - | 127,174,947 |
| Sonaecom, SGPS, SA | 17.40% | 149,579,394 | - | - | (5,510,820) | - | 144,068,574 |
| Sonaegest, SA | 20.00% | 159,615 | - | - | - | - | 159,615 |
| Total | 3,016,238,256 | 340,915,676 | 215,319,299 | 534,961,007 | (714,478,666) | 2,962,316,974 |
As at 31 December 2006 and 2005 other investments held for sale are detailed as follows:
| 31.December.2006 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Companies | % Held | Opening | Increase | Decrease | Changes in | Transfers | Closing | |
| balance | fair value | balance | ||||||
| Associação Escola Gestão Porto | 0.00% | 49,880 | - | - | - | - | 49,880 | |
| Eirles Three Junior Notes | - 33,715,091 |
- | 30,317,580 | (3,397,511) | - | - | ||
| Sonae Industria, SGPS, SA | - 6,400,000 |
- | 5,002,410 | (1,397,590) | - | - | ||
| Total | 40,164,971 | - | 35,319,990 | (4,795,101) | - | 49,880 |
| 31.December.2005 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Companies | % Held | Opening | Increase | Decrease | Changes in | Transfers | Closing | ||
| balance | fair value | balance | |||||||
| Associação Escola Gestão Porto | - | 49,880 | - | - | - | - | 49,880 | ||
| Eirles Three Junior Notes | - | 30,400,867 | - | - | 3,314,224 | - | 33,715,091 | ||
| Sonae Industria, SGPS, SA | 0.71% | - | - | 41,631,824 | (1,003,758) | 49,035,582 | 6,400,000 | ||
| Total | 30,450,747 | 0 | 41,631,824 | 2,310,466 | 49,035,582 | 40,164,971 |
As at 31 December 2006 and 2005 other non-current assets are detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Loans granted to group companies: | ||
| Espmen - Investimentos Imobiliários, SA | 7,105 | - |
| Investalentejo, SGPS, SA | 788,000 | 788,000 |
| Sonae Capital, SGPS, SA | 20,000,000 | - |
| Sonae Investments, BV | 792,400,040 | 498,572,204 |
| Guarantee deposits | 7,744 | 13,529 |
| Other | 141,603 | 243,891 |
| 813,344,492 | 499,617,624 |
Trade accounts receivable amounted to 790,914 euro and 1,207,534 euro as at 31 December 2006 and 2005, respectively, and include balances arising solely from services rendered to group companies.
As at 31 December 2006 and 2005 other debtors can be detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Other debtors | ||
| Grovesnor Investments (Portugal), S.àr.l (Note 35) | - | 226,260,029 |
| Others | 680,561 | 685,341 |
| Group companies - Short term loans: | ||
| Agloma Investimentos, SGPS, SA | 1,246,000 | - |
| Atlantic Ferries, SA | 797,000 | - |
| Box Lines- Navegação, SA | - | 1,000,000 |
| Choice Car, SGPS, SA | - | 250,000 |
| Elmo, SGPS, SA | 4,008,000 | - |
| Investalentejo, SGPS, SA | 9,404,000 | - |
| Nab - Sociedade Imobiliária, SA | 148,000 | - |
| SC- Sociedade de Consultadoria, SA | - | 365,000 |
| Sonae Capital, SGPS, SA | 44,225,280 | - |
| Sonae Turismo, SGPS, SA | - | 7,195,000 |
| Group companies - Interest: | ||
| Investalentejo, SGPS, SA | 18,281 | 147 |
| Sonae Investments, BV | 17,609,616 | 3,717,859 |
| 78,136,738 | 239,473,376 |
As at 31 December 2006 and 2005 taxes recoverable can be detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Advance payments | 56,743 | 51,104 |
| Taxes withheld | 1,150,016 | 439,073 |
| 1,206,759 | 490,177 |
As at 31 December 2006 and 2005 other current assets can be detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Accrued income | 682,527 | 146,979 |
| Prepayments | 175,693 | 139,487 |
| 858,220 | 286,466 |
As at 31 December 2006 and 2005 investments held for trading can be detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Call option on Modelo Continente´s shares held by Banco Santander | ||
| Central Hispano | - | 5,707,400 |
| - | 5,707,400 |
As at 31 December 2006 and 31 December 2005 cash and cash equivalents can be detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Cash at hand | 2,500 | 2,500 |
| Bank deposits | 130,511,592 | 197,439,106 |
| Cash and cash equivalents on the balance sheet | 130,514,092 | 197,441,606 |
| Bank overdrafts (Note 18) | - | 23,523 |
| Cash and cash equivalents on the cash flow statement | 130,514,092 | 197,418,083 |
As at 31 December 2006 bank deposits include short term deposits amounting to 130,450,000 euro withdrawn in the beginning of 2007.
As at 31 December 2006 and 2005 share capital consisted of 2,000,000,000 ordinary shares of 1 euro each.
As at 31 December 2006 Efanor Investimentos, SGPS, SA and affiliated companies held 52.94% of Sonae´s share capital.
As at 31 December 2006 and 2005 own shares can be detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Own shares - Nominal value | 132,806,072 | 132,806,072 |
| Own shares - (Discount)/Premium | 5,238,291 | 5,238,291 |
| 138,044,363 | 138,044,363 |
During the twelve months ended 31 de December 2006 the company did no sell or buy any own shares.
On 12 May 2006, Sonaecom, SGPS, SA transferred, in an over the counter transaction and in accordance with is Deferred Performance Bonus Plan, 557,574 Sonae, SGPS, SA shares to employees. After this transaction, Sonae, SGPS, SA holds directly or through its affiliated companies 133,418,572 own shares (133,976,146 as at 31 December 2005), representing 6.671% of its share capital.
The company sets up legal reserves in accordance with Portuguese Company Law. In 2006 and 2005,respectively, 4,902,754 euro and 607,570 euro has been transferred from profit for the year to legal reserves.
As at 31 December 2006 and 2005 reserves can be detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Free reserves | 526,962,310 | 479,791,497 |
| Captive reserve (1) | 139,243,694 | 139,912,783 |
| Fair value reserve | 540,120,826 | 207,618,055 |
| 1,206,326,830 | 827,322,335 |
(1) Under article 324 of the Portuguese Companies Act shareholders are not allowed to distribute reserves equal to amounts paid for own shares.
Movements occurred in 2006 and 2005 in these reserves are detailed in the statement of changes in equity. In 2005, free reserves have been reduced by 756,158,113 euro as a result of the demerger of Sonae Indústria, SGPS, SA.
As at 31 December 2006 and 2005 this caption included the following loans:
Bonds SONAE / 05 amounting to 100,000,000 euro, repayable after 8 years, in one instalment, on 31 March 2013. Interest rate equal to Euribor 6 months plus 0.875%, with interest paid half-yearly.
Bonds Sonae 2006/2011 amounting to 250,000,000 euro, repayable after 5 years, in one instalment, on 10 May 2011. Interest rate equal to Euribor 6 months plus 0.65%, with interest paid half-yearly. The company has the option to make whole or partial reimbursements, at no extra cost, on the date of the 6th and 8th coupons.
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Bonds | 350,000,000 | 174,819,685 |
| Up-front fees not yet charged to income statement | (2,812,652) | (2,417,212) |
| 347,187,348 | 172,402,473 |
As at 31 December 2006 and 2005 this caption included the following loans:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Commercial paper (a) | 260,500,000 | 340,950,000 |
| Bank overdrafts (Note 12) | - | 23,523 |
| 260,500,000 | 340,973,523 |
(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.
As at 31 December 2006 and 2005 this caption included the following:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Nominal value of Sonae/97 bonds | 74,819,685 | 74,819,685 |
| Up-front fees not yet charged to income statement | (42,394) | (94,493) |
| 74,777,291 | 74,725,192 |
Bonds SONAE / 97 amounting to 149,639,369 euro repayable, at par value, in two equal instalments on the 18th and 20th coupons. Interest rate equal to Lisbor (subsequently changed to Euribor) plus 0.17% from the 1st to the 13th coupon, plus 1.17% in the 14th coupon and plus 1.22% from the 15th to the 20th coupons. Half of this loan (74,819,685 euro) will be reimbursed at par value in October 2007.
As at 31 December 2006 and 2005 other creditors can be detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Group companies: | ||
| Atlantic Ferries, SA | - | 7,195,000 |
| Box Lines - Navegação, SA | 891,000 | - |
| Cinclus-Planeamento Gestão de Projectos, SA | 2,850,000 | - |
| Interlog, SGPS, SA | 18,977,000 | - |
| Modelo, SGPS, SA | - | 13,861,000 |
| Sonae Capital, SGPS, SA | - | 81,776,150 |
| Sonae Sierra, SGPS, SA | - | 23,067,600 |
| Sonaecom, SGPS, SA | 90,000,000 | 172,473,000 |
| Shareholders - dividends not yet paid | 35,737 | 33,531 |
| Share capital increases not yet paid | ||
| Sonae Turismo, SGPS, SA (Note 35) | - | 35,216,379 |
| Other creditors | 6,859 | 75,000,170 |
| 112,760,596 | 408,622,830 |
As at 31 December 2006 and 2005 taxes payable can be detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Income tax charge for the year | 12,948 | 14,041 |
| Taxes withheld | ||
| Staff | 47,524 | 39,891 |
| Services | 821 | 10,339 |
| Capital | 215,103 | 632,097 |
| Other | 1,013 | 923 |
| Value added tax | 133,023 | 161,189 |
| Social security contributions | 47,355 | 42,897 |
| Stamp duty | 75 | 85 |
| 457,862 | 901,462 |
As at 31 December 2006 and 2005, other current liabilities were made up as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Accruals: | ||
| Salaries | 2,975,976 | 3,756,447 |
| Interest | 4,857,092 | 4,884,328 |
| Sale of call option on shares | 2,355,000 | - |
| Others | 9,253 | 14,807 |
| 10,197,321 | 8,655,582 |
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Guarantees given: | ||
| on tax claims | 1,776,135 | 1,776,135 |
| on judicial claims | 355,199 | 355,199 |
| Others | 40,000,000 | 192,323,306 |
The Company is responsible for loans obtained by its affiliated undertaking Sonae Investments, BV up to 69,382,000 Euro. As of 31 December 2006 and 2005 the balance drawn down amounts to 0 euro.
Guarantee given to Caixa Geral de Depósitos relating to a 40,000,000 euro loan granted to the affiliated undertaking Investalentejo, SGPS, SA (existing as at 31 December 2005).
As at 31 December 2006 and 2005, the company is a part in operational lease contracts, as a lessee, whose minimum lease payments had the following schedule:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Due in | ||
| 2006 automatically renewable | - | 265,836 |
| 2007 automatically renewable | 265,836 | - |
| 2006 | - | 56,401 |
| 2007 | 70,138 | 31,194 |
| 2008 | 61,815 | 22,871 |
| 2009 | 41,539 | 2,595 |
| 2010 | 29,983 | - |
| 469,311 | 378,897 |
As at 31 December 2006 and 2005 balances and transactions with related parties can be detailed as follows:
| Affiliated and associated undertakings | ||
|---|---|---|
| 31.December.2006 | 31.December.2005 | |
| Transactions | ||
| Services rendered | 1,800,067 | 2,319,260 |
| Purchases and services obtained | 1,082,441 | 1,634,956 |
| Interest income | 32,153,152 | 21,572,864 |
| Interest expenses | 8,712,350 | 8,698,412 |
| Dividend income | 53,613,493 | 8,718,968 |
| Acquisition of investments | 280,102,275 | 53,957,728 |
| Disposal of investments | - | 188,274,663 |
| Disposal of intangible assets | 75,000,000 | - |
| Balance | ||
| Accounts receivable | 19,220,640 | 5,442,252 |
| Accounts payable | 1,005,725 | 112,974,436 |
| Loans obtained | 112,718,000 | 298,372,750 |
| Loans granted | 873,023,425 | 508,170,204 |
In 2006 and 2005, there were no transactions with company Directors and no loans were granted to company Directors.
As at 31 December 2006 and 2005 no balances existed with company Directors.
Services rendered amounted to 1,800,067 euro and 2,319,260 euro, in 2006 and 2005, respectively. Services rendered include management fees permitted by company law.
As at 31 December 2006 and 2005 other operational income can be detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Supplementary income | 152,373 | 142,102 |
| Accrual written back | - | 777,600 |
| Gain on sale of brands | 74,999,997 | - |
| Others | 7,666 | 448,413 |
| 75,160,036 | 1,368,115 |
As at 31 December 2006 and 2005 external supplies and services can be detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Subcontracts | 218,623 | 766,408 |
| Energy | - | 384 |
| Fuel | 32,251 | 28,260 |
| Water | - | 146 |
| Books | 15,043 | 11,233 |
| Office material | 26,326 | 19,997 |
| Operational rents | 347,555 | 357,107 |
| Entertainment expenses | 40,482 | 43,046 |
| Communication | 221,597 | 221,414 |
| Insurance | 202,484 | 1,108,927 |
| Travelling | 157,553 | 179,562 |
| Fees | 47,665 | 192,094 |
| Legal expenses | 10,256 | 10,525 |
| Maintenance | 28,170 | 32,632 |
| Publicity | 33,286 | 31,700 |
| Hygiene | 13,130 | 13,993 |
| Services obtained | 779,651 | 874,231 |
| Others | 243,195 | 190,305 |
| 2,417,267 | 4,081,964 |
As at 31 December 2006 and 2005 staff costs can be detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Directors salaries | 2,000,973 | 2,439,837 |
| Staff salaries | 2,471,989 | 2,451,835 |
| Social costs | 435,292 | 410,715 |
| Other staff costs | 115,546 | 51,199 |
| 5,023,800 | 5,353,586 |
As at 31 December 2006 and 2005, staff was 60 and 59, respectively.
As at 31 December 2006 and 2005 other operational expenses can be detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Donations | 120,441 | 15,000 |
| Fines and penalties paid | - | 89 |
| Taxes | 276,383 | 257,198 |
| Losses on sale of fixed assets | 233 | - |
| Other operational expenses | 175,703 | 153,607 |
| 572,760 | 425,894 |
As at 31 December 2006 and 2005 net financial expenses can be detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Interest payable and similar expenses | ||
| Interest arising from: | ||
| Overdrafts | (34,318) | (426,644) |
| Bonds | (15,609,751) | (7,503,608) |
| Other | (10,861,450) | (15,806,326) |
| Exchange losses | (22) | (10) |
| Other financial expenses | (1,411,538) | (1,543,137) |
| (27,917,079) | (25,279,725) | |
| Interest receivable and similar income | ||
| Interest income | 36,121,077 | 22,304,844 |
| Exchange gains | - | 1,565 |
| 36,121,077 | 22,306,409 | |
| Net financial expenses | 8,203,998 | (2,973,316) |
As at 31 December 2006 and 2005 investment income can be detailed as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Dividends received | 53,613,493 | 8,718,968 |
| Gains/(Losses) on sale of investments | (65,349,636) | 98,752,702 |
| (11,736,143) | 107,471,670 |
Dividends were received from Sonae Sierra, SGPS, SA (12,013,923 euro) and Modelo Continente, SGPS, SA (41,599,570 euro). Gains on sales of investments include 22,967,476 euro arising from the sale to an affiliated undertaking of 100% of SC Insurance Risk Services, SGPS, SA, 2,347,590 euro arising from the sale to an affiliated undertaking of part of the shareholding on Sonae Indústria, SGPS, SA and 12,334,800 euro arising from the sale of Hospimob - Imobiliária, SA. Losses on sale of investments include 106,170,953 euro arising from the sale to Modelo Continente, SGPS, SA of 4.8% of its own shares.
Gains and losses on sale of investments include 100,075,852 euro of a transfer from fair value reserves corresponding to changes in the fair value of investments sold in the year, previously recorded under fair value reserves.
Income tax charge for the year was 12,949 euro and 14,041 euro, in 2006 and 2005, respectively.
The reconciliation between the profit before taxation and the tax charge for the years ended 31 December 2006 and 2005 may be summarised as follows:
| 31.December.2006 | 31.December.2005 | |
|---|---|---|
| Profit before taxes Increase / (Decrease) for tax |
65,150,993 | 98,069,115 |
| purposes | 40,289,011 | (55,964,744) |
| Taxable income | 105,440,004 | 42,104,371 |
| Use of carried forward tax losses | (105,440,004) | (42,104,371) |
| Net taxable income | - | - |
| Tax charge @ 27.5% | - | - |
| Autonomous taxes | 12,949 | 14,041 |
| Tax charge | 12,949 | 14,041 |
| Effective average tax rate | 0.000198754 | 0.000143175 |
| 31.December.2006 | 31.December.2005 | |||
|---|---|---|---|---|
| Carried forward tax loss |
Limit for use | Carried forward tax loss |
Limit for use | |
| Arising from 2002 | 335,033,154 | 2008 | 440,473,158 | 2008 |
| 335,033,154 | 440,473,158 |
As at 31 December 2006, deferred tax assets have not been recorded in relation to carried forward tax losses, considering the uncertainty of their use.
Earnings per share for the period were calculated taking into consideration the following amounts:
| 2006 | 2005 | |||
|---|---|---|---|---|
| 4th Quarter | Cumulative | 4th Quarter | Cumulative | |
| (Unaudited) | (Unaudited) | |||
| Net profit | ||||
| Net profit taken into consideration to calculate basic earnings per share (Net profit for the period) |
(92,496,223) | 65,138,044 | 75,053,381 | 98,055,074 |
| Effect of dilutive potential shares | ||||
| Interest related to convertible bonds (net of tax) | - | - | - | - |
| Net profit taken into consideration to calculate diluted earnings per share: |
(92,496,223) | 65,138,044 | 75,053,381 | 98,055,074 |
| Number of shares | ||||
| Weighted average number of shares used to calculated basic earnings |
1,866,581,428 | 1,866,382,294 | 1,866,023,854 | 1,865,952,847 |
| Effect of dilutive potential ordinary shares from convertible bonds |
- | - | - | - |
| Weighted average number of shares used to | ||||
| calculated diluted earnings per share | 1,866,581,428 | 1,866,382,294 | 1,866,023,854 | 1,865,952,847 |
| Profit/(Loss) per share (basic and diluted) | (0.049554) | 0.034901 | 0.040221 | 0.052550 |
During 2006, the following acquisitions and disposals occurred:
| Disposals | Acquisitions | |||
|---|---|---|---|---|
| Companies | Total price | Amount received | Total price | Amount paid |
| Eirles Three Junior Notes | 33,715,075 | 33,715,075 | - | - |
| Espmen - Investimentos Imobiliarios, SA | - | - | 6,152,894 | 6,152,894 |
| Hospimob - Imobiliaria, SA | 21,034,800 | 21,034,800 | 8,700,000 | 8,700,000 |
| Modelo Continente, SGPS, SA | 108,240,000 | 108,240,000 | 84,649,022 | 84,649,022 |
| SC Insurance and Risk Services, SGPS, SA | 37,500,000 | 37,500,000 | - | - |
| Sonae Indústria, SGPS, SA | 7,350,000 | 7,350,000 | - | - |
| Sonae Turismo, SGPS, SA (a) | 127,012,275 | 91,795,896 | - | - |
| Sonaecom, SGPS, SA | - | - | 34,372,300 | 34,372,300 |
| Sontel, BV | - | - | 100,000 | 100,000 |
| 334,852,150 | 299,635,771 | 133,974,216 | 133,974,216 |
(a) On sale of Sonae Turismo,SGPS, SA an amount of 35,216,379 euro has not been received as it corresponded to part of its share capital increase which had not yet been paid up. (Note 20).
Amounts received on disposals of investments in the cash flow statement, include 226,300,923 euro relating to disposals in prior years.
On 2 January 2007 Sonae, SGPS, SA sold to an affiliated undertaking 40,481,436 shares of Sonaecom, SGPS, SA for 204,026,437.44 euro. Voting rights in Sonaecom, SGPS, SA directly attributable to Sonae represent 1.663% of total voting rights.
In the Shareholders Annual Meeting held on 6 April 2006, payment of a gross dividend of 0.025 per share was approved. This was paid on 5 May 2006, the total amount paid being 46,650,596.35 euro.
For 2006, the Board of Directors proposed a gross dividend of 0.03 euro per share. In view of the fact that the Board of Directors intends to maintain the number of own shares held until dividend is paid, total amount of dividends is estimated to be 55,997,442.84 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 20 March 2007. These financial statements will be presented to the Shareholders' General Meeting for final approval.
In the twelve months ended 31 December 2006 shareholders' loan contracts were entered into with the following companies:
Espmen - Investimentos Imobiliarios, SA Sonae Investments, BV Sonae Capital, SGPS, SA
In the twelve months ended 31 December 2006 short-term loan contracts were entered into with the following companies:
Agloma Investimentos, SGPS, SA Atlantic Ferries, SA Box Lines - Navegação, SA Clinclus - Planeamento e Gestão de Projectos, SA Contibomba - Comércio e Distribuição de Combustíveis, SA Elmo, SGPS, SA Gestholding, SGPS, SA Iginha - Sociedade Imobiliária, SA Imoareia, Investimentos Turísticos, SGPS, SA Imoplamac - Gestão de Imóveis, SA Inparvi, SGPS, SA Interlog, SGPS, SA Investalentejo, SGPS, SA Ipaper - Indústria de Papeis Impregnados, SA Modelo Continente - Operações de Retalho, SGPS, SA Modelo Continente, SGPS, SA Modelo, SGPS, SA Nab - Sociedade Imobiliária, SA Público - Comunicação Social, SA SC - Sociedade de Consultadoria, SA Sete e Meio - Investimentos e Consultadoria, SA Somit- Sociedade de Madeiras Industrializadas e Transformadas, SA Sonae Capital, SGPS, SA Sonae Matrix - Multimédia, SGPS, SA Sonae Sierra, SGPS, SA Sonae Turismo, SGPS, SA Sonaecom, SGPS, SA Todos os Dias - Com.a Retalho e Expl. De Centros Comerciais, SA
| Companies | Closing Balance |
|---|---|
| Agloma Investimentos, SGPS, SA | 1,246,000 |
| Atlantic Ferries, SA | 797,000 |
| Elmo, SGPS, SA | 4,008,000 |
| Espmen - Investimentos Imobiliarios, SA | 7,106 |
| Investalentejo, SGPS, SA | 10,192,000 |
| Nab - Sociedade Imobiliária, SA | 148,000 |
| Sonae Capital SGPS, SA | 64,225,280 |
| Sonae Investments, BV | 792,400,040 |
| 873,023,426 |
As at 31 December 2006 amounts owed to affiliated undertakings can be summarized as follows:
| Companies | Closing Balance |
|---|---|
| Box Lines - Navegação, SA | 891,000 |
| Clinclus - Planeamento e Gestão de Projectos, SA | 2,850,000 |
| Interlog, SGPS, SA | 18,977,000 |
| Sonaecom, SGPS, SA | 90,000,000 |
| 112,718,000 |
31 DECEMBER 2006
(Translation of a report originally issued in Portuguese)
To the Shareholders of Sonae, S.G.P.S., S.A.
In compliance with the applicable legislation and our mandate we hereby submit our Report and Opinion which covers our work and the consolidated and individual documents of account of Sonae, S.G.P.S., S.A. for the year ended 31 December 2006, which are the responsibility of the Company's Board of Directors.
We accompanied the operations of the Company and its principal affiliated companies, the timely writing up of their accounting records and their compliance with statutory and legal requirements, having obtained from the Boards of Directors and personnel of the Company and its principal affiliated companies all the information and explanations required.
In performing our work, we examined the consolidated and individual Balance sheets as of 31 December 2006, the consolidated and individual Statements of profit and loss by nature, of changes in equity and of cash flows for the year then ended and the related notes. Additionally, we examined the Report of the Board of Directors for the year 2006. As consequence of our legal examination we have issued the Statutory Audit and Auditors' Report.
Considering the above, in our opinion the consolidated and individual financial statements referred to above and the Report of the Board of Directors, including the profit appropriation proposal included therein, are in accordance with the accounting, legal and statutory requirements and so can be approved by the Shareholders' General Meeting.
We wish to thank the Company's Board of Directors and personnel, as well as the statutory boards and personnel of the Group companies for the assistance provided to us.
Porto, 20 March 2007
DELOITTE & ASSOCIADOS, SROC, S.A. Represented by Jorge Manuel Araújo de Beja Neves
_______________________________________________
(Translation of a report originally issued in Portuguese)
Page 2 of 2
Porto, 20 March, 2007
DELOITTE & ASSOCIADOS, SROC S.A. Represented by Jorge Manuel Araújo de Beja Neves
Sonae SGPS, SA Lugar do Espido Via Norte Apartado 1011 4471-909 Maia Portugal Tel (+351) 22 948 75 22/76 22 Fax (+351) 22 948 77 22 www.sonae.pt
(Translation from the Portuguese original)
Sociedade Aberta Head Office: Lugar do Espido, Via Norte, 4471-909 Maia Share Capital: € 2,000,000,000.00 Maia Commercial Registry and Fiscal Number 500 273 170
I, hereby, certify that the following has been approved and is included in minute 97 of the Shareholders' General Meeting held on 3 May 2007:
| Legal Reserves | 3,256,602.22 |
|---|---|
| Free Reserves | 5,883,699.39 |
| Dividends | 55,997,442.84 |
c) A gross dividend of 0.03 euro per share, in view of the fact that the Board of Directors intends to maintain the number of own shares held until dividend is paid.
Maia, 03 May 2007
The Chairman of the Board of the Shareholders' General Meeting
(Manuel Eugénio Pimentel Cavaleiro Brandão)
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