Registered Office: Lugar do Espido, Via Norte, Maia, Portugal Registered at the Commercial Registry of Maia Registry and Tax Identification No. 506 035 034 Share Capital: EUR 253 319 797.26 Publicly Traded Company

ANNUAL REPORT

SEPARATE AND CONSOLIDATED FINANCIAL STATEMENTS

2020

26 MARCH 2021

Management Report

Appendices to the Management Report and Qualified Shareholdings

Appendix regarding Article 447 of Companies Law
Qualified Shareholdings
Statement issued under the terms and for the purpose of sub-paragraph c) of nr. 1 of Article 245 of the Portuguese Securities Code

Corporate Governance Report

Separate Financial Statements

Separate Statement of Financial Position
Separate Income Statement
Separate Statement of Comprehensive Income
Separate Statement of Changes in Shareholders' Funds
Separate Statement of Cash Flows
Notes to the Separate Financial Statements

Consolidated Financial Statements

Consolidated Statement of Financial Position
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Shareholders' Funds
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial statements

Statutory External Auditor Report and Statutory Audit Board Report

Statutory External Auditor Report on separate and consolidated information
Statutory Audit Board Report

26 March 2021

Key Indicators (statutory figures) 3
Chairman's message4
1. Sector review7
2. Business Review10
2.1. Turnover & Recurrent EBITDA 10
2.2. Consolidated financial performance11
2.2.1. Consolidated Income Statement 11
2.2.2. Capex 12
2.2.3. Consolidated Statement of Financial Position 13
2.3. Individual Results of Sonae Indústria, SGPS, S.A14
2.4. Proposed Allocation of Results14
2.5. Proportional Indicators (Unaudited)14
2.6. Covid-1916
2.7. Outlook for 202118
2.8. Information on Shareholdings and Share Performance 18
2.8.1. Efanor Tender Offer19
2.8.2 Share Performance 19
2.9. Transactions With Own Shares20
2.10. Transactions Between the Company and its Directors20
2.11. Dividend policy 20
2.12. Subsequent Events 21
3. Risk Management21
3.1. Credit Risk Management Policy 21
3.2. Market Risks 22
3.3. Legal Risks23
3.4. Operational Risks23
4. Non-Financial Information23
4.1. About Sonae Indústria 24
4.1.1. Business24
4.1.2. History 25
4.1.3. Products26
4.1.4. Strategy30
4.1.5. 2020 Key Corporate Events 32
4.1.6. Awards and Innovative Projects 32
4.1.7. Improving our Work (IOW)34
4.2. Social and Employee-Related Matters35
4.3. Respect For Human Rights60
4.4. Anti-Corruption and Bribery Matters 61
4.5. Environmental and Forestry Matters63
4.6. Management Systems 78
5. Closing Remarks and Acknowledgements82
Appendices to the Management Report and Qualified Shareholdings 83

KEY INDICATORS (STATUTORY FIGURES)

TURNOVER BY MARKET

TURNOVER

RECURRENT EBITDA AND % TURNOVER MILLION EUROS

NET DEBT AND NET DEBT TO RECURRENT EBITDA MILLION EUROS

6.5 x 7.0 x 7.5 x 8.0 x 8.5 x 9.0 x

WORKING CAPITAL MILLION EUROS

CHAIRMAN'S MESSAGE

One year ago, the final words of my 2019 Chairman Message addressed the exceptional situation the world was beginning to face in the initial stages of the Covid-19 pandemic. Since then, the pandemic has caused vast health, social and economic damage to people all around the world and has disrupted many industries and businesses of all sizes.

At Sonae Indústria we have also faced significant challenges throughout the year although, after a particularly difficult period between March and May, our businesses have shown surprising resilience and recovered well during the second half of 2020. Our teams have worked relentlessly to ensure the safety of our people and to protect our businesses under difficult circumstances while preparing them for a future in the face of much uncertainty.

The work done on the implementation of precautionary health and safety measures at all Sonae Indústria offices and industrial sites since the beginning of the pandemic, was clearly important to preserve the safety of our people. Until the end of December 2020, the number of confirmed Covid-19 cases within our people, considering our fully owned businesses and also Sonae Arauco, was still quite low at 96. Unfortunately, in January 2021, one of our employees in South Africa has passed away due to Covid-19.

As previously reported, Sonae Indústria's turnover and profitability levels were significantly affected by the Covid-19 pandemic in the first half of 2020, as a result of the sudden contraction of economic activity, particularly in the second quarter of the year and in the countries where more severe lockdown measures were implemented.

In order to offset, as much as possible, the negative effects of the pandemic on turnover and profitability, we implemented significant measures at different levels, including adjusting production levels and costs (optimizing fixed costs, implementing governments support measures, layoff and short work schemes, notably in 2Q20) and revisiting investment plans in order to protect liquidity.

In the second half of 2020, under a context of generally less restrictive extraordinary pandemic containment measures imposed by governments, we witnessed a stronger than expected recovery in customer demand and activity levels both in our North American and Sonae Arauco businesses. For North America and Sonae Arauco, Turnover in the 2H20 was respectively circa 100% and 102% of 2H19 levels which compares with the 79% and 77% in the first half of 2020.

Accordingly, after a difficult first half of the year with a net loss of –7.2 million euros, the second half of 2020 was marked by positive Net Results of circa +1.3 million euros with improved contributions from North America and Sonae Arauco, leading to a negative Net Result of circa -6.0 million euros in 2020 at Sonae Indústria.

Notwithstanding the overall lower activity levels compared to the previous year, Proportional Recurrent EBITDA reached 63.9 million euros, slightly higher than in 2019 with an improved margin of 11.9% versus 10.5% in the previous year, benefiting from the actions taken but also by the pandemic related employment protection schemes and subsidies across a number of our businesses. Proportional Senior Net Debt reached 299 million euros at the end of 2020, implying an increase of circa 16 million euros during the year, that reflected the investment effort started before the pandemic. The resulting proportional senior leverage ratio stood at circa 4.7x, up from 4.4x in 2019.

In relation to our North American business, I am pleased to highlight the significant achievements of the team that under adverse circumstances was able to complete successfully two strategic investments while delivering improved financial results in the year. In the first half of 2020 we completed the full refurbishment of one of our particleboard production lines which is now allowing us to produce better quality panels for our customers with increased efficiency and competitiveness. We also completed the investment in our brand new hot coating plant

and already in 2021 started producing High Gloss and Perfect Matt decorative panels under our new LUMMIA brand. With the new LUMMIA high end products, we will further reinforce our already leading position as a decorative solutions provider. In addition to these major business developments and despite the pandemic's negative impact on activity levels in the year, our North American business improved its Recurrent EBITDA result when compared with 2019.

For our Laminates business, 2020 was also marked by the adverse effects of the pandemic on top line which prevented achieving the targeted improvement in profitability. As announced, in December 2020 we closed the industrial activities at our Horn site in Germany and concentrated all Surforma Laminates production in our plant in Maia, Portugal. Intensive work is being done by Surforma's team to develop new business models adapted to the current reality. In relation to the Components business, we took the decision to close down this operation given that we found no way of turning around this business that had consistently generated negative results and negative free cash over many years. As with other inactive sites, we will keep working to monetize the assets of the Horn and Vilela sites and further reduce their running costs.

At Sonae Arauco, despite the very adverse circumstances in the first half of the year as reported throughout 2020, the second half showed a marked recovery and as a result we were still able to achieve a positive, although marginal, Net Profit. This an encouraging sign of the resilience of the business model we have been implementing over the past years.

During the year and notwithstanding the challenges faced by the pandemic, at Sonae Arauco we continued with the implementation of strategic investments aiming at improving our competitive position and the sustainability of our business. We completed the investment in a new particleboard continuous press in Beeskow, that started production in 3Q20, replacing the last day-light presses in Sonae Arauco industrial portfolio. We also continued to invest and to streamline our supply chain processes, in line with our objective of improving customer service levels and to, fully deliver on time and on quality. Additional progress was also made on the digitalization of operations, namely through the use of sensors in equipment and real-time data analysis prompting automatic corrective actions.

As regards Sonae Indústria's Balance Sheet, in 2020 we saw a reduction in Shareholders' Funds resulting from the negative results of the year and from the foreign exchange accounting impacts, but also due to the increase in Net Debt which was mainly driven by the strategic investments in North America which had started in 2019. In the face of continued pressure from an undercapitalised balance sheet, in January 2021 the Board of Directors approved a share capital increase of up to 55 million euros in order to improve the companies' capital structure, through the reinforcement of its equity base, and consequently, to enable Sonae Indústria to reduce the level of indebtedness and to pursue its strategic plans within an environment of continued uncertainty due to the pandemic. The capital increase process is ongoing and is expected to be concluded in the second quarter of 2021.

Looking forward, we will continue to face a period of unusually high uncertainty. The recovery in activity levels during the second half of 2020 seems to have been driven primarily by an increased focus of consumers on home improvements, as they spent a significantly higher share of time at home and freed up a higher share of the household budget for home-related spending in a context of limitations to travelling and other leisure activities. The lack of visibility on the evolution of the pandemic crisis including the implementation of vaccinations and treatments for an ever evolving virus, makes it difficult to evaluate the impacts on the demand drivers of our business (namely residential and office segments), and on the general economic conditions and on potential structural changes in customer behaviour. However, we are confident that appropriate measures have been taken to enable our businesses to see this crisis through.

As a final word, I would like to highlight the resilience, adaptability and commitment that our teams have demonstrated throughout such a difficult year. They were able to quickly adapt to the new reality of remote working, adhere to the safeguarding measures that were promptly defined and understand the rationale for the implementation of the tough measures that were required during some phases of the pandemic situation. I would

also like to thank the contribution of Sonae Indústria Statutory Boards and to thank all our stakeholders for their continued support of and confidence in our company.

Paulo Azevedo

Chairman, Sonae Indústria

1. SECTOR REVIEW

MACROECONOMIC CONTEXT¹

2020 was marked by the worldwide propagation of the Covid-19 virus and by the related containment measures, which are causing material negative economic impacts and led to an expected global GDP² contraction of circa 4.2% (vs. circa +2.7% in 2019).

However, in 2021 and 2022, a recovery is expected with estimated global GDP growth rates of 4.2% and 3.7%, respectively, mainly supported in the short term by private consumption. These estimates have a high level of uncertainty, as they depend on the successful containment of new virus outbreaks, on the progress of the vaccination process and on supportive fiscal policies to support demand.

The economic contraction in 2020 was also registered in the Euro area, with an expected GDP reduction of -7.5% (vs. circa +1.3% in 2019). On a quarterly basis, economic growth was unequal throughout 2020 with the second quarter being particularly affected by the lockdowns to contain the pandemic followed by a third quarter marked by a material economic recovery as containment measures were eased, and finally a fourth quarter again affected by new containment measures being applied in most countries. The labour market in the Euro Area is under pressure and the trend of reduction of the unemployment rate was interrupted in 2020 (an increase of circa 0.6 p.p when compared to 2019, despite the relevant employment support public measures). The levels of private consumption and investment were affected by the uncertainty and by the reduction of consumer confidence. Tourism sector in particular was severely impacted by the Covid-19 pandemic. Consumer prices growth reduced from 1.2%, in 2019, to 0.3% in 2020, mainly driven by energy prices, but also by services prices. However, from a trade perspective, Euro area presented again a surplus in the current account balance and the credit conditions remained favourable (short-term interest rates for the Euro area continue to be negative). In 2021 and 2022 an economic recovery in the Euro Area is expected, with an estimated GDP growth of 3.6% and 3.3%, respectively. The Trade and Cooperation Agreement (TCA) formalized in December 2020 between the European Comission and the United Kindgom (UK) is estimated to partially offset the negative effects from the exit of the UK from the European Union.

As regards the US economy, the expected GDP rate in 2020 is -3.7% (vs. circa +2.2% in 2019) and the expected economic growth in 2021 and 2022 is circa 3.2% and 3.5%, respectively, benefiting from an assumed additional fiscal package in early 2021. The positive trend of last years in unemployment rates was reversed with an increase of the unemployment rate of 4.4 p.p in 2020 when compared to 2019. The dinamycs of the economic relations between US and China, that have been markey by tensions, can be modified with the election of the 46th president.

Brief analysis by main regions where Sonae Indústria Group is present:

• After sixth consecutive years of growth, in 2020 the Iberian Peninsula was significantly affected by the Covid-19 pandemic and related strict confinement measures. The expected GDP rates in 2020 are -11.6% in Spain and -8.4% in Portugal. In the next two years a recovery is expected supported mainly in the short term by demand, with an estimated growth rate in 2021 and 2022 of 5.0% and circa 4.0% in Spain, respectively, and of 1.7% and circa 1.9% in Portugal, respectively. Despite the government supportive measures, the continuous

reduction of the unemployment rates (that remained high particularly in Spain) in the last years was reversed in 2020, with an increase of circa 1.7 p.p. and 0.9 p.p. in Spain and Portugal, respectively, which

² GDP: Gross Domestic Product.

¹ Source: OECD, Economic Outlook, December 2020.

contributed to a reduction of private consumption and investment levels. The consumer prices variation was negative in 2020 (-0.3% in Spain and -0.01% in Portugal), impacted by the significant reduction of consumer confidence and the overall prices pressure, including the reduction of oil price. From a trade perspective, Spain registered a surplus in the current account balance, but Portugal registered a deficit in the current account balance for the second consecutive year. The positive trend registered in the last years in the residential construction sector, which is fairly correlated with the economic environment, remained in Portugal but at a much slower pace, as indicated by the building permits y.o.y. increase of 2.0%³ . However in Spain the evolution of the residential construction sector in 2020 was negative, with a building permits y.o.y. decrease of circa 20.1%⁴ .

• In Germany the expected GDP reduction in 2020 is of 5.5% (vs. circa +0.6% in 2019), affected by the Covid-19 pandemic leading to a reduction of private consumption, investment levels and exports. However, a GDP growth of 2.8% and 3.3% in 2021 and 2022, respectively, is expected. The performance of the labour market in 2020 was supported by short-time work schemes and public supporting measures, leading to a moderate increase of the unemployment rate of circa 1.1 p.p.. The consumer prices growth reduced from 1.4%, in 2019, to 0.5% in 2020, affected by a reduction in demand, energy prices and VAT rates. The current account balance in 2020 presented again a surplus. Despite the macroeconomic environment, affected by the pandemic, the residential construction sector registered a growth, as evidenced by the y.o.y increase in the number of building permits in 2020 (up by circa 4.8%⁵ ).

• In relation to North America, a GDP fall of circa 3.7% (vs. circa +2.2% in 2019) and 5.4% (vs. circa +1.7% in 2019) is expected for the US and Canadian economies, respectively, due to the pandemic negative economic effects in the first half of the year, as the second half already showed signs of recovery. For 2021 and 2022, it is estimated a GDP growth for the US economy of circa 3.2% and 3.5%, respectively, and for the Canadian economy of circa 3.5% and 2.0%, respectively. The performance of labour market in 2020 was significantly affected by the pandemic in both countries, with a material increase of the unemployment rates (+4.4. p.p. in the US economy and +3.9 p.p. in the Canadian economy). It should also be noted the material reduction of private consumption and investment levels in 2020. The long term and short term interest rates reduced significantly in 2020, leading to a recovery of the housing investment levels. Despite the negative macroeconomic environment, the housing starts increased by circa 8.4%⁶ y.o.y in Canada and by 3.5%⁷ y.o.y in the USA.

• For South Africa, OECD estimates a negative GDP rate of 8.1% in 2020 (vs. circa +0.2% in 2019) and a recovery in 2021 and 2022, with an expected GDP growth rate of circa 3.1% and 2.5%, respectively. The unemployment levels, that were already very high (circa 28.7% in 2019), increased circa 3.3 p.p. in 2020. The macroeconomic environmental led to a weaker performance in the residential construction sector, as evidenced a y.o.y. decrease of circa 31.9%⁸ in the number of residential building permits.

WOOD BASED PANELS

NORTH AMERICA (TAFISA CANADA)

Demand by Product

During 2020 particleboard demand in North America weakened in 2Q20 and early 3Q20 due to the Covid-19 pandemic. However, from late 3Q20 through year end demand strengthened measurably due to the increase in expenditures for residential improvement and furniture. This demand recovery is extending into 2021. Considering

⁸ Source: Statistics South Africa, February 2021 ("Building plans for residential buildings (number)", cumulative 11 months evolution until November 2020).

³ Source: Instituto Nacional de Estatística, February 2021 ("Nova habitação residencial", cumulative 12 months evolution until December 2020).

⁴ Source: Ministerio de Fomento, January 2021 (Total "New Housing", cumulative 11 months evolution until November 2020).

⁵ Source: German Federal Statistics Office, February 2021 ("Permits for new construction, dwelling", cumulative 11 months evolution until November 2020).

⁶ Source: Canada Mortgage and Housing Corporation, February 2021 ("Building permits (units)", cumulative 12 months evolution until December 2020).

⁷ Source: United States Census Bureau, January 2021 ("Housing units started", cumulative 12 months evolution until December 2020).

the published estimates from the Composite Panel Association (CPA), North American particleboard industry shipments reduced 6% when compared to 2019.

Supply information

Main closures and investments by key industry players in North America announced:

Arauco closed the Moncure (North Carolina, USA) particleboard plant in the first half of 2020. This romeved a 262 thousand m3 of capacity from the North American industry;
Egger started production in the new particleboard plant in North Carolina (USA) in the fall of 2020. This plant represents an investment of USD 500 million for particleboard production, with an expected capacity of 600 thousand m3, and melamine faced particleboard production.

During 2020, the market was still absorbing the contraction of capacity from 2019 and early 2020. Egger's new plant had little overall impact on the demand-supply balance in 2020.

EUROPE (SONAE ARAUCO)

Demand by product⁹

In 2020, the wood based panels consumption was globally impacted by the Covid-19 pandemic crisis. Most macroeconomic indicators report historical declines in economic activity and construction and furniture industries, that are not expected to be fully recovered in 2021. As one of the exceptions to this trend, it should be mentioned that the construction in Portugal in 2020 is expected to have kept the same level of 2019 activity.

Across several regions production sites and commercial companies closed temporarily their activities due to containment measures imposed by local governments, which affected the wood based panels industry and its direct customers.

During 2020 particleboard consumption is expected to have decresead by circa 4% in European Union 27 (EU-27).

MDF consumption, in EU-27 is also expected to have decreased by circa 4% in 2020.

In what concerns OSB, consumption in EU-27 is expected to have increased in 2020, by circa 3%.

Supply information¹⁰

The overall EU-27 particleboard (PB) production capacity is expected to have increased in 2020 by 2%. Particleboard capacity in the Iberian Peninsula is estimated to have increased by circa 3% in 2020 and to represent approximately 3.9 million m3. For 2021, is expected again an increase of circa 0.1 million m3. It should be mentioned the Sonae Arauco investment to replace the two single day light particleboard presses by a new continuous press with state-of-the-art technology at our Beeskow (Germany) plant and the start up in September 2020 of Klaipedos Mediena (VMG) new particleboard plant in Akmene (Northern Lithuania), with an annual capacity of 600 thousand m3.

MDF production capacity in EU-27 is expected to have decreased by 2% in 2020, mainly driven by Germany. In Iberian Peninsula, no increases in MDF available capacity are estimated to have occurred during 2020. In Germany, the MDF production capacity is expected to have decreased in 2020, mainly due to the closure of Laminate Park operations (Sonae Arauco and Tarkett joint venture) at the Eiweiler site, by the end of 2019.

Total EU-27 OSB production capacity is expected to have increased in 2020 by around 3% (circa +0.2 million m3).

¹⁰ Sources: Sonae Arauco internal estimates and competitor's public information.

⁹ Sources: FAOSTAT: Food and Agriculture Organization Statistics and Sonae Arauco internal estimates.

2. BUSINESS REVIEW

2.1. TURNOVER & RECURRENT EBITDA

TURNOVER and RECURRENT EBITDA

Consolidated Turnover reached 201.8 million euros in 2020, a reduction of 12.2% vs. last year (circa -28.2 million euros), driven essentially by our North American business with lower sales volumes (in local currency but also affected by circa EUR -5.5M effect from the depreciation of the Canadian dollar vs. the EUR). The evolution of the consolidated turnover was clearly impacted by the Covid-19 outbreak, with significant negative impacts particularly in 2Q20 (circa -32% vs. 2Q19), followed by a gradual recovery in 3Q20 and specially in 4Q20 (-15% and +4%, respectively, vs. 3Q19 and 4Q19). For the second half of the year, Consolidated turnover reached 106.9 million euros, which represents a decrease of 6.7 million when compared to 2H19 mostly due to a circa 6.0 million euros effect from the depreciation of the Canadian dollar vs. the EUR, but an increase of circa 12.0 million euros when compared to 1H20.

Variable costs per cubic meter decreased both in local currency and in euros in 2020, when compared to the previous year, with a decrease in input costs, and in euros also benefiting from the depreciation of the Canadian dollar. For the second half of the year, variable costs per cubic meter also decreased when compared to 2H19 and 1H20.

Recurrent EBITDA in 2020 reached 28.0 million euros, an increase of circa 1.6 million euros vs. 2019, explained by a reduction in variable and fixed costs, which more than offset the reduction in Consolidated turnover. In the second half of the year, Recurrent EBITDA stood at 17.7 million euros, an increase of circa 4.3 million euros and 7.4 million euros, when compared to 2H19 and 1H20, respectively. The 2H20 Recurrent EBITDA margin reached circa 16.6%, up by circa 4.8 p.p. and 5.7 p.p. vs. 2H19 and 1H20, respectively.

Consolidated EBITDA in 2020 reached circa 26.7 million euros, an increase of 0.9 million euros vs. 2019. In the second half of the year, Consolidated EBITDA stood at 16.4 million euros, an increase of circa 3.2 million euros and 6.1 million euros, when compared to 2H19 and 1H20, respectively. The evolution in Consolidated EBITDA is mainly explained by the aforementioned performance of Recurrent EBITDA.

2.2. CONSOLIDATED FINANCIAL PERFORMANCE

2.2.1. CONSOLIDATED INCOME STATEMENT

CONSOLIDATED INCOME STATEMENT

MILLION EUROS

	2019	2020	2020/	2H19	1H20	2H20	2H20/	2H20/
						2019 Unaudited Unaudited Unaudited	2H19	1H20
Turnover	230.0	201.8	(12.2%)	113.6	94.9	106.9	(5.9%)	12.6%
Other operational income	4.1	8.8	115.3%	2.1	4.8	4.0	87.3%	(17.7%)
EBITDA	25.8	26.7	3.5%	13.2	10.3	16.4	23.9%	59.6%
Non recurrent items	(0.7)	(1.4)	(90.9%)	(0.2)	(0.1)	(1.3)	-	-
Recurrent EBITDA	26.5	28.0	5.9%	13.4	10.3	17.7	31.9%	71.3%
Recurrent EBITDA Margin %	11.5%	13.9%	2.4 pp	11.8%	10.9%	16.6%	4.8 pp	5.7 pp
Depreciation and amortisation	(15.9)	(15.7)	1.2%	(8.1)	(7.9)	(7.8)	2.8%	1.1%
Provisions and impairment Losses	(5.4)	0.0	100.5%	(5.4)	(0.6)	0.6	111.9%	-
Operational profit (EBIT)	4.4	11.0	-	(0.2)	1.7	9.2	-	-
Net financial charges	(11.5)	(10.8)	5.9%	(5.7)	(5.7)	(5.1)	11.4%	11.4%
o.w. Net interest and other charges	(9.8)	(9.4)	4.5%	(4.9)	(5.0)	(4.4)	10.7%	13.1%
o.w. Net exchange differences	(0.0)	(0.0)	(73.1%)	(0.0)	(0.1)	0.1	-	-
o.w. Net financial discounts	(1.6)	(1.4)	15.3%	(0.8)	(0.6)	(0.8)	1.6%	(40.7%)
Gains and losses in Joint-Ventures - Net Results	0.7	0.1	77.7%	(4.7)	(2.8)	2.9	-	-
Gains and losses in Joint-Ventures - Other	(3.7)	(3.2)	12.2%	(3.7)	(0.1)	(3.1)	14.5%	-
Profit before taxes (EBT)	(10.0)	(2.9)	71.1%	(14.3)	(6.8)	3.9	127.5%	-
Taxes	(3.3)	(3.1)	8.1%	(1.5)	(0.4)	(2.7)	(81.1%)	-
o.w. Current tax	(3.3)	(1.3)	60.9%	(1.0)	(1.5)	0.2	117.8%	112.4%
o.w. Deferred tax	(0.0)	(1.8)	-	(0.4)	1.1	(2.9)	-	-
Consolidated net profit/(loss) for the period	(13.4)	(6.0)	55.4%	(15.8)	(7.2)	1.3	108.0%	117.4%

Total fixed costs in 2020 represented circa 16.8% of turnover, a reduction of circa 0.6 p.p. vs. 2019, due to the reduction of fixed costs. It should be noted that fixed costs in 2Q20 and 3Q20 include positive impacts of layoff and short work schemes implemented aiming to partially offset the material reduction of turnover due to the Covid-19 pandemic. For the second half of the year, total fixed costs as a percentage of turnover reduced by 1.8 p.p. and 1.7 p.p. when compared to 2H19 and 1H20, respectively.

The number of employees of Sonae Indústria was 473 FTE's, at the end of December 2020, excluding Sonae Arauco and trainees, which compares with 503 and 506 FTE's at the end of June 2020 and December 2019, respectively. The reduction in FTE's is explained by the closure of the Components plant (in Portugal) in the 2H20.

Depreciation and amortization charges during 2020 were 15.7 million euros, a reduction of circa 0.2 million euros when compared to 2019. In 2H20, the depreciation and amortization charges reached 7.8 million euros, a reduction of 0.2 million euros and circa 0.1 million euros when compared to 2H19 and 1H20, respectively.

Provisions and impairment losses in 2020 were 0.02 million euros, which compares with a charge of 5.4 million euros in 2019, which included the recognition of Provisions related with the closure of all industrial activities at Horn site in Germany by the end of 2020, that were mostly used in 2H20. Pursuant to the agreement with Arauco these costs related with the Horn site are the responsibility of Sonae Indústria hence, in addition to the 50% considered at Sonae Arauco level as explained below, Sonae Indústria considers directly the remaining 50% in its accounts.

Net financial charges during 2020 were 10.8 million euros, a reduction of circa 0.7 million euros when compared to 2019, mainly explained by a reduction of 0.4 million euros in net interest and other charges (benefiting from lower base rates in Canada debt since the beginning of the pandemic and despite higher average consolidated gross debt in 2020 when compared with 2019) and of circa 0.3 million euros in net financial discounts due to lower activity levels.

Gains and losses in Joint-Ventures – Net Results refers to 50% of the net results of Sonae Arauco in the period. This amounted to 0.1 million euros in 2020, a reduction of 0.5 million euros when compared to 2019. In 2020, Sonae Arauco Recurrent EBITDA (considering the 50% contribution) was circa 1.5 million euros lower than in 2019, affected by the significant impact of the Covid-19 pandemic in 2Q20. The second half of the year was marked by a material recovery of Sonae Arauco Recurrent EBITDA level leading to positive 2.9 million euros Gains and Losses in Joint-Ventures – Net Results in 2H20 which compares with negative circa 2.8 million euros in 1H20. It should be noted that in 2020 Sonae Arauco booked non recurrent expenses of 4.5 million euros in relation to the closure of all industrial activities at Horn site (Germany), but these were fully offset by the use of Provisions recognized in 2019 for that purpose, therefore without material effect in the net results.

Gains and losses in Joint-Ventures – Other amounted to -3.2 million euros in 2020, essentially explained by Sonae Arauco's expenses and contingent liabilities that, pursuant to the agreement with Arauco, are the responsibility of Sonae Indústria and that, accordingly, Sonae Indústria compensates Sonae Arauco via cash contributions to Sonae Arauco for the full amounts paid or incurred. During 2020 Sonae Indústria paid circa 6.9 million euros to Sonae Arauco under this concept. Since 50% of these expenses were already reflected in Sonae Indústria's income statement through the net results of Sonae Arauco, the remaining 50% (circa 3.4 million euros) are reflected through Gains and Losses in Joint-Ventures – Other.

Current tax charges and Deferred tax charges are mostly related with our North American business and reduced by circa 0.3 million euros on an combined basis when compared with 2019 (the reduction in Current tax charges and the increase in Deferred tax charges in North America is related with the depreciation tax rates applicable in some of the investments made).

Net results in 2020 were negative of circa 6.0 million euros which compare with the negative 13.4 million euros net results in 2019. The main drivers for the lower net losses in 2020 when compared to 2019 are the aforementioned improvements in Recurrent EBITDA and the significantly better figure for Provisions and impairment losses. It should be noted that for the second half of 2020, the net results were positive of circa 1.3 million euros, an improvement of circa 8.5 million euros when compared to the first half of 2020, driven mainly by the significant improvements in the EBITDA of the fully owned businesses (essentially Canada) and in Gains and losses in Joint-Ventures – Net Results (improved results at Sonae Arauco level).

2.2.2. CAPEX

Additions to Gross Tangible Fixed Assets¹¹ reached 21.6 million euros in 2020, essentially explained by investments in our North American business (21.1 million euros), including the investment in a new High Gloss and Perfect Matt lacquering plant in Lac Mégantic and the complete refurbishment of a particleboard production line. 11 Excluding the effect from the IFRS 16. 17.3

0.0 1.5 3.0 4.5 6.0 7.5 9.0 10.5 12.0 13.5 15.0 16.5 18.0 19.5 21.0 22.5 24.0

2.2.3. CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF FINANCIAL POSITION MILLION EUROS

	2019	1H20	2020
		Unaudited
Non current assets	370.0	363.2	362.2
Tangible assets	153.6	154.0	145.3
Investments in joint ventures	209.1	201.9	210.1
Other non current assets	7.3	7.3	6.7
Current assets	50.6	45.0	44.3
Inventories	22.0	20.1	21.4
Trade debtors	14.1	14.1	14.0
Cash and cash equivalents	7.1	4.7	3.0
Other current assets	7.5	6.2	5.9
Non-current assets classified as available for sale	0.1	0.1	1.6
Total assets	420.7	408.3	408.1
Shareholders' Funds	127.3	112.4	112.6
Equity holders	127.3	112.4	112.6
Liabilities	293.4	295.9	295.5
Subordinated bonds loan	50.0	49.9	49.9
Senior interest bearing debt	166.0	171.0	174.1
Non current	157.6	162.0	164.2
Current	8.4	9.0	9.9
Trade creditors	26.0	20.8	22.3
Other liabilities	51.4	54.2	49.1
Total Shareholders'Funds and liabilities	420.7	408.3	408.1

Senior Net Debt	158.9	166.3	171.1
Total Net Debt	208.9	216.3	221.1
Working Capital	10.0	13.4	13.0

Tangible assets reached 145.3 million euros at the end of December 2020, a reduction of 8.3 million euros vs. December 2019, explained primarily by the depreciation of the Canadian dollar vs. the EUR and by the impairments booked in 2020 (related with the closure of the Components plant), which more than offset the positive effect from the investments in our North American business (refurbishment of one of the two particleboard production lines and the ongoing investment in a new High Gloss and Perfect Matt lacquering plant in Lac Mégantic).

Investments in Joint-Ventures (50% shareholding in Sonae Arauco) reached 210.1 million euros, which represents an increase of 1.0 million euros when compared to the book value of this investment at the end of December 2019, essentially due to the positive effects of 3.4 million euros from 50% of the cash contributions made by Sonae Indústria to Sonae Arauco in 2020 and of 0.1 million euros from our share of Sonae Arauco's net results, which more than offset an unfavourable exchange rate effect of 3.0 million euros (mainly explained by the South African Rand).

Consolidated Working Capital reached 13.0 million euros, an increase of 3.0 million euros when compared to December 2019, explained by the decrease in trade creditors, which more than offset the decrease in inventories and in trade debtors.

Senior Net Debt stood at 171.1 million euros at the end of December 2020, representing an increase of circa 12.2 million euros and 4.8 million euros, when compared to December 2019 and June 2020, respectively (debt variation in 2020 includes among other effects, the cash contribution made by Sonae Indústria to Sonae Arauco of circa 6.9 million euros during 2H20 and material payments for the strategic investments in Canada). Note: Senior Net Debt does not include the Subordinated Bonds¹² issued during 4Q19 which are however included in Total Net Debt.

¹² Subordinated Bonds of 50 million euros (with book value, including amortised cost effect, of 49.9 million euros).

Total Shareholders' Funds, at the end of December 2020, totaled circa 112.6 million euros, which represents a decrease of 14.7 million euros when compared to December 2019, mainly explained by the negative impacts from the net results and from unfavourable exchange rate effects of 7.3 million euros (essentially related with the exchange rate evolution of the Canadian Dollar and the South African Rand vs. the Euro).

2.3. INDIVIDUAL RESULTS OF SONAE INDÚSTRIA, SGPS, S.A.

In 2020, Sonae Indústria, SGPS, SA, as the holding company of the Group, generated on its individual accounts a negative Net Result of 12,418,475.54 euros.

This Net Result is explained by net financial charges of -7.0 million euros, results related with investments in subsidiaries and joint ventures of circa -2.3 million euros (explained by impairments in financial investments of - 6.2 million euros and despite the positive effect of dividends from Megantic BV of circa 4.0 million euros) and operational results of -3.1 million euros (which include provisions and impairment losses of -3.7 million euros).

2.4. PROPOSED ALLOCATION OF RESULTS

In accordance with applicable legal and statutory terms, the Board of Directors proposes to the Shareholders' General Meeting that the negative results of 12,418,475.54 euros in Sonae Indústria, SGPS, SA 2020 individual accounts be transferred to retained earnings.

It also proposes that the referred amount of -12,418,475.54 euros is fully covered by free reserves.

2.5. PROPORTIONAL INDICATORS (UNAUDITED)

EXPLANATORY COMMENTS ON PROPORTIONAL INDICATORS

Due to the fact that in the audited accounts, one of Sonae Indústria's main assets (its 50% shareholding in Sonae Arauco) is accounted by the equity method, unaudited Proportional Indicators are also presented.

These Proportional Indicators consider the full contribution of our wholly owned businesses and the proportional consolidation of the 50% contribution from Sonae Arauco.

Proportional Indicators are not audited. In respect of Proportional Indicators, Sonae Indústria external auditors have carried out an analysis of the consistency of the assumptions and of the figures considered by Sonae Indústria in the calculation of those Proportional Indicators.

PROPORTIONAL FINANCIAL INDICATORS

(UNAUDITED)

	2019	2020
Proportional Turnover	606	537
Proportional Rec. EBITDA	64	64
Proportional Rec. EBITDA margin	10.5%	11.9%
LEVERAGE
Proportional Senior Net Debt (excluding Subordinated Bonds)	283	299
Proportional Senior Leverage (Senior Net Debt / LTM Rec. EBITDA)	4.4 x	4.7 x
Proportional Total Net Debt	333	349
Proportional Total Leverage (Total Net Debt / LTM Rec. EBITDA)	5.2 x	5.5 x

In 2020, Senior Net Debt to Recurrent EBITDA (proportional) stood at circa 4.7x, which represents an increase of 0.2x vs. 2019. Proportional Senior Net Debt excludes Subordinated Bonds (50 million euros issued during 4Q19).

PROPORTIONAL TURNOVER BY DESTINATION MARKET 2019

PROPORTIONAL TURNOVER BY DESTINATION MARKET

PROPORTIONAL TURNOVER and RECURRENT EBITDA (unaudited) MILLION EUROS

2020

Proportional Turnover in 2020 was significantly affected by the Covid-19 pandemic, particularly in 2Q20, resulting in a reduction of circa 68.6 million euros in the year, when compared to 2019. This evolution was mainly driven by a lower contribution from Sonae Arauco (-40.4 million euros), affected specially by a reduction in total sales volumes in all regions, but also from Sonae Indústria (-28.2 million euros), essentially due to our North American business with lower sales volumes (in local currency but also affected by circa EUR -5.5M effect from the depreciation of the Canadian dollar vs. the EUR). However, the second half of the year was marked by a material recovery in activity, with an increase in Proportional Turnover of 38.3 million euros when compared to 1H20 and a reduction of circa 1.7 million euros when compared to 2H19.

Proportional Recurrent EBITDA in 2020 reached 63.9 milion euros, circa 0.1 million euros higher than in 2019, driven by our fully owned businesses (circa +1.6 million euros), that benefited from a reduction in variable and fixed costs, which more than offset the reduction in turnover levels. Sonae Arauco contribution was lower than in 2019, materially affected by the the Covid-19 pandemic, particularly due to its effects in turnover levels with subsequent impacts on profitability. However, the material improvement in the Proportional turnover in 2H20 allowed an improvement of the Proportional Recurrent EBITDA of circa 15.7 million euros and 11.9 million euros when compared to 1H20 and 2H19, respectively, due to Sonae Arauco and our fully owned businesses.

The average unitary variable costs (per m3) decreased y.o.y. in Canada (in local currency and in euros) and in Sonae Arauco.

The number of employees of Sonae Indústria, at the end of December 2020, was 3,063 FTEs¹³ including 100% of Sonae Arauco operations.

¹³ FTEs excluding Trainees and Externals.

2.6. COVID-19

The worldwide propagation of Covid-19 in 2020 has caused vast negative human, social, economic and financial impacts.

The Covid-19 pandemic and the extraordinary pandemic containment measures imposed by the authorities in the several regions have also had a significant impact not only on daily lives of people but also on all types of businesses, and Sonae Indústria was no exception.

The impacts in Sonae Indústria businesses in the several regions where Sonae Indústria operates (namely Europe, North America and South Africa) were particularly felt between mid March and end of May. The intensity of the negative impacts of the pandemic in Sonae Indústria during this period differed by business and by region but there was a common denominator in its main driver which was the significant decrease in turnover levels.

The extraordinarily abrupt reduction in economic activity in most geographies where Sonae Indústria operates due to the pandemic (including Covid-19 related lockdown restrictions since late March and until May in general) caused a material reduction in demand from our customers which reduced significantly their orders severely impacting our sales volumes as a consequence. In some cases our production facilities were temporarily closed either due to lockdown restrictions or to reduced order levels.

In the most critical period from a business perspective (mid March to end of May 2020) the most significant impacts of Covid-19 were the following:

North American business: partial shutdown in the last days of March due to government lockdown restrictions (not only in Quebec but also in other Canadian provinces and in the USA). Accordingly in that period, we operated the largest of the two particleboard lines and two or three of the five MFC surfacing lines. Lockdown restrictions in Quebec started to be gradually eased on 20 April (residential construction) and all construction and manufacturing restarting (with restrictions) on 11 May. Similar situations occurred in other regions of Canada and in the US.
Laminates and Components: the Laminates plants in Maia and Horn kept operating during the months of March and April. The Components plant in Vilela operated during the month of March and part of April until a confirmed Covid-19 case led to the temporary stoppage of the plant during two weeks. In Maia a reduction in activity (partial layoff) was implemented during May. The Horn plant also operated at a lower level in May.
Sonae Arauco: industrial sites in Spain and South Africa were stopped due to strict temporary lockdown measures implemented by the respective national authorities to fight the Covid-19 crisis. The reduction in demand from several customer segments in all regions caused by this crisis, also led to having to curtail production in other sites and activity in the offices. When possible layoff or short work schemes were implemented, according to the countries' legislations, to minimize fixed costs and preserve available cash and financing facilities. Sonae Arauco monitored demand in the markets and adjusted production accordingly.

The impacts on sales volumes were particularly significant in the months of April and May and especially in the countries where more severe lockdown measures were implemented and where the impacts in economic activity were stronger such as in the case of Spain, South Africa and Portugal (with Sonae Arauco being present in all these geographies and accordingly being particularly affected).

Turnover (as % of previous year)	March 2020/ March 2019	April 2020/ April 2019	May 2020/ May 2019	June 2020/ June 2019
Sonae Indústria (fully owned businesses)	81%	56%	66%	84%
Tafisa Canada	79%	57%	63%	84%
Laminates & Components	110%	52%	100%	92%
Sonae Arauco	88%	55%	53%	85%

The reduction in turnover levels in the period from mid March to May caused a material negative impact in the profitability of Sonae Indústria businesses given that some of the important items in its cost structure are either fixed, such as depreciation (material in a highly capital intensive industry), or at least not susceptible of being fully adjusted downwards when activity reduces, particularly in short periods of time such as some personnel and overhead expenses.

In order to offset as much as possible the negative effects of the pandemic, during the most critical period but also in the remaining of the year, management teams put into place effective actions at different levels of all businesses, including adjusting production levels (according to demand), costs (optimizing fixed costs) and investment plans in order to protect liquidity and safeguard the future. Whenever possible and adequate, we also used the governments support measures that were created to partially offset the negative effects of the pandemic in the businesses.

Other potential Covid-19 related concerns, such as disruptions on the supply of materials and services, shortages on workforce availability due to health and safety issues and problems with credit management, collection of trade receivables, and lower levels of credit insurance, did not have significant negative impacts in operational performance and results during 2020, particularly when compared to the above described impacts on turnover.

With the gradual easing of the pandemic containment measures and despite the overall economic uncertainties in all regions, demand and turnover picked up materially from June onwards.

In the second half of the year there were no material impacts on activity and on turnover levels of our businesses derived from lockdown measures affecting directly our businesses or our direct customers as it had happened during 1H20.

Therefore, in the second half of 2020 there was a material improvement in the turnover levels of our two main businesses (nevertheless turnover was still materially below 2019 levels on a full year basis):

Turnover (as % of previous year)	1H20/ 1H19	2H20/ 2H19	2020/ 2019
Sonae Indústria (fully owned businesses)	82%	94%	88%
Tafisa Canada	79%	100%	89%
Laminates & Components	94%	95%	95%
Sonae Arauco	77%	102%	89%

Accordingly profitability also improved materially in the second half of 2020 when compared with the previous year. Sonae Indústria consolidated Recurrent EBITDA increased from 10.3 million euros in the first half of 2020 to 17.7 million euros in the second half of the year. At Sonae Arauco, Recurrent EBITDA contribution (considering a 50% contribution to Sonae Indústria) increased from 13.8 million euros in 1H20 to 22.1 million euros in 2H20. The main driver for the disparity between the results in the first half of 2020 and the second half of 2020 was the contrast in the impact from Covid-19 on activity and turnover levels driven particularly by increased demand from home renovation sector.

Regarding the effects of Covid-19 on liquidity and financing, close communication was kept with bank creditors in different regions throughout 2020 in order to keep them informed of the actual situation as we went through the pandemic crisis. Considering the significant refinancings concluded between December 2019 and March 2020, Sonae Indústria scheduled debt repayments in 2020 were reduced to circa 8 million euros. It should be mentioned that the amounts of debt repayments scheduled for 2020 that were postponed as a result of the application of legal moratoria related with the pandemic represent less than 1% of the total debt of Sonae Indústria.

As at the 31 December 2020 financial covenants in existing financial agreements were either satisfied or remedied.

Available liquidity, calculated as the undrawn committed facilities plus cash and cash equivalents, at Sonae Indústria at the end of December 2020 totalled circa 46.5 million euros, of which 29.4 million euros in Canada.

COVID-19 | PEOPLE

The health and safety of our people is a foremost concern and accordingly, since the very beginning of the pandemic in March, Sonae Indústria implemented important measures to protect the health of our people at the workplace (plants and offices) under the context of the Covid-19 pandemic.

Until the 31 December 2020, the number of confirmed cases of Covid-19 within our people, considering our fully owned businesses and also Sonae Arauco, was still quite low at 96. Unfortunately, already in 2021 we regret the passing away of one of our employees in South Africa.

We will continue to focus on the health and safety of our people as the end of the sanitary crisis cannot be predicted, making individual and collective responsibility remain fundamental to contain the pandemic.

COVID-19 | RISKS AND OUTLOOK

The recovery in activity levels during the second half of 2020 seems to have been driven primarily by an increased focus of consumers on home improvements and second home refurbishments , as they spent a significantly higher share of time at home and freed up a higher share of the household budget for home-related spending in a context of limitations to travelling and other leisure activities.

There is extreme uncertainty on the evolution of the pandemic crisis itself including the implementation of vaccinations and treatments for an ever evolving virus, makes it difficult to evaluate the impacts on Sonae Indústria operations, on the demand drivers of our business (namely residential and office segments), on the general economic conditions and on potential structural changes in customer behaviour.

Due to these uncertainties Sonae Indústria is unable to estimate future impacts on the company's results with accuracy or assurance.

The effects of the pandemic can still be significant over the next quarters particularly in the event of further significant virus waves and of new lockdowns being imposed until an effective solution for the health crisis is available.

The risk that the economies fail to recover significantly and swiftly from the adverse economic consequences already caused by the pandemic namely on employment, available income and consumer and investor confidence levels, all with impact on the demand for durable goods which are important drivers of market demand for our products, may also cause a material impact in Sonae Indústria businesses.

Despite the uncertainties created by Covid-19 crisis, the measures taken by management; the general government support measures; and the material recovery experienced by our businesses in the second half of 2020, set out a framework for Sonae Indústria to overcome the important challenges raised by the pandemic.

2.7. OUTLOOK FOR 2021

The outlook for 2021 is still uncertain and particularly dependent on the developments of Covid-19 pandemic and on its direct and indirect impacts on Sonae Indústria businesses, as described in the previous section.

Despite the extraordinary circumstances, we will keep working to achieve of our strategic objectives to the full extent that external conditions permit.

2.8. INFORMATION ON SHAREHOLDINGS AND SHARE PERFORMANCE

Sonae Indústria, SGPS, SA is a company listed in the NYSE Euronext Lisbon, with a majority shareholder – EFANOR Investimentos, SGPS, SA – that currently controls directly or indirectly, approximately 86.2% of the share capital.

2.8.1. EFANOR TENDER OFFER

On the 31 July 2020, Sonae Indústria received a notification from Efanor Investimentos, SGPS, SA regarding the Preliminary Announcement of a Public, General and Voluntary Tender Offer ("Offer") over Sonae Indústria SGPS, SA shares, at a price of 1.14 euros per share.

On the 27 August 2020, Sonae Indústria's Board of Directors issued its Report on the opportunity and conditions of the Offer (https://www.sonaeindustria.com/fileManager/comunicados/pdf\_en\_347.pdf).

The Offer period occurred between 7 and 27 October 2020 and the process was concluded on the 28 October 2020, with the disclosure of the Offer results.

As a result of the public tender offer, Efanor Investimentos, SGPS, S.A. increased its shareholding (direct and indirect) in Sonae Industria, from circa 68.61% of the total number of shares and voting rights (before the Offer Preliminary Announcement) to 86.22% ("free float" accordingly reduced from 31.39% to 13.78%).

2.8.2 SHARE PERFORMANCE¹⁴

ISIN Code Bloomberg Code	PTS3P0AM0025 SONI	(Until 28/07/2017: ISIN Code PTS3P0AM0017)
Reuters Code	SONI.LS	2017	2018	2019	2020
Share Capital Total number of shares		253,319,797.26 45,403,029	253,319,797.26 45,403,029	253,319,797.26 45,403,029	253,319,797.26 45,403,029
Net Results Net Results per share Dividends per share Prices Year High Year Low Year Average		15,265,731 0.336 0.000 3.6590 1.4000 2.2956	11,028,470 0.243 0.000 4.1400 1.3750 2.7039	-13,369,349 -0.294 0.000 1.6650 0.8700 1.2086	-5,969,033 -0.131 0.000 1.1400 0.5560 0.8687
Share price as at 31-Dec Market Capitalization as at 31-Dec Average trading volumes		3.5010 158,956,005 57,761	1.4600 66,288,422 50,477	0.8700 39,500,635 28,554	0.9520 43,223,684 46,806

¹⁴ Please note that market share prices considered in this section are market close prices.

Sonae Indústria's share price performance is dependent on the business cycles, which are correlated with the residential construction and furniture industries. As such, the share price evolution of Sonae Indústria has been historically impacted by economic and business cycles.

During 2020, Sonae Indústria's share price increased by 9%, contrasting with PSI 20 share price that decreased 6%.

Sonae Indústria's share price reduced 24% from the end of 2019 until 31 July 2020 (date of Efanor Investimentos, SGPS, SA preliminary announcement of the Offer) which compares with PSI 20 reduction of 18%. The share price then appreciated by circa 73% in the period from 31 July until 27 October (date of the end of the Offer period). This appreciation of circa 73% contrasts with PSI 20 evolution of -7% in the same period.

Sonae Indústria's share price then reduced by 16% from 27 October until the end of 2020 (contrasting with PSI 20 appreciation of 23%).

The highest daily trading volume of Sonae Indústria shares was registered on 11 September (782,324 shares).

The minimum share price during 2020 was registered on 27 March (0.556 euros). On the other hand, the maximum share price of 1.14 euros was achieved on 21 January and also in 28 sessions in a period between 11 September and 27 October.

Regarding liquidity, Sonae Indústria's share had, during 2020, an average turnover of 46,806 shares per day.

2.9. TRANSACTIONS WITH OWN SHARES

Sonae Indústria, SGPS, S.A. did not acquire or sell any own shares during the year and, as at 31 December 2020, the company did not hold any own shares.

2.10. TRANSACTIONS BETWEEN THE COMPANY AND ITS DIRECTORS

During 2020, no transactions were carried out between Sonae Indústria, SGPS and its Directors.

2.11. DIVIDEND POLICY

The Board of Directors has set a target to distribute to its shareholders 50% of the company's yearly profits.

The actual dividend pay-out ratio is proposed by the Board of Directors each year, taking into consideration the sustainability of the company's capital structure and the available financing sources, as well as the current investment plans.

2.12. SUBSEQUENT EVENTS

On the 28 January 2021, Sonae Indústria's Board of Directors approved a share capital increase of up to 55 million euros with a subscription price of each new share of 1.14 euros. The decision to approve the capital increase takes into consideration the need to reinforce the company's shareholders' funds in order to improve Sonae Indústria capital structure, reducing its overall cost of debt and enable the company to pursue its strategic plans within an environment of highly increased uncertainty due to the pandemic.

The offer and the admission to trading in the regulated market of the new shares to be issued are conditional to the approval and publication of the respective prospectus by the Portuguese Securities Market Commission ("CMVM") and to the disclosure of the notice for the exercise of subscription rights, in accordance to the law. The capital increase process is ongoing and is expected to be concluded in the second quarter of 2021.

3. RISK MANAGEMENT

3.1. CREDIT RISK MANAGEMENT POLICY

a) Receivables (Customers)

Sonae Indústria credit risk derives mainly from account receivables items associated with its operating activity.

The main objective of Sonae Indústria Credit Risk Management policy is to guarantee the effective collection of its operating receivables, according to the most commercially adequate reduced payment terms, while maintaining the level of debtors' impairments as low as possible.

In order to mitigate credit risk related with potential customers defaulting on payment of outstanding receivables, Group companies have:

established Credit Risk Committees to analyse and monitor credit risks and customers payment behaviours. These Committees are also an opportunity to foster the sharing of experiences, the alignment of procedures and practices and to ensure the enforcement of sound controlling rules and are held once each two months at Sonae Arauco and in the Laminates business and on a quarterly basis in our North American business;
detailed monthly reports hilighting the full picture of the customers balances and pending orders with a special focus on exposure and overdue situations;
implemented common proactive and preventive credit management procedures and processes, supported by IT systems;
established appropriate risk coverage mechanisms (for example, credit insurance, letters of credit, bank guarantees).

At Sonae Arauco and to foster the sharing of experiences, the alignment of procedures and practices and to ensure the enforcement of sound controlling rules, a "Customer's Credit Risk Management Forum" is promoted, which was held twice during 2020, engaging all Credit Control, Management Control, Internal Audit and Information Technology involved parties. Often, external stakeholders such as credit insurance companies and insurance brokers, also attend to share best practices and get to know our status and internal processes. Since April 2020, a reduction of credit insurance levels (mainly in Spain) driven by the Covid-19 pandemic crisis, led Sonae Arauco to enhance internal controls and establish even more accurate process to follow-up the credit risk. As the level of turnover has strongly recovered in the second half of the year the credit risk covered by credit insurance showed some reduction, even if not conditioning the commercial activity for the majority of our customers.

Within the context of the Covid-19 pandemic and its effects in the business background, the Group has increased the frequency of the follow-up of the customer credit situations (in terms of credit risk and collections) with formal monthly credit reports and weekly thorough checks of customers positions.

For Sonae Indústria Group, in terms of collections, it was a year where even if some delays were experienced in the first half of the year due to the lockdown government decisions, no default situation occurred due to Covid-19 and consequently the level of impairments on customers and the level of provisions is positive or without expression, respectively.

Sonae Indústria is constantly assessing the current exposure to credit risk and the possible impact of future economic forecasts, and have concluded that the impact of Covid-19 in this matter was reduced or nil and it is expected to evolve following the same trend.

b) Financial assets other than trade debtors

In addition to its operating activities and the related trade debtor balances, Group companies have other financial assets, which are mainly associated with its cash management activities and with deposits in financial institutions. As a result of these bank movements and balances, credit risk arises from the potential counterparty default by the applicable financial institutions. This risk is, nevertheless, considered as very low due to the limited duration and amounts typically involved in bank deposits and to the credit profile of the financial institutions used by Group companies.

3.2. MARKET RISKS

a) Interest Rate Risk

Due to the significant proportion of floating rate debt and the consequent cash flows related to interest payments, the company is exposed to interest rate risk.

As a general rule, Sonae Indústria does not hedge its exposure to floating interest rates. This approach is based on the principle of the existence of a positive correlation between the interest rate levels and the "operating cash flow before net interest charges", which creates a natural hedge on the "operating cash flow after net interest charges" for Sonae Indústria.

As an exception to this general rule, Sonae Indústria may engage in certain interest rates derivatives, solely aimed at hedging existing risk exposures and only to the extent that the risks and valuation of such derivatives can be accurately assessed by the company. Sonae Indústria subsidiaries do not engage in interest rate derivatives for trading, speculative or profit making purposes.

b) Foreign Exchange Risk

As a geographically diversified Group, present in three different continents, Sonae Indústria is exposed to foreign exchange risk. Consolidated Statements of Financial Position and Profit and Loss are exposed to foreign exchange translation risk and Sonae Indústria subsidiaries are exposed to foreign exchange risk of both translation and transaction type.

As a Group rule, whenever possible and economically viable, subsidiaries aim to offset assets and liabilities denominated in the same foreign currency, thus mitigating exchange risks.

Also as a rule, in situations where relevant exchange risk arises from trade in a currency other than that of the subsidiary, exchange risk should be mitigated through the use of short term forward exchange rate agreements contracted by the subsidiary exposed to such risk. Sonae Indústria subsidiaries do not engage in forward exchange rate agreements for trading, speculative or profit making purposes.

As a policy, translation risk in connection with the conversion of the equity investments in foreign non-euro subsidiaries is not hedged, as these are considered long-term investments. Also, it is assumed that hedging transactions would not add value in the long term. Gains and losses related to the translation at different exchange rates of assets and liabilities of foreign non-euro subsidiaries are accounted as equity under the "Other Accumulated Comprehensive Income".

c) Liquidity Risk

Liquidity risk management in Sonae Indústria aims to ensure that the company can obtain, on a timely basis, the financing required to properly carry on its business activities, implement its strategy and meet its payment obligations when due, under the most favourable terms and conditions.

For this purpose, liquidity management at the Group comprises:

consistent financial planning and cash flow forecasting at country and consolidated levels with different time horizons (weekly, monthly, annual and business plan);
diversification of financing sources;
diversification of debt maturities issued in order to avoid excessive concentration of debt repayments in short periods of time;
negotiation of (committed and uncommitted) credit facilities, commercial paper programmes and other facilities with relationship banks to ensure the right balance between satisfactory liquidity and adequate commitment fees;
active access and management of subsidiaries cash positions and cash flows taking into account the Group's objectives on liquidity.

3.3. LEGAL RISKS

Sonae Indústria and its affiliates and subsidiaries are subject and actively promote the respect for applicable laws in countries and regions where they operate. Changes in these legal environments can result in changes or restrictions to the present conditions of exploitation and can lead to increased costs.

Sonae Indústria, SGPS, S.A. is and intends to continue being recognised by the way it abides by the rules and values of competition based on merit, the force of free markets and unrestricted respect for the consumer. In order to achieve that goal, measures are in place to reinforce the promotion and dissemination of the existing compliance initiatives within the Group. Such measures include training for employees in order to ensure that all parts of our organisation, across all geographies, have a deeper and more complete awareness and a more rigorous respect for their legal obligations.

3.4. OPERATIONAL RISKS

Industrial manufacturing of wood-based panels encompasses a wide range of operational and process related risks, namely fire and explosion incidents. To maintain these risks within acceptable levels operational risk management is active in the implementation of standards and selection of new systems to reduce the likelihood and consequences of an industrial incident.

For a detailed description of these risks and the initiatives undertaken to mitigate them, please refer to section 4. and to the Corporate Governance Report.

4. NON-FINANCIAL INFORMATION

This reporting of non-financial information, which refers to the year ended on 31 December 2020, has been prepared in line with the requirements established in Portuguese law by Decree-Law No 89/2017 of 28 July, which modifies the Companies Code, in matters of non financial information.

In accordance with the referred legislation, the non-financial information status is part of this Management Report.

In this context, through the non-financial information statement, the Sonae Indústria Group aims to inform on environmental, social and employee related matters, on respect for human rights, fight against corruption and

bribery, gender equality and non-discrimination, as well as other information for the company that has been defined as relevant in the execution of its own business activities.

For the elaboration of this report, those matters that have a high degree of relevance in environmental, social and economic social character, and that may affect the ability of Sonae Indústria Group to create value in the short, medium and long term, have been taken into account.

In order to identify which of the commented topics are material and must be reported, we have considered a number of variables, being the main ones:

The relevance of such matters or indicators, both internally for the company and externally for its stakeholders and target audiences;
The sector of activity in which the company operates; and
The sensitivity of the information.

4.1. ABOUT SONAE INDÚSTRIA

4.1.1. BUSINESS

Strategic partnership with Arauco

On 31 May 2016, a strategic partnership between Sonae Indústria SGPS and Inversiones Arauco Internacional, Limitada (Arauco) was completed through "Sonae Arauco", a 50/50 joint-venture involving the European and South African wood based panels and related operations of Sonae Indústria, namely the production facilities of wood based panels, chemicals and paper impregnation. This partnership aims to build a stronger company in the European and South African markets and reinforce Sonae Indústria's long term growth commitment in the wood based panels industry.

Fully owned businesses

In addition to the 50% shareholding in Sonae Arauco, Sonae Indústria holds full ownership of the wood based panels business in North America and of the Laminates business, together with some real estate assets in Europe.

Sonae Indústria currently operates a total of thirteen plants located in five countries on three continents, of which two plants are fully owned businesses and the remaining eleven are part of the Sonae Arauco partnership,

totalling 3,063 employees¹⁵ at the end of 2020. Considering only the fully owned businesses (i.e. without Sonae Arauco contribution) turnover reached 201.8 million euros in 2020.

Under the terms of article 66 of the Portuguese Commercial Companies Code, Sonae Indústria SGPS informs that it has no branches.

Wood based panels

Wood-based panels are valuable alternatives to solid wood with some clear advantages, namely in terms of efficiency in the use of raw materials. Another particular advantage is their dimensional flexibility, which (in contrast to solid wood) allows for the production of tailor-made sizes, which can be adapted to the clients requirements. Hence, today wood-based panels are replacing solid wood in an increasing number of applications.

Compared to other construction materials such as steel and concrete, wood has significantly lower adverse environmental impacts when used as a building material. In what regards to the climate change, wood-based panels have a positive effect through improved energy efficiency, which enables homeowners to significantly reduce energy spent. Additionally, when used for construction purposes, wood-based panels function as carbon stores, thereby helping to mitigate CO2 emissions. At the end of their useful life, wood-based panels can be recycled and transformed into new products, in this way re-entering a continuous recycling process. The demand for wood and wood-based panels in the construction industry is therefore expected to steadily increase over time.

In times where extreme climate events like floods and droughts signal that climate change is much more than a theoretical scientific discussion, societies in general – and businesses in particular – are increasingly looking for ways on how to fight these new climate scenarios and realities.

Wood-based products have an important role to play in this reality. Sonae Indústria believes using more wood is a strong contribution to fight climate change, as it reduces CO2 sources and assures CO2 sinks and the storage of carbon. The reduction of CO2 sources results from the fact that wood is a material that stores energy and that it can replace other materials, in several applications, that require more energy – and emissions – in their production. Wood use can also increase CO2 sinks and storage of carbon, as the forest itself is a unique player in carbon sequestration from the atmosphere: as forests grow, they absorb more CO2 while forest products keep the carbon stored during their service life. Using wood products encourages further forest growth, and an effective market for wood products provides a financial incentive to invest in active forest management. Additionally, when wood products are reused or recycled, carbon storage is extended during another service life, avoiding CO2 emissions into the atmosphere.

4.1.2. HISTORY

SONAE was founded in 1959 at the site of its present location in Maia. Its first activity was the production of high pressure decorative laminates.

SONAE's expansion and diversification began in 1971 when it took control of Novopan, a particleboard company, located in Rebordosa, near Oporto. At the same time, the first melamine surfacing production line was installed and the components production for the furniture and interior decoration industries also started.

Throughout the 1990s and until 2007, Sonae Indústria made acquisitions and invested significantly in Greenfield projects in Brazil, Canada, South Africa, Portugal, Spain, and the United Kingdom. It is also important to highlight the spin-off, in 2005, from Sonae SGPS, S.A., which had been the shareholder until then.

Between 2008 and 2015, following the global economic and financial crisis, Sonae Indústria went through a restructuring process which led to a significant reduction in installed capacity through assets sales and plant closures, which culminated in the current perimeter, with industrial operations in Portugal, Spain, Germany, Canada and South Africa.

In May 2016, a strategic partnership between Sonae Indústria SGPS and Inversiones Arauco Internacional, Limitada (Arauco) was completed through a 50/50 joint-venture, "Sonae Arauco", involving the European and South African

¹⁵ Number of Employees: FTEs excluding Trainees and Externals.

wood based panels, chemicals and paper impregnation activities of Sonae Indústria. The creation of a new brand and corporate image for Sonae Arauco was completed in 2017.

In August 2018, Sonae Indústria launched a new brand for its laminates and compacts business, Surforma® intended for the construction, furniture and interior design industries.

In 2019, Laminate Park operations at Eiweiler site (Germany) were closed. Laminate Park was a joint venture between Sonae Arauco and Tarkett for the manufacturing and sale of MDF/HDF laminate flooring. Also in 2019, GHP GmbH, a subsidiary of Sonae Arauco, reached an agreement to sell its biomass power plant in the Horn site¹⁶ , in Germany.

In 2020, the continued loss making activities of laminates and worktops at Horn site in Germany, and of furniture components Vilela plant, in Portugal, were closed.

In 2020 Tafisa Canada launched the new Melamine Face Chipboard (MFC) collection Karisma and concluded the investment in a new lacquering plant in Lac-Mégantic, to supply to the market the new LUMMIA panels, Perfect Matt and High Gloss decorative surfaces.

4.1.3. PRODUCTS

Raw and technical products

Sonae Indústria "raw and technical products" are comprised of:

• Particleboard (PB), a very versatile product, suitable for all general uses in furniture and construction industries;

• Medium density fibreboard (MDF), an excellent substitute for solid wood and ideal for furniture, flooring and the building industry;

• Oriented strand board (OSB) a product which is highly resistant and suitable for structural and non-structural applications in the construction industry.

More than 50% of the "raw board" production is then transformed into value added products such as melamine faced board (MFC), accoustic panels and others. These are used in a great variety of applications, such as home and office furniture, kitchen and bath cabinets shelving, doors, wall paneling, packaging and interior decoration.

Laminates and Compacts

Thin laminates ensure high quality application, where design, quality and durability come together. They are versatile materials and have great surface features, such as abrasion resistance. Besides, they are the ideal solution for any successful design. Laminates create unique bold environments, while combining quality, versatility and exclusivity.

Compact solutions can withstand high impacts, thus ensuring reliability and safety. They can be used in the harshest of environments and unstable conditions, such as high wear and tear or humidity levels. Compacts are the perfect ally, thanks to their structural stability and high resistance.

¹⁶ The economic interest of Horn laminates and worktops plant and real estate belongs to Sonae Indústria (according to the agreement between Sonae Indústria and Arauco) despite the fact that this asset is held by GHP GmbH.

Sonae Arauco - The new Core&Technical brand and Ecoboard Concept

In Sonae Arauco, 2020 was marked by the launch of a new brand for the raw products. The new Core&Technical brand intends to give a more broaden view of the technical products offer, according to the intended application: from Particleboard (PB), a versatile product range that covers all major international standards and formaldehyde emission levels; MDF, made with the best fibers selection; to OSB, a product with the highest mechanical performance in the market.

Core&Technical products, in specific PB and MDF, can also count with additional properties, such as fire retardant (Fire X) and moisture resistance (Hydro X), complying with the strictest environment requirements in what regards to formaldehyde emissions. If the intended application is for lacquering or milling, then MDF Superlac and Novolac respectively could be the perfect alternative, as they offer great mechanical performance, ensuring the best application result.

In an era of a sustainability concerns, Sonae Arauco promoted Ecoboard concept. The first and single company in the market to present a formaldehyde free glued range of products in PB, MDF and OSB. A comprehensive range, available in PB, MDF and OSB. Reduced formaldehyde contributes to improved air quality, sustainability and environment respect.

DECORATIVE PRODUCTS

DECORATIVE PRODUCTS IN NORTH AMERICA

In 2020, Tafisa Canada product development and commercialization focus was on LUMMIA, a new lacquered panel offering a Perfect Matt and High Gloss decorative surface. This is the first plant in North America to offer this technology to the market.

In early 2020, the Tafisa Canada started the construction of its new plant in Lac-Mégantic dedicated to the production of LUMMIA panels. In parallel, Tafisa Canada finalized its product line to include 19 inspirational décors that fit well with this technology. The LUMMIA line will be formally launched with initial product sales in early 2021.

Tafisa Canada also launched this year a new MFC (Melamine Faced Chipboard) collection called Karisma, as part of the its Prélude series. This new collection features a new lineal rift-cut texture along with six oak and three concrete décors. The décors are truly contemporary and lifelike. This collection was launched to the market in 4Q20, with strong reception from customers, architects and designers. Karisma is available in both MFC panels and SURFORMA® HPL (High Pressure Laminates) sheets.

To complement the MFC panels and Surforma HPL sheets, Tafisa Canada developed an extensive complementary products program to support LUMMIA and Karisma. This program includes edge banding, 3 DL film, door and accessory mouldings. New processes and technology were deployed thus enabling excellent complementary product matches in terms of look and texture.

The Covid-19 pandemic had a major impact on how new products could be launched. Thus, a series of short, punchy videos were produced to help launch the new products to customers, architects, designers and consumers. These videos are housed on the Tafisa Canada website conveniently ready for the customer to view. Tafisa Canada deployed a proactive social media strategy to draw attention to these digital developments.

In 2020 Tafisa Canada also made a significant investment in rebranding its logo, product imagery and development of effective digital communication and marketing tools. Its website, www.tafisa.ca, was completely revamped and is now more user-friendly.

Following these launches in 2020, Tafisa Canada continues to consolidate its position as a design leader, with a complete line of decorative surfaces both in TFL (melamine faced chipboard) and Surforma® HPL available in more than 120 standard colour and texture combinations between the EIR

Sommet Series® and the renowned Prelude Series®. And, now the new and highly anticipated LUMMIA line of Perfect Matt and High Gloss panels.

More information at www.tafisa.ca

Innovus - The perfect match with life

Innovus is the brand of decorative products that offers versatile solutions, turning ideas into innovative projects. Totally renewed in 2019, the new Innovus collection proposes a set of contemporary decors and brand new finishes with distinctive colours, appealing patterns and attractive textures. The new collection was inspired by our everyday lives, the places we live and work in and that we visit, which become part of who we are. When it comes to different needs, Innovus has the solution: a perfect match for different projects and creations. In 2020 the

Innovus Collection has spread in the market, despite the pandemic situation.

Besides its wide offer of wood, fantasies and unicolours decors, Innovus also includes a comprehensive range of special products, such as:

Innovus Coloured MDF, a product that combines the strength and technical properties of the Medium Density Fibreboard (MDF) with the visual appeal of a versatile range of colours. Innovus Coloured MDF can also be combined with the trendy Innovus melamine decors, which results in a unique and truly distinctive decorative solution.

Innovus Essence, a product range using double-sided embossed in-register (EIR) technology to obtain decorative panels with the look and feel of real wood in a melamine surfaced panel. Innovus Essence, with its two structures – Rustic and Authentic – and nine wood shades was developed with a variety of applications in mind such as doors, living room furniture and wall panelling, in applications that really value the natural effect of wood.

Innovus Magnetic, a range of laminates that can be used for sticking magnets or to write on with markers or chalk. This functional and decorative solution is ideal for partitions and wall coverings for shops, offices, schools and nurseries and even at home.

Innovus Lamifloor, a range of laminates with very high abrasion resistance, ideal for access flooring application.

Innovus Metallic, a range of laminates with real metal as a decorative element, that can be used for interior fittings.

As a demonstration that the Innovus collection is always up to date with market trends, a new marketing material was produced for office remodeling projects – The New Normal with Innovus: Solutions for office refurbishments. At a time when the home office increasingly appears as a new way of working, Innovus presents itself as the ideal solution for remodeling domestic and business offices, since it has modern, safe decorative solutions, prepared for multiple applications and adapted to any context. During 2021, several flyers of this series will be released, focusing several spaces of home.

In 2020 we took a further step and Innovus has now certified its anti-bacterial property (bacterial efficacy verified by tests performed in external laboratories). Innovus prevents the development and spread of bacteria (such as Staphylococus Aureus or E. Coli) and is particularly useful in critical surfaces like table tops, kitchen worktops, reception counters and many other situations in particular in public areas. The Innovus Collection, certified for its antibacterial properties, has more than 200 decors and 5 new finishes and asserts itself as an increasingly complete and comprehensive solution in terms of applications.

along with the current context.

2020 also marks the year that Sonae Arauco was present at Euroshop, one of the most relevant events for Retail, that took place in Dusseldorf (Germany) on February. In its own stand Sonae Arauco presented the new Innovus Coloured MDF Deep Black, a deeper and more solid black when compared to the existent one.

During the year, and despite of the Covid-19 pandemic limitations, Sonae Arauco was present in some other events, such as Architect at Work Germany and Denmark and in Face to Face in Spain.

The comunication tone was also adapted due to the Covid-19 pandemic. During the first lockdown, in March and April, the social media and email marketing plan were revised to go

More information at www.sonaearauco.com

SURFORMA® - LAMINATES & COMPACTS

Surforma® Laminates and Compacts are an excellent material for indoor and outdoor surfaces. Laminates can be used either applied to suitable substrates and compacts as selfsupporting compact sheets. Surforma® products meet the stringent requirements for

hygiene, fire and humidity resistance and mechanical properties and are available in a variety of colors, patterns and surface textures, providing extensive options for architects and designers. Their surfaces are hard and resistant to wear, impact and scratching, making them long lasting, easy to clean and largely resistant to vandalism.

2020 the year of consolidation of Surforma brand. The Surforma collection proposes a set of contemporary decors and new finishes with distinctive colours, appealing patterns and attractive textures.

This collections is a complete and innovative proposals for decorative laminates and offers versatile solutions, enhancing the high features of laminates and bringing to customers the possibility of find the right colour, the ideal finish and the perfect pattern, to create innovative and successful projects.

Surforma collection has the perfect finish for each décor:

ULTRA SMOOTH is an elegant and warm to the touch finish with anti-fingerprint proprieties.

STUCCO is a texture with a concrete, ceramic touch. Its development was inspired by industrial and urban moods and its highly tactile surface.

COSMOS is an exclusive finish that represents the next level in stone and cement structures.

SPIRIT is an expressive finish full of movement and contrasts, which provides the true spirit of real wood, resulting in a top quality product.

FLOW is a unique finish with gentle cross lines, creating subtle waves that give the surface a very natural and spontaneous look.

FUSION is a wood textured surface that provides a warm natural touch, by recreating the look of handcrafted wood.

More information at www.surforma.com

4.1.4. STRATEGY

The way in which Sonae Indústria views itself as a company, acts and interacts with others and with the surroundings represents a corporate culture that promotes continuous improvement – always challenging ourselves to perform better – and is sustained by the company's Mission, Vision and Values.

VISION:

To be recognised as a sustainable world leader in the wood-based panels industry, consistently providing our customers with the best value products, upholding the highest standards of service and promoting responsible business and environmental practices.

MISSION:

Our aim is to deliver the full potential of wood-based panels for the benefit of our customers, shareholders, employees, and society.

We base our operations on sound corporate governance, continuously improving the efficiency of our operations, actively promoting innovation and providing a motivated, safe and fair working environment.

VALUES & PRINCIPLES

Sonae Indústria's values represent the foundation stone on which we build our business and they serve to guide our behaviour. Our value system is focused on four main principles: Ambitious, Innovative, Authentic and Responsible, which can then be sub-divided in the values and capabilities illustrated in the picture below.

STRATEGIC GUIDELINES:

1. North America:
2. Continue to improve the product offering, product mix and customer service levels.
3. Strengthen our decorative solutions with the launch of new melamine colors and finishings.
4. Leverage on the investment in a new lacquering plant to introduce new surface finishings and explore investments on new decorative products, including the new LUMMIA panels, Perfect Matt and High Gloss decorative surfaces.
5. Enhance supplier partnerships for complementary products to our decorative collections, including matching HPL (High Pressure Laminates) supplied from our Laminates business in Portugal.
6. Investment in production improvements.
7. Strengthen and increase specification efforts.
1. Laminates:
2. Improve profitability by looking for growth opportunities with existing and new customers and with new and innovative products.
3. Enhance the partnerships with Tafisa Canada and Sonae Arauco for the provision of matching Laminates.
4. Develop ongoing initiatives to materially reduce Laminates manufacturing costs.
5. Develop partnerships to help the growing of Laminates business.
1. Support Sonae Arauco in achieving its strategic objectives by building a more competitive and sustainable business, investing in productivity and flexibility; improving its sales mix, namely through its decorative solutions, and improving product quality and service level offered to our customers.
1. Seek a more balanced and flexible capital structure in order to finance the future growth of the business.

4.1.5. 2020 KEY CORPORATE EVENTS

31 March 2020	FY19 consolidated results announced
30 April 2020	Announcement on resolutions taken by the Shareholder's Annual General Meeting
6 May 2020	1Q20 consolidated results announced
6 May 2020	Announcement on decision to cease disclosure of quarterly financial information
30 July 2020	1H20 consolidated results announced
31 July 2020	Notification received from Efanor Investimentos SGPS, SA regarding the Preliminary Announcement of the Public, General and Voluntary Tender Offer over Sonae Indústria shares
27 August 2020	Report of the Board of Directors on the opportunity and conditions of the Tender Offer
14 September 2020	Release of Sonae Indústria Plan for Gender Equality 2021
28 October 2020	Results of Efanor Investimentos SGPS, SA Tender Offer over Sonae Indústria shares
4.1.6. AWARDS AND INNOVATIVE PROJECTS	Tafisa Canada - Safety Achievement Award In 2020 the Composite Panel Association (CPA) honored Tafisa Canada with the Safety Achievement Award for operating from 2017 to 2019 at more than 50% below the average of Recordable Incident Rate (RIR) for Class II.
	Every Spring, the Composite Panel Association (CPA), which represents the North American composite panel and decorative surfacing industries, recognizes participating plants that have exemplary safety records including acknowledgment for long-term and annual safety improvement and safety achievement awards.
290,000.	Awards are given to plants with low worker-hours (Class I), and high worker hours (Class II). Historically, the number of worker-hours has been shown to have an impact on incident rate so two different bases are used. In 2020, plants in Class I reported employee hours below 290,000 and Class II plants reported hours higher than
pandemic the meeting was held virtually.	Normally the award would have been presented at the 2020 CPA Spring Meeting, but due to the Covid-19
magazine has been awarded that would contribute	SONAE ARAUCO - bronze award in internal communication category Sonae Arauco second edition of Wood Made Stories bronze in the Internal Communication category at the Prémios Lusófonos da Criatividade (Portuguese-speaking Awards for creativity). In this project Sonae Arauco was looking for a publication to bring employees closer, regardless of geographic location, and foster the sense of belonging to an international group that has in the People its top priority, simultaneously reinforcing the positioning
of the brand, in a differentiating support.	In the second edition, while maintaining the high quality standards in terms of content and the aesthetics of the publication, the recent changes in Sonae Arauco's strategy, which is going to focus even more on sustainability,

4.1.6. AWARDS AND INNOVATIVE PROJECTS

Tafisa Canada - Safety Achievement Award

SONAE ARAUCO - bronze award in internal communication category

In the second edition, while maintaining the high quality standards in terms of content and the aesthetics of the publication, the recent changes in Sonae Arauco's strategy, which is going to focus even more on sustainability, deserved a special highlight.

In this sense, through Surforma, the company will create

furniture solutions with the objective of improving sleep quality, through the use of products with sensorization properties and monitoring of the environment of the space where it is integrated.

The company is part of the Smart Health 4 All project mobilized by Health Cluster Portugal and led by Siemens, which brings together 24 other institutions and aims to create innovative medical devices to improve the lives of people affected by chronic diseases and others related to the aging of the population.

DecoChrom Project The DecoChrom Project is a 48 month project that has been initiated in January 2018. This project elevates printed graphics products to the age of interactivity, and empowers the

creative industries with the tools and innovative advanced material sets to design and build aesthetically pleasing practical

human interfaces to smart consumer goods and environments. The DecoChrom consortium, of which Surforma, S.A. is a member, develops printed electrochromics (EC) as the mass producible, print industry compatible, ultralow power interactive graphics solution for ambient intelligence. This project brings together a strong interdisciplinary consortium of 15 industry and research balanced partners, with state-of-the-art backgrounds in design, chemistry, printing, coatings and laminates, electronics system integration, and complete electrochromic solutions. This project was funded by the European Union's Horizon 2020 research and innovation programme.

After three years of the execution of the project, the team is working on the scale up of fully integrated electrochromic devices in HPL (High Pressure Laminates) to produce industrial proof of concepts of furniture and a gym floor. The project was presented at the Interzum 2019 exhibition in Cologne, Germany.

More information at www.decochrom.com

EU projects

Surforma, S.A. has been actively involved in the participation and submission of several European H2020 projects, mostly in the printing electronics and structural electronics, such as ULTIMATE and PVISEZ projects, submitted in 2020.

The Valladolid College of Architects (COAVA) has given the DOCOMOMO plaque to the building of Sonae Arauco's industrial unit in Valladolid as a recognition for its patrimonial value. The building was designed in the 1960's by the architects Antonio Vallejo and Santiago de la Fuente.

The Fundación para la Documentación y Conservación de la Arqui tectura y el Urbanismo del Movimiento Moderno (DOCOMOMO) – which is dedicated to the study of modern architecture in the twentieth century

– was the entity chosen to place the plaque on Sonae Arauco's building. As a result of this distinction, the building now belongs to the heritage of the Modern Movement.

MANAGEMENT REPORT

Smart Health 4 All project

Sonae Indústria has been developing an intense research and development activity with the aim of improving people's conditions and quality of life.

The Zero Defects 4.0 project

The Zero Defects 4.0 project started in January 2020. This project will have a direct impact on reducing the waste of raw materials and the energy consumption associated with the processes. Currently, the non-conformities of wood-based panels, solutions for application in kitchens, furniture, floors and interior decoration, lead to the waste of raw materials for the production of sub-optimal panels and constraints in the supply to increasingly demanding industrial customers.

The Zero Defects 4.0 project consortium, of which Sonae Arauco is a member, combines six entitities with backgrounds in production, industry, research and data analysis, information technology and project management. The consortium estimates that this project allows, in an initial phase of the project's start-up, a 10% reduction in quality non-conformities with gradual increase, by automatic learning of the implemented models, until the final view of zero defects. In addition, the project will result in productivity gains, leveraged by greater availability of the production line, resulting from the improvements generated by the data in the decision processes.

As the validation is successful, now being implemented in the Sonae Arauco industrial unit in Oliveira do Hospital, the commercialization and implementation are scheduled for 2021.

ACTIVAS Project – Spaces built for an active, safe and healthy life

ACTIVAS is a consortium project, of which Sonae Arauco is a member, composed of 20 Portuguese entities. This project, approved in 2020, intends to investigate, develop and demonstrate in real environment the use of a set of solutions for active and healthy life that together promote the availability to population of smart products and services to support the proximity care network.

Project ACTIVAS is divided into 6 Research and Development (R&D) strategic work lines to create new Products, Processes or Services (PPS), and Sonae Arauco is involved in PPS3.

The main objective of PPS3 is to develop solutions to create or rehabilitate living spaces or environments by the architectural design of the space focused on the accommodation of users and, at the same time, facilitate the transition or adaptation of this same space over time, in order to transform, shape and adjust the space carefully to the specific or evolving needs of users.

In this sense, PPS3 intends to find solutions for sensoring materials and surfaces, to allow the development of structural solutions and responsive furniture using materials that allow these transformations and adaptations over time.

This purpose is materialized in the study of different solutions for sensoring and functionalization of both, materials and furniture surfaces - focusing specifically on the new material 3DF of Sonae Arauco - and in the woodbased structures, in the context of modular constructive systems using materials included in Sonae Arauco AGEPAN system.

4.1.7. IMPROVING OUR WORK (IOW)

The IOW (Improving our Work) initiative is a pillar of Sonae companies culture and way of working. It is a powerful philosophy and methodology in search of productivity and quality, everyday, everywhere, by everyone, creating sustainable value for Sonae's stakeholders.

The IOW Model is a reference of good management practices that, when fully adopted by any business, accelerates the achievement of sustainable superior results.

In 2020 the IOW model has been revised and improved to be more fexible and more adapted to the business specific needs. The improved version of the IOW model is structured around 5 pillars:

Outstanding Results: IOW must above all be an accelerator of Results;
Strategic Deployment and Execution: to ensure total alignment between the initiatives and strategic objectives defined by the business and the work performed by all teams, on a daily basis, through a method of deployment, follow-up and review;
Daily Management: Daily Management is the axis through which teams measure and improve their performance every day and deliver results aligned with their mission and business strategy;
Operational Excellence: to promote the optimization of local and transversal processes that deliver quality products and services (Q), with excellent service levels (D), efficiently and profitably (C), through motivated (M) and happy employees;
Sustain & Share: to ensure the sharing of best practices that can be adopted by other teams, to assess the maturity of good management practice use, to help the business to sustain and strengthen its Continuous Improvement Culture.

Aware that our people are at the center of our success, a major focus has always been given to the training of the teams to provide them with the appropriate mindset, and the best continuous improvement tools. In 2020 the restrictions due to the pandemic situation has challenged our trainings processes.

The IOW Center of Expertise has quickly adapted to this situation to keep-up assuring the IOW trainings, through the creation of remote trainings and several IOW webinars sessions. The new training formats are a great success and the catalogue of training is being constantly adjusted to the business needs.

Our teams keep embracing the IOW way, continuously improving, in order to deliver outstanding Customer satisfaction and results.

4.2. SOCIAL AND EMPLOYEE-RELATED MATTERS

People

At Sonae Indústria, we believe that people are the key resource to drive change towards the future. We care for the safety and well-being of our employees and we strive to support their personal and professional development so that they fulfil their own career aspirations. We have expressed our commitment towards our people in the corporate values of Cooperation, Non-discrimination and Health and Safety.

Growing our business through acquisitions challenged us to continually respond to the different working cultures of the companies acquired. In many cases, this has also involved a need to respond to different geographical cultures, as acquisitions and greenfield projects take place in different parts of the world. While the integration of new people and cultures into the Sonae Indústria family provided valuable insight into different approaches to people management and invited the exchange of knowledge and best practices, it also challenged the company

to create a common framework for people management within the organization. Operating in a globalized and interconnected economy, we are in constant competition for skilled and experienced people. We realise that in today's business environment, careful attention to human resources management is a prerequisite for attracting and retaining the people we require to succeed.

Health and safety

The production of wood-based panels requires physical abilities, permanent attention and good health as employees work with heavy equipment and are regularly exposed to some levels of noise, sawdust and chemical emission during production. We therefore work to implement measures to minimize these effects in our people, as described in further detail below.

Unfortunately, the risk of accidents in our industry is real. Providing a healthy and safe environment for our people is an absolute priority and we never compromise in this area. Managing health and safety issues is integrated into our daily work, and we take a proactive and preventive approach. We maintain the commitment to do more than just legal compliance.

The safety and well-being of our employees during the performance of their daily tasks is of outmost importance in order to prevent any type of accident that can happen. Thus, this vision has been transformed into a target that can be only met with the contribution of all involved: achieve zero injuries and zero serious process related accidents.

Most common risks at Sonae Indústria

Every employee has the responsibility to guarantee the health and safety of their workplace, independently of their job location and job grade. For that to happen, it is necessary to understand the particularities of their work tasks and the respective environment in which they are carried out. If a worker has the ability to identify the potential hazards of working on a specific task with a specific equipment, there's a less probability/risk of some incident or accident to occur.

Sonae Indústria industrial activity is characterized by a number of situations, activities and places that constitute a threat to all of its employees and other contractors working daily in the sites.

This diverse set of operations, whether they are carried out by contractors or internal employees, originate multiple safety risks for all people involved. Each risk is analyzed through a risk assessment analysis that takes in consideration its impact, in terms of seriousness and probability of happening. Finally, and to guarantee that each risk is mitigated to its maximum, a set of rules, programs and guidelines is therefore implemented with the contribution of all people involved.

As previously referred, employees at Sonae Indústria may be exposed to various risks in the industrial environment, such as:

Trampling situations

At Sonae Indústria plants there are several daily movements of large industrial vehicles carrying raw materials, as well as heavy trucks that transport Sonae Indústria's products. This movement may cause potential life threatening situations since, in some cases, the drivers of these vehicles may have reduced visibility therefore putting in danger someone that is not on the identified secure paths.

Dust explosion

A dust explosion is the rapid combustion of fine particles suspended in the air (dust), often, but not always, in an enclosed location. Dust explosions can occur where the concentration of dust in air falls within the explosive limits and a source of ignition of the required energy for that dust cloud is present. A dust explosion can be prevented if one or preferably both of these conditions are avoided. Research shows that the woodworking industry accounts for 40% of all such events, being dust the primary source of fuel.

Industrial environment health risks

Another type of risk in an industrial environment is related with health. Sonae Indústria employees are exposed to noise and dust and in some cases, formaldehyde. According to the workplace risk analysis, personal protective equipment (PPE) is mandatory in some areas of the plants.

Hot work

Hot work refers to any temporary or permanent operation involving open flames or the production of heat and/or sparks with the capacity to ignite any combustible materials within the work area. At Sonae Indústria, there are a wide variety of hot works in the industrial plants, such as welding, grinding, oxyacetylene cutting and others. Recent studies carried out by leading insurance companies reported hot work related incidents as the third-leading cause of property damage events. Sonae Indústria uses the Hot Work Permit System as a primary measure to prevent fires due to non-routine open flame and high temperature work.

Hazardous material exposure

When visiting or working in a Sonae Indústria plant, visitors and employees may be exposed to a wide variety of hazardous materials, such as acids.

For everyone safety it is paramount that anyone within Sonae Indústria premises to follow basic rules and adopt behaviours to prevent risk situations, namely:

Always wear the minimum mandatory Personal Protective Equipment, PPE (e.g. safety footwear, safety glasses, helmet/ cap and high visibility vest). If required by the site, or in some specific areas, other PPE may be mandatory;
Always use the designated walking paths;
Always be aware and respect the safety signs displayed;
Do not enter the wood yard, warehouses or loading areas except through the designated entry points and only after complying with existing access protocols and when carrying a beeper;
Make sure they are aware of all the risks in the areas of work/visit;
When in doubt, always ask the local safety officer about emergency situations and other relevant aspects, such as meeting points or emergency exits.

Covid-19 pandemic exposure

A new worldwide risk has become reality in 2020, the Covid-19 has changed the way we think of health and safety in our work environments. The proximity of people combined with sanitary habits have become one of the great challenges of 2020.

TAFISA CANADA

Considering this risk several work environments, behaviours and measures have been implemented in Tafisa Canada after a risk assessement to minimize the risks of contamination for our employees and contractors and follow new health and safety regulations, namely:

Social distancing in work and rest areas;
Addition of physical barriers between work spaces (plexiglass);
Addition of cleaning routines at work stations by the employees before every shift;

Increase of personal hygiene measures when arriving at the plant and during work (mandatory hand washing and sanitizing);
A strict protocole to be observed for people with symptoms or in close contact with an infected individual;
Mandatory wear of procedural masks when social distancing is not possible;
Minimization of the number of people in a same space;
Addition of air purificators to increase ventilation;
Implementation of telework for the majority of office workers;
Communication to employees concerning the Covid-19 situation by using the IoW group meetings and virtual Employee Town Hall meetings conducted by the Chief Operating Officer;
Security Alert (awareness and information sent to employees).

The implementation of such measures required a lot of time and several interventions on the field from managers to ensure the respect of the measures.

SONAE ARAUCO

Sonae Arauco implemented different actions to ensure the safety of employees and operations. A Crisis Management Team was formed to support employees and operations in the different countries where Sonae Arauco is present.

Source: Sonae Arauco.

The main actions implemented are summarized below:

Screening of all cases in the company done in coordination with the Crisis Management Team to ensure uniform criteria and allow for actions to be taken in order to maintain industrial production;
Communication and awareness initiatives for Sonae Arauco employees;
For functions possible to be performed remotely, "home office" has been adopted. Equipment and technical support has been provided and awareness communications about cybersecurity and remote work security best practices have been reinforced. A dedicated internal digital area has been created for this purpose;

Business continuity measures have been put in place, including contingency plans for the supply of key materials and services and people backups for critical functions;
Communications to key stakeholders have been issued, including customers and suppliers;
Several rules and procedures have been implemented and equipment made available at the plants and offices to mitigate the infection risk, including:
- o Social distance and mandatory use of face masks;
- o Layout's adjustments to ensure distancing;
- o Definition of "clean teams" and offset work schedules;
- o Development of internal protocols to regulate different activities during pandemic situation;
- o Cleaning and desinfection (including the use on surfaces of a long-lasting antiviral technology);
- o Mitigation of airborne transmission in the offices (ventilation of working spaces, air-conditioning systems without air recirculation);
- o Access conditions to plants and offices to internal and external employees(screening of potential cases of infection and body temperature control);
- o Rules and recommendations on travels, trainings and meetings;
- o Use of Covid-19 antigen rapid tests.

The recommendations of the World Health Organization and the local health organisations have been adopted in all plants and offices.

SURFORMA

In Surforma several actions were implemented to create health and safety conditionsin order to minimize the risk of contamination at workplaces, namely:

Reorganization and implementation of guidelines, standards and best practices defined by the competent health authorities;
Definition of an isolation area for potential cases of infected employees and creation of a contingency plan;
Implementation of health and safety measures at work, such as physical distance, reinforcement of hygiene measures and daily cleaning of workspaces and the mandatory use of individual protective equipments;
Reinforcement of training and awareness for the employees about the procedures, rules and measures of the contingency plan.

How to deal with people and social matters

Employment

Sonae Indústria focus on constantly fostering good relationships with its employees, promoting open communication with all our people as well as training and education opportunities. We also prioritise career development and offer equal opportunities, despite the challenges on gender diversity due to the nature of our industry. Additionally, we support freedom of association wherever we operate.

Measures to attract and retain Talent

In Sonae Indústria, people are considered a key element to ensure the success of the company and to leverage our strategic projects. Hence we strive to attract qualified professionals that have the required skills to meet present and future challenges, and invest in continuous training and development initiatives to promote the retention and development of our people.

The Human Resources management for Sonae Indústria (except for Tafisa Canada) is handled by Sonae Arauco Human Resources specialized team.

At Tafisa Canada, in 2020, with the Covid-19 pandemic, we had to reduce some of our hiring initiatives.

Despite the situation, Tafisa Canada continued to enhance its appeal as an employer and foster the retention of the talent base by implementing initiatives such as:

Increasing the communication to our employees concerning the Covid-19 situation by using the IoW team meetings and virtual Employee Town Hall meetings conducted by the Chief Operating Officer;
Building relationships with universities by hiring trainees;
Promoting a progressive retirement program;
Post-graduation employment program;
Sponsoring community activities.

Through Sonae Arauco an investment was made in the implementation of a new platform to support HR Processes throughout all geographies, ensuring alignment in Talent Management initiatives. During 2020, we continued to ensure the roll-out of the strategic project of "4People", implementing the training module and using this platform as a means to leverage and disseminate key knowledge within the organization. This initiative was particularly critical given Covid-19 pandemic outbreak, allowing us to continue to foster our employee's development through eLearning offering leveraged in this Human Resources Platform.

Furthermore, aligned with the its mission and strategy and to ensure a higher focus on Competences Development, Sonae Arauco redesigned the Competences Model to better address and support employees individual development needs. In 2020 the first stage of this project addressed soft skills, proposing a new framework and assessment scale, that was implemented for the 2019 Performance Appraisal and Competences Development (PACD) for a pilot group to assess its applicability and gather feedback regarding the model. The 2020 PACD will consolidate this model and expect to roll-out for the remaining employees this competences framework throughout 2021.

Collective Agreements

In all geographies we are an active part of the negotiation process with the works councils, participating in regular meetings with the purpose of reaching sustainable agreements for all parties.

Additional details regarding each country are presented below:

Canada Collective Agreement in place for the period 2016-2021. We had negotiations of the new union context for the new factory (Lacquered panels);
Spain Collective Agreement in place for the period 2016-2020. This Collective Agreement includes a complete chapter covering Health & Safety topics, including the relationship between the company and the employees' representatives on this area;
Portugal regular meetings with trade unions and participation in the negotiations for collective agreements;
Germany there are Works Councils for each company, a General Works Council and a Group Company Works Council. Working conditions are regulated and negotiated on the basis of various collective agreements and company agreements. Several agreements have been negotiated or discussed during 2020, namely short time work, working time regulations, introduction and handling of techonoly tools and equipments, Wearing and handling of masks due to Covid-19;

• South Africa – regular meetings with trade unions.

As evidenced previously, the Collective Agreements agreed with the Works Councils, usually include a complete chapter for Health & Safety topics.

Zero accidents is our top priority and main focus, and for that we:

have clear and strict rules regarding the use of equipment's in the plants;
have machine regulations for our equipments;
provide continuous training to our employees to develop them and create awareness towards safety behaviours.

Company rules on work breaks and resting periods

Sonae Indústria has collective agreements in place in the countries in which is present, covering the large majority of its employees. For those employees not covered by such agreements, the company takes into account the specific legislation of the countries where it is present and the labour market conditions.

In the existing collective agreements of Sonae Indústria companies, it is also considered important considerations to ensure sound Health & Safety practices, namely in what concerns breaks and mandatory resting periods, following local legislation and sometimes going beyond.

European Forum – Sonae Arauco

Sonae Arauco and its European affiliates believe that effective communication with all employees is essential for correct business performance. As such, the company permanently seeks ways to improve the efficacy of information and the exchange of opinions with all its employees.

With this objective in mind, an European Forum was created to ensure that Sonae Arauco employees in the region are kept informed about the major developments and have the opportunity to discuss all common affairs that could affect their interests.

The members of the forum are Sonae Arauco CCDO (Chief Corporate Development Officer), the national HR managers of each country and representatives of all workers of the European subsidiaries (at the moment only workers' representatives from Germany and Spain were designated). The forum is planned to occur once per year, however, in 2020 due to pandemic constraints it was not possible to organise.

Non-discrimination

Sonae Indústria adopted and develops a policy of non-discrimination. We are an equal opportunities employer and we do not accept any form of discrimination in the workplace be it related to age, gender, race, social background, religion, sexual orientation, or physical ability. Our career development and reward systems are based on merit.

The set of standards included in Sonae Indústria Code of Conduct and in Sonae Arauco Code of Ethics reinforce the implementation of these values.

The prohibition of arbitrary discrimination demeanours includes recruitment and hiring procedures, as well as employment terms and conditions, such as tasks to be carried out, training, wages, benefits, promotion, transfers, discipline and treatment. In addition, moral and sexual harassment conducts are especially rejected.

Different initiatives and procedures on this regard have been followed, some of them as a result of legal requirements in the different countries. For example, Sonae Indústria in Portugal and Sonae Arauco in Spain created, respectively, a Plan for Gender Equality¹⁷ and an Equal Opportunities Plan (with measures foreseen in 2020 and 2021), following as applicable the Portuguese and Spanish law. Other legal requirements are also

¹⁷ The Plan for Gender Equality is available in the company website, through the following link: https://www.sonaeindustria.com/en/sonaeindustria/sustainability/equality-plans.

observed such as, in Portugal, the code of good conduct for anti-harassment prevention and a law entered in force (during 2019) regarding the equal remuneration between men and women on equal work functions.

In South Africa, an Employment Equity policy has been defined to regulate the conditions under which Sonae Arauco South Africa staff will be affected by Employment Equity practices. This policy is designed to comply with Employment Equity legislation of South Africa (The Employment Equity Act 55 of 1998 (EEA)) and its Regulations and Code of Conduct. This policy aims to: implement affirmative action measures; implement education, training and development strategies to provide and ensure equal opportunity to all employees in the workplace; develop a culture and practices that will prevent and readdress inequalities, imbalances, prejudices and injustice in the workplace; protect employees against unfair discrimination and harassment; make reasonable accommodation in the workplace for family responsibility and people with disability.

In Germany it is also regulated in a special law as well as in tariff contracts. During the onboarding there is a mandatory information to the employees about that.

General Equal Treatment Act (AGG) is a German federal law, which is also known colloquially as the Anti-Discrimination Act, came into force on August 18, 2006 and serves to implement EU anti-discrimination directives. The aim of the law is to prevent or eliminate discrimination on the grounds of race or ethnic origin, gender, religion or belief, disability, age or sexual identity. The main focus of the General Equal Treatment Act is, in accordance with the requirements of the EU Directives, protection against discrimination in employment and occupation.

In addition to a prohibition of discrimination under labour law and its exceptions, the measures and obligations of the employer to protect against discrimination in the workplace are also regulated here. The rights of employees, such as the right to complain and the right to refuse performance, and their claims in the event of violations of the prohibition of discrimination (claims for compensation and damages) are also explained.

During the last three years no communications have been received regarding discriminatory behaviours between employees.

Operational changes

The different organisational changes and significant events are officially communicated to the organization and its employees in compliance with the various legal provisions applicable in the countries and with the labour regulations. These notifications are mostly made via employee representatives, intranet, notices to interested parties or unions.

Training and education

Sonae Indústria recognizes the importance of people in the organization, and values the dissemination of knowledge within the company, as such, training and development are a key factor and priority in the company. Employees are expected to take advantage of all opportunities that are presented to them to achieve both personal and professional development and Sonae Indústria aims to provide the training and support necessary to achieve their full potential, by maximising their skills and motivation.

Tafisa Canada registered less training than usual due to the Covid-19 context, but revised all the job training programs in view of the TWI concept (Training Within Industry) with an internal trainer for the new employees. The company continued the training of key employees in technical and managerial fields. French language courses for foreign employees and English courses for non-union members continued to be provided. Tafisa Canada continued to support degree completion from secondary (high school) to Master's level programs.

Tafisa Canada continued to hire several interns and trainees (from universities and technical schools) and students (during the summer period) in order to provide them enriching work experiences and to prepare the company's potential future workforce.

Sonae Arauco has set up in 2018 a knowledge academy, with specific programmes to foster culture development and business knowledge.

SAKA

In 2018, Sonae Arauco has launched its academy of knowledge: SAKA.

This initiative was implemented to address the following challenges:

Eventual exit of skilled employees with deep business and specific operational knowledge;
Risk of losing additional key knowledge holders due to retirement in coming years;
In certain cases, knowledge mostly resides in key peoples' minds instead of a knowledge repository;
Difficulty in passing business specific knowledge to younger people because of lack of formal transfer programs.

SAKA aims to identify, collect and standardize Sonae Arauco core and critical knowledge, in order to retain and transmit it.

SAKA is structured around six pillars of knowledge:

Source: Sonae Arauco.

In each pillar, Sonae Arauco is collecting information and delivering training materials to increase the knowledge of its people.

Sonae Arauco expectation is that, once implemented, SAKA will directly impact on critical areas related with the company's knowledge.

In a near future, SAKA will not only be the most important repository of knowledge but will also perform a key role both on the company's training programs and on people's development.

In 2020, several online training courses continued to be implemented and made available in the "4 People" system.

Furthermore, given the critical dimension of Health & Safety, that was even more imperative given the pandemic outbreak and the need to adopt protective measures and guidelines to be followed by all employees, in 2020 was also created and made available a specific and customized online training to all Sonae Arauco employees. This allowed us to ensure a global awareness towards the pandemic and guarantee all internal procedures were known by our employees.

In 2020, SAKA has been chosen by The European Round Table for Industry (ERT) as one of the case studies to highlight Inclusion & Diversity within 20 of European industry's biggest and best known brands.

The success of SAKA lays on the development of an innovative training experience that takes on new learning formats, like gamification, allowing to cherish each age group and, above all, take advantage of the diversity that is increasingly more present in our company.

The ERT publication addresses various dimensions of Inclusion & Diversity, namely gender, age, disability, ethnic groups, LGBT+ or support to victims, with the goal of accommodating demographic diversity and cognitive diversity.

Taking me Further

Sonae Arauco started in 2018 the implementation of an initiative called "Taking me Further" with the ambition to develop a balanced, high performance and healthy work environment. This program promotes equilibrium between mind, emotions, body and health.

The program was implemented in Sonae Indústria and Sonae Arauco facilities in Maia and it was foreseen to be extended to other sites in 2020. Given the constrains the company had to endure throughout 2020, this initiative was put on hold, nonetheless, since it's the company recognizes the importance of employee wellbeing, it's on its agenda to think of possible initiatives adapted to the current new normal of the employees.

It should be highlighted that this program has a high commitment from the employees, as they are the monitors of the activities promoted. The fact that the program is built with internal resources (core & support teams) affected positively the engagement of all the participants.

Source: Sonae Arauco.

Partnerships with Universities

With the objective of developing and improving the characteristics of our products we have developed partnerships with several Portuguese universities; Faculdade de Engenharia da Universidade do Porto (FEUP), Escola Superior Tecnológica de Viseu (ESTV), Universidade do Minho, Universidade de Aveiro (UA), Universidade Nova de Lisboa (UNL), Universidade de Coimbra (UC), Universidade de Trás os Montes e Alto Douro (UTAD), Instituto Superior Técnico (IST) and Instituto Superior de Engenharia do Porto (ISEP), as well as with research associations and consortiums - Associação Rede de Competência em Polímeros (ARCP), PrintoCent, Pólo de Inovação em Engenharia de Polímeros (PIEP), Centro de Nanotecnologia e Materiais Técnicos, Funcionais e Inteligentes (CENTI), TechMinho and Colab ForestWise – Laboratório Colaborativo para a Gestão Integrada da Floresta e do Fogo. These partnerships provide the basis for product and process innovation in the Group and encourage the proximity between our company and the academic community. At the moment, and within the defined competences framework, the main objectives of our research are as follows:

New polymers, fundamental investigation;
Resins industrial control and monitoring;
Wood based panels development of new products, analysis of physical and mechanical characteristics, and performance evaluation of gluing systems;
Impregnated papers and laminates impregnation, performance characterization, development of new products / processes;
Emissions analysis of VOC¹⁸ emissions;

¹⁸ Volatile organic compound emissions.

Forest and fires management;
Decrease the industrial footprint and contribute to circular economy;
Contribute to the health and well being in general and provide the safety of individuals or groups increasing the properties of involving materials;
Contribute to the area of integrated electronics, ubiquitous and interactive products.

With some of the above mentioned objectives in mind, Sonae Indústria, through its affiliates, has a series of facilities and equipment in the campus of the University of Porto.

With these partnerships, Sonae Indústria has privileged access to university, equipment and techniques, researchers' know-how, development of new technologies and methodologies in collaborative projects and a permanent access to high value technicians that could potentially be integrated in the company.

Involvement in Local Community

At Sonae Indústria, most of our people have a common inherent desire to improve the conditions of those in need in the local communities where we are present. In some specific situations, the employees are involved with social institutions or charities and the company encourages them to actively participate in these initiatives.

In the different countries where Sonae Indústria operates, the specific needs for help and contribution vary greatly depending on the communities' level of welfare, presence of social security systems as well as the culture and values of the local citizens. Therefore, the community-related activities are prioritized and managed at local level.

In 2020, in the light of Covid-19 pandemic, we did our best to respond to the nationwide effort to fight the pandemic during the most critical stage of the disease, by cooperating with independent associations to source and distribute medical and individual protection equipment. Together with other companies and institutions Sonae Indústria was able to raise funds to purchase circa 2.900 personal protective suits to be distributed to health workers. Moreover, these equipment was manufactured by a Portuguese company based in the north of the country, thus contributing to the support of local businesses.

We keep looking at opportunities to help overcome this situation and bring some comfort to the communities in need.

TAFISA CANADA

Tafisa Canada maintained its committment to support non-profits, charities and organizations that help make Lac-Mégantic and surrounding communities to prosper and thrive. Despite the impact of the Covid-19 pandemic on non-profits, fundraising events and other activities, which were either cancelled of postponed, Tafisa Canada distributed funds to programs in the areas of youth, education, technology, sports, health care research, community services, tourism, environment and arts.

Among the organisations Tafisa Canada has supported over the years, including 2020, is "Place aux jeunes du Granit". This organization promotes the migration, establishment and retention of young graduates and professionals aged 18 to 35 in the region, in collaboration with its partner-promoters and local, regional and national key players in business development, for the benefit of Lac-Mégantic and surrounding rural communities. By supporting this organization, the Company has had the privilege throughout the years of hiring young professionals willing to establish themselves in the region rather than seek employment in larger urban areas.

Another usual challenge in rural regions is the access to health care services. For the past 17 years, Tafisa Canada and its employees have committed to support the "Fondation du Centre de Santé et de Services Sociaux du Granit" (Health and Social Services Foundation) through voluntary donations, which are used to improve health care services for the entire population of Lac-Mégantic and surrounding communities.

Tafisa Canada always strives to support its employees in their community involvement endeavours and volunteer efforts. In 2020, several employees organized a food drive for Lac-Mégantic's local food bank run by the "Centre d'action bénévole du Granit". Tafisa Canada promoted the event and provided additional support through a monetary contribution.

Sonae Arauco

Sonae Arauco's social responsibility strategy is completely aligned with the company's vision, nature and purpose. Considering that Sonae Arauco envisions to create wood-based solutions for a better life and planet, the company's social responsibility initiatives are guided by the following drivers: Forest & Environment, Education & Wellbeing and Local Communities.

The year 2020 was deeply impacted by the Covid-19 pandemic. And, almost one year after the pandemic first hit Europe, Governments all around the world are facing the enormous task of finding a way to balance the need to protect people's health and the urgency of keeping economies functioning to prevent us from spiraling into one of the biggest social crisis ever lived.

At Sonae Arauco, it was clear, since the beginning, that the priority was to protect both the employees and the business' continuity. Thus, back in February, a Crisis Management Team was formed for what initially was foreseen to be a short period of time. Under its coordination, dozens of procedures were redefined or created - and to this day are adjusted whenever needed - to ensure that everyone can work safely, whether in the factories or remotely.

In this scenario and although Covid-19 didn't impact Sonae Arauco's Corporate Social Responsibility strategy - the company is still driven by the purpose of being a relevant player amongst the several communities, creating economic, social and environmental value - in fact, in 2020, the focus was to protect the internal stakeholder and the business sustainability, because it was the best way to ensure that, in the long run, Sonae Arauco would maintain its relevance for the different communities.

Thus, while Covid-19 forced us to delay some of our corporate social responsibility plans, there are several initiatives that were still possible and deserve a special highlight.

Since Covid-19's appearance, Sonae Arauco's corporate social responsibility has been particularly dedicated to support the regions where it has industrial units and, whenever possible, using the company's wood based solutions.

In this sense, the company has partnered with "Santa Casa da Misericórdia de Viseu" and "Santa Casa da Misericórdia de Sines" – two portuguese charity institutions whose mission is to treat and support sick and disabled people – with the donation of coated Particle Board solutions, to be used both as separation screens and as platforms in the new spaces created to support the populations suddenly affected by this pandemic. In the case of "Santa Casa da Misericórdia de Sines", which was particularly impacted by a Covid-19 outbreak, the support of Sonae Arauco also included a financial donation.

Sonae Arauco has also cooperated with two hospitals, in the Oliveira do Hospital and Viseu regions, in Portugal, namely with the supply of Particle Board solutions to be used as separation screens in a Covid-19 Field hospital, and with the donation of OSB solutions that allowed the creation of a connection bridge to access a new hospital's area, entirely dedicated to screen Covid-19 new cases.

As usual and having the forest preservation as a priority, throughout the year, many were the donations made by Sonae Arauco for the volunteer fire brigades from different local communities, whether on Portugal or in Germany.

Considering this Forest axis, for the second year in a row Sonae Arauco, in a partnership with other Sonae companies, including Sonae Indústria, supported the Portuguese Government campaign "Portugal Chama" through the organization of different initiatives targeting both the internal and the external stakeholders: emails, muppies, media advertisements, digital banners and social media posts from the different companies. The campaign aims to educate and contribute to the adoption of safe behaviours related with fires.

In the Oliveira do Hospital industrial unit, the year was also marked by the plantation of more than 100 trees in the site's premises. The plantations in the different external areas of the factory aimed to raise the teams' spirit, to remember and recognize the difficulties lived in the 2017 fires and to improve the company's landscape.

Following the previous years, Sonae Arauco supported "STEM talent Girl", a partnership sponsored by the Valladolid industrial unit. This is a project of mentoring for the STEM talent development (Science, Technology,

Engineering and Mathematics) and intends to promote scientific and technological vocations amongst women with the aim to inspire and empower the next generation of leading women in science and technology.

In South Africa, two scholarships were given to our employees' children. Resulting from this support, one student successfully completed a BBA (graduation course) in Marketing Management and the other did a successful year in Business Administration.

By the end of the year, and also considering by the negative impact of Covid-19 in the communities in which it is present, Sonae Arauco, together with its employees, joined a food collection initiative of "Banco Alimentar contra a Fome", a Portuguese institution which fights against hunger and food waste. With the involvement of all the industrial units, more than 2,500 kg of food were donated to several institutions reaching hundreds of families.

These initiatives were complemented by several smaller actions, coordinated by the different sites of Sonae Arauco, namely Nettgau, in Germany, that has supported the local football club of Parsau, the local kindergarten (Jübar), the theatre group, a youth movie camp (Arendsee), amongst other institutions, with the supply of several materials, specially OSB boards.

Occupational Health and Safety

TAFISA CANADA

Tafisa Canada continued to provide induction training to all employees, visitors and contractors. The company has also a safety video that must be viewed annually and organized an annual exercise (simulation of real emergency cases with each shift) doing a postmortem analysis afterwards to continuously improve the safety system.

Regarding Tafisa Canada's objective of continuous improvement of the safety of its employees, in 2020 many actions were implemented despite the Covid-19 crisis, namely:

Training in health and safety (circa 1,340 hours);
Finalization phase of a project to improve the security of the wood yard. The access to the wood yard is even more restricted with new barriers with autorisation to access, a new road and parking lot have been added to almost eliminate cohabitation between loaders and other vehicules. Tafisa Canada also created a new wood yard plan for circulation wich includes a safe corridor for pedestrians. The project is at about 90% completed;
Increasing of the health and safety field support for the modernization of one particleboard press Line and for the construction of the new lacquered panel facility in Lac-Megantic;
Reduction of fall hazard by adding many guardrails at critical areas on the roof;
Creation of a housekeeping audit app available on tablet and smartphone and incorporated in supervisor's Gemba walk;
Increasing of the safety of one particleboard press line by adding many safety barriers and catwalks;
Intallation of a panel handling system at quality laboratory;
Creation of a multi-disciplinary committee to propose, decide and implement in a fast track way all the new sanitary rules;
Investment in an additional cafeteria, locker room, and sanitary equipement for social distancing and hygiene measures.

SONAE ARAUCO

Sonae Arauco Behavioural Safety Transformation project (BeST program), launched in 2017, drove the actions defined to improve the company's performance in Health and Safety and to achieve our goal: zero injuries and zero serious process related incidents. With this goal, we have defined clear safety policies & rules, created safer workspaces and have become more critical in identifying improvement opportunities.

In 2020 a reassement was done to all the improvements done and analysed what more could be done in order to further improve our safety performance.

It has been also defined a Safety Roadmap 2020-2024, to give continuity to all the work developed so far and structure the next steps, encompassing the BeST program objectives also within this project. The main objective was to consolidate, in a comprehensive plan, all initiatives to reduce the risk of accident while providing a common frame of reference to all stakeholders of Sonae Arauco.

Safety Roadmap 2020-2024

In relation to this Safety Roadmap, it should be mentioned that:

Sets out a rationale and describes a general approach based on standardization, training and coaching;
Establishes 3 main axis with 13 key focus areas and over 60 different processes to be deployed until 2024;
Processes are associated to the key focus areas with a timescale defined to ensure the evolution of the Roadmap;
Shared responsibility between Corporate and Local teams allows for accountability and realistic outcomes.

Source: Sonae Arauco.

With this approach Sonae Arauco aim to Implement simple and transparent rituals that develop our employee's participation on safety topics and Define the health and safety guidelines to ensure that all employees conduct their activities of production, maintenance, logistics, under the same health and safety guidelines.

The Risk Factor training

The Risk Factor consists of four modules intended for all Sonae Arauco employees, regardless of their role, allowing a better understanding of human motivational factors and subsequent impact on the decision-making process, as described below:

2020 Sonae Indústria

Source: Sonae Arauco.

Planed to be concluded in mid-2020 this program was significantly impacted by the Covid-19 pandemic that halted all trainings from March to September. As this is a training designed to work behaviour competences it is based on peoples interactions that simply could not be maintained.

Training resumed in September following new rules in terms of number of attendees and class dynamics and is expected to be completed in 2021.

Life-saving rules

At Sonae Arauco:

Sonae Arauco maintains a core set of rules – the Life Saving Rules.

The purpose of the Life-Saving Rules creation was to define the critical safety rules that, if not followed, have the potential to result in life changing injury or exposure to life threatening hazards. These apply to all employees (own and contractors) and are:

Safety interlock bypasses /machine protection removal

Safety interlocks shall not be bypassed or a machine which protection was removed cannot be operated without formal written authorisation at the proper management level and compensatory measures should be in place.

Isolation of energy sources (LOTO)

All energy sources (electrical, pressure, gravity, chemical or mechanical) shall be properly and completely locked out, isolated, drained or secured before personnel commence work as defined by an internal procedure, which included certain life-saving personal protective equipments (PPE) requirements and a check of the effectiveness of the lockout.

Work at height

Only properly trained personnel using proper fall protection equipment shall be authorised to carry out work at an elevated position as defined by internal procedure, which include certain including life-saving PPE requirements.

Hot work

Only properly trained, supervised and authorised personnel are entitled to perform hot work activities.

All hot work must be subject to a previous authorisation, given by an authorised Sonae Arauco employee, before it is undertaken as defined by a corporate procedure. As such, employees must:

Confirm with the supervisor or the person in charge of the work that there is an authorisation in place as defined by the internal procedure;
Initiate the work only after receiving the signed authorisation;
Check that all defined conditions and required precautions are met throughout the duration of the work.

Access to wood yard

Only authorized personnel are entitled access to the wood yard, according to the internal procedure, which includes certain PPE requirements.

Confined space entry

Only properly trained, supervised and authorised personnel shall enter a confined space as defined by an internal procedure. A work permit is required and an approved rescue plan should exist before any entry can commence.

Incidents classification, report and investigation

At Tafisa Canada, all material damages (including those caused by fires), near miss, first aid, medical treatment, lost workdays, or fatal accidents are registered and communicated. For major material damages or when a worker suffers an injury, the internal first aid team is called to the scene (internal sound signal) to provide help or organize the transportation of the injured person. The supervisor provides support to the worker, informs his superior and H&S counsellors, begins an investigation, implements an immediate solution to protect other employees and informs the management team and local authorities if requested. A report is written by the worker to complete the investigation. A permanent solution is implemented and the final report is presented to the management team.

At Sonae Arauco, all incidents should be reported and classified according to the impacts on the victim in a scale of six degrees of seriousness.

1. Fatal Accident/Permanent disability, which is an incident that had fatal victims or that resulted in a permanent life-altering condition;
1. Lost Workday Case (LWC), which is any work related injury that leads to, at least, one workday lost by the employee in addition to the shift in which the event occurred;

1. Medical Treatment Case (MTC), which is any work related injury that requires medication or treatment that is typically administered by a healthcare professional, but does not result in any days lost or in work restrictions. After the medical treatment, the worker is able to return to work;
1. First Aid Case (FAC), which represents an incident that required a simple treatment given to a person with a minor injury that is usually administered immediately after the injury occurs. It consists of an one-time and short-term treatment and requires little technology or training to administer.
1. Near Miss, which is any unplanned and undesired event that did not result in injury, illness, or property/ environment damage but had the potential to do so. A near miss situation (when an event occurs) is, for example, a suspended load that falls next to a person, but not hitting him/her.
1. Potential Risk Situation (PRS), which is a situation identified before the occurrence of an event that has the potential to cause one if not properly addressed. This includes unsafe conditions and risky/unsafe behaviours.

Identification and correction of potential risk situations (PRS) should not be considered or treated as a near miss but as an improvement opportunity.

Another relevant concept concerning the incidents classification is the Serious Injuries or Fatalities (SIF) concept. SIF is any fatal event, life-threatening injury, permanent disability or illnesses caused by exposure to conditions in the workplace that will lead to a life-altering condition. In addition, all events in which fundamental management controls¹⁹ are either absent, ineffective or not complied with, are to be considered as SIF.

All events recorded in Sonae Arauco are evaluated in terms of potential, which means that even a Near Miss could be logged as a Potential SIF if, after the analysis, it is understood that it could have led to the consequences described in a SIF. In such cases a comprehensive investigation is required to determine the root causes.

Source: Sonae Arauco.

Although there was already an investigation protocol for accidents occurred in Sonae Arauco, this was revised in 2020 with the implementation of a new methodology to systematically review the investigation done to all relevant events.

¹⁹ Fundamental management controls: LoTo, Confined spaces, Work at height, Removing machine guarding or barricades, Hot work, Woodyard circulation and access protocol.

This methodology is a step by step approach with weekly meetings with involvement of a wider team that includes as permanent team a member of the ExCom, Industrial Director, Corporate Health and Safety (H&S) and country H&S plus the team where the incident occurred: Plant Manager, local H&S, local IoW and manager of the injured person. By leverage with a broader team it was possible to define more robust actions that address the root causes and effectively prevent recurrence of the incidents.

Key Employment Performance Indicators

Number of Employees²⁰

The following sections considers information for Sonae Indústria and also for Sonae Arauco. Aggregate data consider 100% of Sonae Arauco figures.

Employees per country / region²⁰

At the end of 2020, Sonae Indústria employed 473 employees (excluding trainees and externals) in three different countries, a reduction of 33 employees, when compared to the end of 2019, explained by the closure of the Componentes plant (in Portugal) in the 2H20. In our North American business the number of employees (excluding trainees and externals) increased 7, mainly due to the investment in a new High Gloss and Perfect Matt lacquering plant.

Considering Sonae Arauco, the number of employees reaches 2,590 people in eight different countries, 221 people less when comparing to the end of 2019, mainly due to the closure of Laminate Park operations and of all industrial operations at Horn site in Germany.

²⁰ Number of Employees: FTEs excluding Trainees and Externals.

Productivity (Turnover/Number of Employees)²¹

Sonae Indústria

Sonae Arauco

Despite the decrease of the number of employees, in 2020, the productivity decreased in Sonae Indústria and Sonae Arauco, with a reduction in Turnover that was significantly affected by the Covid-19 pandemic.

Employee turnover22
Employee turnover (%)	2018	2019	2020
Sonae Indústria	10.7%	8.5%	14.8%
Sonae Arauco	9.1%	7.4%	11.9%
Employee turnover rate		2018	2019	2020
Sonae Indústria
Executives committee and managers		0.2%	0.0%	0.4%
High Qualified Technicians and supervisors		0.6%	0.0%	0.8%
Adminstrative staff		2.0%	2.3%	0.6%
Manufacturing workers and non-qualified workers	8.0%	6.2%	13.0%
from 18 to 34 years		3.7%	2.3%	5.1%
from 35 to 44 years		2.1%	2.3%	1.2%
from 45 to 54 years		1.6%	1.3%	3.9%
from 55 to 65 years		2.3%	2.3%	3.3%
over 66 years old		1.0%	0.2%	1.4%
Sonae Arauco
Executives committee and managers		0.4%	0.3%	0.3%
High Qualified Technicians and supervisors		1.8%	0.8%	1.5%
Adminstrative staff		0.2%	1.3%	2.6%
Manufacturing workers and non-qualified workers		6.7%	5.0%	7.4%
from 18 to 34 years		2.8%	2.3%	3.0%
from 35 to 44 years		2.8%	1.5%	1.8%
from 45 to 54 years		1.6%	1.2%	2.3%
from 55 to 65 years		1.8%	2.2%	4.6%
over 66 years old		0.2%	0.2%	0.2%

It should be noted that, in 2020, the Employee turnover rate increased in Sonae Indústria and Sonae Arauco due to the aforementioned closures.

²¹ Number of Employees: FTEs excluding Trainees and Externals.

²² Employee turnover (%) = total number of employees (headcount) that left during the year / average FTEs during the year (based on monthly average values).

2020
Sonae Indústria

Workforce by sex, age group and professional classifications (Total FTEs²³)

		2018			2019			2020
	female	male	total	female	male	total	female	male	total
Sonae Industria
from 18 to 34 years	27	72	99	22	74	96	18	70	88
from 35 to 44 years	37	117	154	39	127	166	26	113	139
from 45 to 54 years	30	126	156	30	123	153	22	129	151
from 55 to 65 years	15	80	95	17	85	102	14	91	105
over 66 years old	0	0	0	0	0	0	0	1	1
Total	109	396	505	108	410	518	80	403	483
Executives committee and managers	5	21	26	5	22	27	4	23	27
High Qualified Technicians and supervisors	8	23	31	8	25	33	9	17	26
Adminstrative staff	45	51	95	44	54	98	47	55	102
Manufacturing workers and non-qualified workers	51	302	353	51	309	360	21	307	328
Total	109	396	505	108	410	518	81	402	483
Sonae Arauco
from 18 to 34 years	116	442	558	113	432	544	88	381	469
from 35 to 44 years	176	546	722	168	529	696	147	478	625
from 45 to 54 years	142	730	872	150	694	844	155	620	775
from 55 to 65 years	67	702	769	70	727	797	71	695	766
over 66 years old	2	4	6	3	5	8	2	3	5
Total	503	2,424	2,927	503	2,386	2,889	464	2,176	2,640
Executives committee and managers	23	111	134	14	66	80	15	59	74
High Qualified Technicians and supervisors	82	255	337	65	317	381	67	303	370
Adminstrative staff	249	338	587	312	256	568	274	216	490
Manufacturing workers and non-qualified workers	149	1,720	1,869	112	1,747	1,859	108	1,598	1,706
Total	503	2,424	2,927	503	2,386	2,889	464	2,176	2,640

The most representative age groups at Sonae Indústria range between 35 and 54 years (corresponding to circa 60% of the total employees). It should also be noted that women represent circa 17% of the total workforce of the company.

Regarding Sonae Arauco, the most representative age group ranges between 45 and 65 years (corresponding to 58% of the total employees) and women represent circa 18% of the total workforce of Sonae Arauco.

²³ FTEs including Trainees. For Canada these figures also include Externals.

Employees by type of contract (Labour Agreements) (Headcount²⁴)

	2018			2019			2020
	female	male	total	female	male	total	female	male	total
Sonae Industria
Permanent	92	381	473	102	394	496	75	376	451
Temporary	12	9	21	3	9	12	2	18	20
Total	104	390	494	105	403	508	77	394	471

Sonae Arauco
Permanent	472	2,303	2,775	476	2,224	2,700	455	2,061	2,516
Temporary	53	176	229	42	181	223	22	127	149
Total	525	2,479	3,004	518	2,405	2,923	477	2,188	2,665

Employees by contract time (Headcount²⁴ )

		2018			2019			2020
	female	male	total	female	male	total	female	male	total
Sonae Industria
Full-time	104	389	493	105	402	507	77	392	469
Part-time	0	1	1	0	1	1	0	2	2
Total	104	390	494	105	403	508	77	394	471
Sonae Arauco
Full-time	511	2,470	2,981	471	2,366	2,837	434	2,158	2,592
Part-time	14	9	23	47	39	86	43	30	73
Total	525	2,479	3,004	518	2,405	2,923	477	2,188	2,665
Collective agreements and salary policies
In the table below we present the percentage of employees covered by collective bargaining agreements in Sonae Indústria and Sonae Arauco.
% of Employees		2018		2019	2020
Sonae Indústria		58.9%		58.7%	54.1%
Sonae Arauco		83.1%		84.9%	87.0%

Collective agreements and salary policies

% of Employees	2018	2019	2020
Sonae Indústria	58.9%	58.7%	54.1%
Sonae Arauco	83.1%	84.9%	87.0%

²⁴ Headcount including Trainees and excluding Externals.

Ratio of Standard Entry Level Wage (Shop Floor) by Gender Compared to Local Minimum Wage at significant locations of operations (Industrial Operations)²⁵

		2018		2019		2020

Sonae Industria
Portugal	1.00	1.00	1.00	1.00	1.01	1.01
Canada	2.07	2.07	2.04	2.04	1.99	1.99
South Africa	-	-	2.12	2.12	2.49	2.49
Sonae Arauco
Portugal	1.08	1.08	1.04	1.04	1.10	1.10
Spain	1.55	1.55	1.29	1.29	1.27	1.27
Germany	1.70	1.70	1.30	1.30	1.40	1.40
South Africa	-	-	2.12	2.12	2.49	2.49

Gender Pay Gap²⁶

Provided below is information on the "Gender pay gap", regarding average remuneration by each gender group within each employee category.

	female	male	female	male	female	male
Sonae Industria
Portugal	1.00	1.00	1.00	1.00	1.01	1.01
Canada	2.07	2.07	2.04	2.04	1.99	1.99
South Africa	-	-	2.12	2.12	2.49	2.49
Sonae Arauco
Portugal	1.08	1.08	1.04	1.04	1.10	1.10
Spain	1.55	1.55	1.29	1.29	1.27	1.27
Germany	1.70	1.70	1.30	1.30	1.40	1.40
South Africa	-	-	2.12	2.12	2.49	2.49
Gender Pay Gap26
Provided below is information on the "Gender pay gap", regarding average remuneration by each gender group within each employee category.
						2019	2020

Sonae Indústria
Management, supervisors and highly qualified technicians (%) Adminstrative staff (%)						20.5% 24.6%	29.6% 20.8%
Manufacturing workers and non-qualified workers (%)						51.7%	22.3%
Manufacturing workers and non-qualified workers (%) - Canada						2.8%	0.7%
Manufacturing workers and non-qualified workers (%) - Others						18.2%	-4.0%
Sonae Arauco
Management, supervisors and highly qualified technicians (%)						18.2%	10.3%
Adminstrative staff (%) Manufacturing workers and non-qualified workers (%)						24.4% 10.7%	28.6% -2.3%

Parental Leave
Sonae Indústria complies with parental leave legislation in all the countries where it operates. The group encourages an equitable gender choice for both maternity and paternity leave, thus allowing employees to take leave and return to work in comparable positions with the other employees.
The table below indicates the number of parental leaves taken by Sonae Indústria and Sonae Arauco employees.






25 In South Africa the minimum wage only came into force on 1 May 2018. The figures reported for Spain and Germany in 2019 were revised due to a correction in the calculation method. 26 Gender pay gap = (Gross average annual base salaries of male employees - Gross average annual base salaries of female employees)/ Gross

Parental Leave

Sonae Indústria complies with parental leave legislation in all the countries where it operates. The group encourages an equitable gender choice for both maternity and paternity leave, thus allowing employees to take leave and return to work in comparable positions with the other employees.

The table below indicates the number of parental leaves taken by Sonae Indústria and Sonae Arauco employees.

²⁶ Gender pay gap = (Gross average annual base salaries of male employees - Gross average annual base salaries of female employees)/ Gross average annual base salaries of male employees *100

²⁵ In South Africa the minimum wage only came into force on 1 May 2018. The figures reported for Spain and Germany in 2019 were revised due to a correction in the calculation method.

	2018		2019		2020
	Maternity	Paternity	Maternity	Paternity	Maternity	Paternity
Sonae Indústria
Portugal	2	2	3	1	1	3
Canada	4	17	3	21	3	17
South Africa *	NA	NA	NA	NA	NA	NA
Sonae Arauco
Portugal	13	12	15	22	10	29
Spain	3	9	1	10	2	9
France	0	0	0	0	0	0
United Kingdom	0	0	0	0	0	0
Germany	8	21	11	10	9	13
Switzerland	0	0	0	0	0	0
South Africa *	NA	NA	NA	NA	NA	NA
Netherlands	0	0	0	0	0	0

* In South Africa there is no paternity leave concept but a family responsibility leave is available for the employees (e.g.: leave in case of children illness, loss of a family member, among others) with a limit of five days per employee per 12 month cycle.

Absenteeism rate (%)

In 2020, Absenteeism increased in Sonae indústria when compared to 2019, driven by the pandemic situation.

In Portugal the number of absence hours increased significantly due to Covid-19 prophylactic isolation and absences to look after young children when schools were closed.

The increase in Canada was observed in the short term absenteeism and was mainly due to voluntary/involuntary isolation of employees due to Covid-19. Regarding this issue Tafisa Canada continues to improve the follow-up procedures, when necessary provide lighter work to promote a quick return to work and encourage the employees and their families to use the employee assistance program.

In 2020, the absenteism in Sonae Arauco increased to a level that is similar to the level registered in 2018, mostly due to Covid-19 sick leave, prophylactic isolation and support to young children when schools were closed driven by a lockdown.

Total training hours and training hours by employee²⁷

Recognising human capital as our most important asset, we are attentive to our professionals. We seek to ensure that they acquire the highest technical and managerial skills and that they are equipped to effectively and confidently address the continuous challenges. It is a priority to identify training needs in a structured way and then propose an adequate training offer. Training and development of our employees are also means to support their increased responsibility and commitment.

For Sonae Indústria and Sonae Arauco the number of training hours per employee reduced in 2020 due to the constraints caused by the pandemic.

For Sonae Indústria, in Portugal the training hours were mainly focused on legally required training sessions, some on job training actions and some participations in management/leadership programs developed by Sonae Academy.

For Tafisa Canada, the training hours were also mainly focused on legally required training sessions and job training actions. Following the Covid-19 restrictions, training hours reduced and we focused on giving more short and specific training online since shorter online training sessions are proven to be more efficient.

At Sonae Arauco, during 2020, the pandemic situation had a major impact in the implementation of the training plan, constraining and in many situations making impossible to organize presential training sessions. Furthermore, due to circumstances such as countries lockdowns, layoff periods and forced remote work policies, the company was forced to delay, re-plan or cancel many of the training programs planned to take place in 2020, and refocus on critical issues namely Health safety recommendations amid the pandemic.

For this reason, the training hours represents a major focus on the health and safety training, technical training in the workplace, online trainings and "4People" training sessions, mainly to ensure the dissemination of guidelines and recommendations implemented for Sonae Arauco in the new context of Covid-19.

²⁷ Number of Employees: FTEs excluding Trainees and Externals.

Key Health and Safety Performance Indicators

The chart below represents the Lost Workday Cases (LWC) rate²⁸:

LWC Rate

In 2020 the LWC for our North American operation and for our Laminates business registered an important improvement (circa 36% and 51% when compared to 2019, respectively). However the aggregated LWC for Sonae Industria registered an increase (2% compared to 2019), due to Sonae Arauco (circa 10% compared to 2019). Figures for these indicator do not consider the Components plant (in Portugal) that was closed in the 2H20.

As previously mentioned (in the Occupational Health and Safety topic), regarding our goal of continuous improvement of the safety of our employees, in 2020 Tafisa Canada implemented again many actions and, whitin the context of the Covid-19 crisis and investment in a new High Gloss and Super Matt lacquering plant in Canada, several work environments, behaviours and measures have been implemented and monitored to minimize the health and safety risks for our employees and contractors and follow new health and safety regulations.

At Sonae Arauco, in terms of number of work accidents there has been, in fact, an improvement in the company performance when compared with previous year as the total number of accidents reduced. This improvement is not translated in the LWC rate due to the reduction of hours worked in the year as a result of industrial activity stoppages due to Covid-19 pandemic. In 2020 it was done an assement of all the improvements done and analysed what actions should be done in order to further improve the safety performance.

It was also defined a Safety Roadmap 2020-2024, to give continuity to all the work developed so far and structure the next steps, encompassing the BeST program objectives also within this project. The main objective was to consolidate, in a comprehensive plan, all initiatives to reduce the risk of accident while providing a common frame of reference to all stakeholders.

Our Laminates business also implemented several actions during 2020 to improve the safety of our employees, namely: special focus on issues related to the Work Equipment Directive, (DL 50/2015); training sessions to all employees on firefighting; first aid, chemical hazard and other health and safety issues and ensuring that the forklifts are compliant and properly inspected.

Other actions have been done to further strength Sonae Indústria safety culture and promote the required awareness in this area of paramount importance.

LWC Rate = (Number of LWC x 200,000) / Number of hours worked calculated on a 200,000 employee-hour base (100 full-time employees working 50 weeks, 40 hours per week).

Sonae Arauco figures for LWC Rate include Horn laminates plant and real estate and 50% of Laminate Park figures.

²⁸ Lost Workday Cases: fatality, any occupational injury or illness that prevents the employee from reporting to work on any subsequent scheduled shift. A death as result of occupational injuriy and illnesses is a LWC regardless of the time between injury and decease because of the illness.

Severity Rate

In terms of the seriousness of the injuries, translated by the Severity Rate²⁹, the aggregate figures also registered and increase when compared to the previous year (27%), in all main businesses, except the Laminates business that registered an improvement of 40% when compared to 2019. Figures for these indicator do not consider the Components plant (in Portugal) that was closed in the 2H20.

Regarding our Laminates Business, as in the last year, the improvement benefited from the more thorough multidisciplinary work in the identification of occupational risks.

Regarding the Canadian operation, when compared to 2019 we registered an increase of 5% due to a reduction of the number of hours worked. In fact the lost workdays reduced and several of the lost workday cases in 2020 were less severe and for a shorter period than in the previous year.

In Sonae Arauco, in 2020, there was a deterioration when compared to the previous year (32%), despite no material serious accident with the company employees were registered in 2020. As mentioned above, the reduction of the hours worked in the year due to Covid-19 lockdowns, impacted the rate which explains its deterioration more than from the impact of the seriousness of the accidents occurred.

These results demonstrate the importance of focus on the commitment of Sonae Indústria with the Safety of all employees and contractors and the strategy defined, based on an improvement of the Safety Culture and Risk Awareness of individuals.

4.3. RESPECT FOR HUMAN RIGHTS

Respect for human rights is fundamental for Sonae Indústria and forms part of the way the organization works and acts.

Managing human rights

Sonae Indústria adheres to global principles set out under international law and international declarations on Human Rights. The populations and governments of the countries where we operate hold us accountable for adhering to internationally proclaimed human rights principles. We are committed to fully respect all applicable rules and regulations, such as, for example, to follow legislation on minimum wages and minimum age of workers and maximum working hours per day. By treating workers with dignity and rewarding them fairly for their work, we can motivate them to be more productive and enhance loyalty towards the company. A reputation for adhering to international human rights may also enable us to attract skilled and well-qualified people and to maintain good relations with local communities. By actively seeking to manage our human rights record, we can thus not only ensure good working conditions for our own people but also contribute to raising the level of adherence to human rights standards in countries where the enforcement of these rights may be insufficient.

However, it is not only our own performance that must live up to fundamental human rights standards. To protect our image, we must also ensure that our suppliers and contractors are in full compliance. Therefore, in our

²⁹ Severity rate = Number of workdays lost due to LWC*1,000 / Number of hours worked. A fatality is considered by adding 7,500 days in the numerator.

Sonae Arauco figures for Severity Rate include Horn laminates plant and real estate and 50% of Laminate Park figures.

relationships with suppliers and contractors it will increasingly become a pre-requisite that those parties also ensure full compliance with fundamental human rights. To this end, we consider suppliers performance in this area when entering into working relationships.

How we deal with human rights

Sonae Indústria shares the principles of the UN Global Compact, including those on human rights, that have been an intrinsic part of our culture for a long time, governing the way we treat our people, work with suppliers and contractors, and guiding us in decisions about which new markets to enter. Our efforts to abide by international human rights have also been formalised in our Code of Conduct.

We are pleased that to date, no complaints have been filed against us for involvement in human rights abuses, and we are committed to continuing, and extending, our efforts in this area. We will do so by incorporating key sustainability issues, including human rights, into our risk management processes, thereby ensuring that we address these issues as a regular part of risk assessments at all our operations. We believe these initiatives will allow us to identify, and immediately address, any potential or actual gaps in our future performance in this area.

Suppliers and contractors

Assessing and ensuring that our suppliers comply with human rights issues is a real challenge for the company, as the total number of suppliers is of several thousand.

Tafisa Canada continued to implement an IT system (Cognibox) with its main suppliers. This system requires that the supplier proves that it complies with all the regulations, that it is in good standing with the authorities and that each of its employees has the skills to carry out the work requested. The supplier must declare any nonconformity.

Sonae Arauco aims to implement in the coming years a process to assess our suppliers and the implications of the relationship we establish with them (for example on human rights, site security issues, labour relations and other compliance issues), prioritising the major issues and risks in our relationships with them. Under the plan to implement a new tool to support globally Sonae Arauco purchasing processes, which will be implemented during 2021, suppliers will be required to sign a statement and provide all evidences, confirming they comply with Global Guiding Principles on Business and Human Rights, confirming terms such as the ones below:

The supplier has all the necessary business permits/licenses needed to perform the service, which are valid during the period of service execution;
Fiscal situation, social security and civil insurance of the supplier are in compliance with the law;
All the equipment to be used during the service are in accordance with and comply with the "CE" mark;
People allocated to the service are physically fit to perform the duties, and there's accident insurance for all employees, covering medical treatment for work;
There's no employees under the minimum legal age old and they are paid at least the legal minimum wage;
The supplier ensures that social security of the employees is in compliance with the law;
All the employees will use the mandatory PPE's according the designated areas.

This is another important step towards the enforcement of sound business processes, supporting Sonae Indústria's principles and respect for the human rights.

4.4. ANTI-CORRUPTION AND BRIBERY MATTERS

This chapter presents a brief description of Sonae Indústria's policies and instruments to fight corruption and bribery.

Code of Conduct and Communication of Irregularities

The Code of Conduct ("Code") contains a set of standards based on Sonae Indústria's shared values that govern the activities of the Sonae Indústria Group. It applies to everyone working in the Group, including members of the statutory governing bodies of Sonae Indústria, SGPS, S.A. and Group companies, managing directors, senior executives and all employees (including temporary staff).

The complete Code of Conduct can be found at the company website:

https://www.sonaeindustria.com/en/corporate-governance/code-of-conduct

This code sets out guidance on matters of business ethics to be complied with by all employees when carrying out their professional duties. It has not been conceived to address every single possible situation, nor as a summary of all applicable laws and regulations. Following the Ethical Behaviour, one of the Sonae Indústria principles, our relationships with stakeholders are founded upon respect, transparency, honesty and integrity and we do not tolerate bribery or corruption in any shape or form. We strive to preserve our independence from political pressures in order to speak and act freely, first and foremost in the interests of the company.

Sonae Indústria's Code of Conduct sets out the main ethical behaviours that Sonae Indústria's employees must comply in their relations with:

Employees and service providers;
Shareholders and other investors;
Governments and local communities;
Business partners;
Competitors.

The Ethics Committee supports the enforcement of the Code of Conduct and it is its responsibility to:

Promote the values and behaviours encouraged by the Code;
Act as a consulting body;
Review employee's clarification request;
Receive any communication of irregularity;
Initiate and supervise the investigation of all alleged irregularities reported and ensure that appropriate disciplinary actions are taken.

It is important to highlight that as per its Code of Conduct, everyone at Sonae Indústria is legally bound to comply with all national and international legislation. If our internal standards are more rigorous than those imposed by local laws, Sonae Indústria goes beyond compliance with local legislation and adopts the most demanding standards.

In 2020 there were no reported corruption situations.

Antitrust Policy and Guidelines

"Antitrust" or "Competition" laws are applicable in the countries in which Sonae Indústria operates. The purpose of these laws is to ensure that businesses and markets operate competitively and provide the fairest outcome for the consumer. Competition laws are fundamentally premised upon the idea that, where free and open competition exists, markets will function efficiently, and consumers will benefit from lower prices, product variety and better quality products and services.

Sonae Indústria promotes and respects free competition as a healthy business practice and a fundamental principle, which must govern all aspects of its business dealings.

The management of Sonae Indústria is committed to complying with competition laws in all countries where operates and expects all employees to also do so. It is the belief of the management that compliance with such laws is on the best interest of Sonae Indústria, its shareholders, its employees and other stakeholders.

The Board of Directors of Sonae Indústria approved an antitrust policy.

Sonae Indústria promotes, on a regular basis, training actions on competition law for our staff with resposabilities in the sales, pruchasing and other areas and for the management team.

At Sonae Arauco an Antitrust Policy and Guidelines manual has been adopted and sets out the policy and rules by which all Sonae Arauco employees and management should conduct business from a competition standpoint. The content of this manual is regularly reassessed, and updated when necessary.

Third parties acting as agents of Sonae Indústria are also directed to comply with the same standards of conduct that apply to Sonae Indústria employees.

Prevention of Crimes

There are control practices and processes in the company's business activities, promoting an environment favourable to the prevention and detection of risks of crimes. The most relevant components to prevent and detect crimes are related with:

I. Code of Conduct disclosed to all Employees and available in different locations.
II. Whistleblowing channel a "whistle-blowing" channel is foreseen and explained in the Code of Conduct and managed by the Ethics Committee. Non-compliance situations related with criminal risks are managed by this Committee.
III. Disciplinary system the applicable law in each country is the basis for the disciplinary actions in case of non-compliance issues on criminal risks.
IV. Financial resources system suited to crime prevention policies and procedures regulating the management of financial resources, with the aim of preventing crimes (budget, investment approval, services purchasing process, travel expenses, among others).

4.5. ENVIRONMENTAL AND FORESTRY MATTERS

The industrial activity of Sonae Indústria impacts the environment through the sourcing of raw materials and generates waste water discharges, waste disposal, and emissions.

As a company we are conscious of the environmental footprints we leave behind and consider that the responsible management of environmental issues is critical to our business success. We are committed to sustainable sourcing of raw materials and actively respect these principles in all our business practices.

This chapter describes our key environmental issues and what we are doing to manage them.

To respect the environment is part of Sonae Indústria's nature

Sonae Indústria is committed to the concept of sustainable utilisation of raw materials and actively respects these principles in all its business practices.

Sonae Indústria believes that efficient value chains are able to stimulate investment and the active management of forests. In this context, wood-based panels contribute to the sustainable use of forest resources.

The wood-based panels present diverse advantages, namely:

An interesting alternative to solid wood;
Their dimensional flexibility allows made-to-measure products to be manufactured;
Compared to other building materials, like steel and concrete, it has considerably lower environmental impacts;

A positive effect on global warming due to improved energy efficiency;
Acting as carbon storage, helping reduce CO2 emissions;
At the end of their lifespan, they can be recycled and transformed into new products in a continuous recycling process.

Source: Sonae Arauco

Main Environmental and Forestry Concerns

Respect for the environment is one of the main concerns at Sonae Indústria and all its businesses. As the activities at Canada and Sonae Arauco are heavily dependent on forest-based resources, the sustainable utilization of the forest-based resources is one of the company focus.

Tafisa Canada is an active member of the Composite Panel Association and of the Conseil de l'Industrie Forestière du Québec in order to keep updated on the issues of environmental matters and participate on several committees in relation to Environment, Product performance, Product emissions, Health and Indoor air Quality.

Sonae Arauco is an active member of the EPF (European Panel Federation) and has an active participation in several of its working groups and performs lobby efforts towards environmental and government institutions focusing on regulations such as:

Industrial emissions and its impact;
Reclassification of the risk of substances/chemical components (in the European context);
Forest management and forest-based raw material certifications (FSC® and PEFCTM);
CO2 emissions;
and Biomass and energy.

Industrial emissions regulations and its impact and implementation at Sonae Indústria

Industrial production processes account for a considerable share of the overall pollution in Europe due to the emissions of air pollutants, discharges of waste water and the generation of waste.

The Industrial Emissions Directive (IED) is the main European instrument that regulates the environmental impacts caused by industrial installations. The IED aims to achieve a high level of protection of the human health and the environment by reducing harmful industrial emissions across the EU, in particular through enforcing the application of Best Available Techniques (BAT).

Since 2010, the wood-based panels industry is included in the scope of the IED, setting permit conditions which include emission limit values for pollutants emitted in significant quantities. The main challenges arising for the sector are:

Dust emissions;
Dryers TVOC (total volatile organic compounds) emissions;
Emission limits defined for formaldehyde (mainly in the case of dryers and presses).

Since 2019 Sonae Arauco started further implementing the installation of state-of-the-art solutions, that enable to go beyond the compliance with emissions at the European sites. This project encompasses new systems as well as retrofitting of existing ones following the best available techniques available.

In Canada, most environmental issues are regulated by provincial acts and regulations. The Quebec Environment Quality Act (EQA) establishes a general structure to prevent pollution by issuing permits (Ministerial authorization). This law is also the basis of specific regulations for air, water, land protection and waste management. The Clean Air Regulation (CAR) is the main Quebec regulation for air pollution control. The main challenges arising are:

Dryers dust emissions;
Dryers and combustion equipment heavy metals emissions;
Formaldehyde emissions from production presses;
Fugitive particle emissions from the transfer, fall or handling of materials.

In 2020, a new regulation (REAFIE) was adopted to modernize the regulatory scheme applying to activities based on their environmental impacts. This regulates projects with moderate, low, or negligible environmental risks. This new regulation formalizes and improves the list of activities exempt from the Ministerial authorization scheme. Among the benefits of the new regulation are reduced administrative requirements and shorter processing times for authorization applications and greater transparencey with a minister's public online register to give citizens better access to information.

In 2019, Tafisa Canada invested in a new emissions treatment system for its first particleboard production press to further reduce the company's environmental emissions. The system enabled us to reduce particulate emissions by 95%. In 2020, formaldehyde emissions measurement demonstrated a 50% reduction following the full start-up of this new emission treatment system.

In 2020, Tafisa Canada installed a captation system to redude fugitive dust emissions from an unloading station.

This year Tafisa Canada also completed a one year study of the air quality of the plant's surrounding. This study was conducted in conjunction with the Quebec Ministry of Environment (MELCC) and the Eastern Townships Department of Public Health (DSP Estrie). The results will be made public in 2021.

Formaldehyde and its risk reclassification

Formaldehyde is naturally emitted by vegetation (leaves and wood). In 2015, formaldehyde was reclassified as a carcinogenicity category 1B substance when it is present above certain values, which results in new challenges for the wood-based products industry. This reclassification triggered new obligations under various European and national legislations.

The reclassification focused on the risks for workers and consumers, resulting in new regulations for workplace exposure and a new standard for product emissions' analysis, with its method resulting in the reduction of the emissions limit of formaldehyde to half.

Following these results, Sonae Arauco acts in accordance to ensure proper work conditions to all its employees and after a comprehensive product development, Sonae Arauco was able to achieve the new product emissions standard and produce boards with very low formaldehyde emissions, that are highly demanded by the market.

Formaldehyde is also a matter related to the air emissions from our production sites and we have been striving to achieve all limitations imposed towards emissions concentration limits in our plants.

Also worth mentioning that in Germany , the implementation of the new "E05" emission regulation on the level of formaldehyde emissions from wood-based products had impacts in the production costs which had to be dealt with. This new emission regulation is required since 1 january 2020.

In Canada, in 2019, the Environmental Protection Agency (EPA) implemented a national wide formaldehyde emission standard to which Tafisa Canada has been adhering to with no non-compliant lots in 2019 and 2020. In 2019 Tafisa Canada has received a Composite Panel Association (CPA) certification stating compliance with the limit for formaldehyde emissions defined by EPA, that was automatically renewed in 2020.

As for our Laminates business it should be noted that our Laminates are REACH³⁰ compliant. It should also be highlighted that during 2020, our Laminates Business obtained the Greenguard® certification of its product, further attesting the low chemical emissions and overall contribution to improve the indoor air quality where our products are used.

Forest management and forest- based raw material certifications (FSC® and PEFCTM)

Wood is a natural and renewable material, being absolutely necessary to have both responsible forestry and responsible use of forest resources to guarantee the sustainable use of wood.

To ensure this, Sonae Indústria promotes sustainable forestry management in the regions in which it operates, by actively participating in sustainable forest management standardisation and certification initiatives both at national and international level, as well promoting initiatives to increase the forest management certification along the value chain.

In order to do so, Sonae Arauco and Laminates business are certified by two of the largest forest management and responsibility chain certification systems: the FSC® (Forest Stewardship Council® - FSC-C-013589) and the PEFCTM (Program for the Endorsement of Forest Certification schemes) and Tafisa Canada is certified by the FSC® (Forest Stewardship Council® - FSC-C-013589).

FSC® confirms that the forest is being managed in a way that preserves the natural ecosystem and benefits the life of local people and workers, while ensuring it sustains economic viability. To secure this certification, FSC® members have agreed upon a set of criteria that forest managers and owners have to meet:

Maintain areas of environmental and social value, helping protect people, plants and animal species that live in these areas;
Process to achieve forest management certification, achieved by passing an assessment carried out by a FSC®-accredited certification body, with forest management conformity assessed against the FSC® principles and criteria;
Supplying controlled wood, since to gain this certification, forest owners and managers who supply controlled wood must meet the FSC® controlled wood standard. Meeting this standard means that the

³⁰ European registration, evaluation, authorisation and restriction of chemicals.

material sourced has not been harvested illegally, in violation of traditional or civil rights, or in a way that threatens high conservation value (HCV) areas.

Sonae Arauco is now a member of the Forest Stewardship Council (FSC®) International, taking another important step in its mission of creating a sustainable forest value chain. The company, which is one of the largest woodbased solutions' players in the world, joins a group of more than 1,000 members that integrate this international non-profit organization, dedicated to promoting the responsible management of the world's forests.

PEFCTM is an international non-profit non-governmental organisation dedicated to promoting Sustainable Forest Management (SFM) through an independent third-party certification. As such, PEFCTM is the world's largest forest certification system and the certification system of choice for small and non-industrial private forests, with hundreds of thousands of family forest owners certified and who comply with the PEFCTM Sustainability Benchmark.

PEFCTM sets the highest standards for forest certification and sustainable forest management in line with society's ever evolving expectations. Obtaining a PEFCTM Sustainable Forest Management certification demonstrates that management practices meet the requirements for best practice in SFM.

Eco-Certified Composite Grademark Program (ECC)

In 2020, Tafisa Canada panels were again granted Eco-Certified Composite Grademark Program (ECC) Certification by the Composite Panel Association (CPA), demonstrating an exemplary commitment to the sustainable use of wood fiber and to environmental stewardship. Tafisa Canada's particleboards meet or exceed the following five requirements:

Carbon Footprint The plant shall demonstrate that the panel's carbon store offsets its cradle-to-gate carbon footprint as determined in kg-CO2 equivalents of greenhouse gas (GHG) emissions;
Local and Renewable Resource At least 85% of total annual wood fibre used shall be sourced within 402 km of the manufacturing plant;
Recycled/Recovered Use a minimum of 75% recycled or recovered fiber; or at least 50% recycled or recovered fiber and a minimum of 5% post-consumer fiber. Percentages shall be calculated on a weight basis as measured in bone dry tons (bdt);
Sustainability The plant shall document that greater than 97% fiber furnish brought on-site to manufacture panels is either converted into panels or other non-waste products;
Wood Sourcing The plant shall hold a valid assessment and certificate from a certifying agency recognized by CPA such as the Forest Stewardship Council (FSC—Controlled Wood Standard or Chain of Custody Standard) or the Sustainable Forestry Initiative (SFI—Fiber Sourcing Standard).

LEED® credits (Leadership in Energy and Environment Design 2009)

Tafisa Canada's panels qualify for LEED® credits (Leadership in Energy and Environment Design) under the US Green Building Rating System.

LEED is an internationally recognized green building certification system, providing third-party verification that a building or community was designed and built using strategies aimed at improving performance across all the metrics that matter most: energy savings, water efficiency, CO2 emissions reduction, improved indoor environmental quality, and stewardship of resources and sensitivity to their impacts. To be awarded a LEED certification, a building project must be granted a minimum number of credits from an independent audit through

the independent Green Building Certification Institute (GBCI.org) which classifies its rating as certified, silver, gold or platinum.

In order to help its customers to obtain LEED V4.1 credits, Tafisa Canada granted in 2020 a mandate to the certification experts of Vertima to develop official documents to demonstrate its product conformity to the LEED credit requirements. As a result, Environmental Product Declarations (EPD), Health Product Declarations (HPD) and Environmental Data Sheets (EDS) will be available in 2021 .

CO2 emissions³¹

As responsible citizens of the local communities where we operate, the company is committed to manage the energy consumption in a responsible way to reduce CO2 emissions as far as possible.

By using the non-reusable and non-recyclable materials generated during production as fuel we are able to supplement our energy consumption in the form of heat and power through sources of renewable "fossil-free" energy. As a general rule, for the board producing facilities, the process heat needs are supplied locally using integrated thermal energy facilities. The final balance between CO2 emissions during combustion of biomassbased materials and CO2 sequestration during tree growth is estimated as neutral.

In addition, one of the major environmental focus, in what concerns Sonae Arauco, is related to successfully managing the carbon emissions allowed within the European Union Emissions Trading Scheme (ETS), ensuring the respect for the environment and the will to reduce CO2 emissions.

In 2020, as the result of developing efforts on reduction CO2 emissions, Sonae Arauco decided to sell an important amount of its exceeding allowances accumulated during the latest years, still not having to buy any allowances from the grid.

Tafisa Canada operation is not subject to Carbon tax considering the low values of CO2 emisions. The Quebec capand-trade system for greenhouse gas emission allowances considers an emitter: an enterprise who produces annual greenhouse gas emissions in a quantity equal to or greater than 25,000 metric tonnes of CO2, excluding the emissions attributable to the combustion or use of biomass and biomass fuels. Since Tafisa Canada mainly uses biomass fuels such as bark and wood dust, the quantity of CO2 emitted is much lower than 25,000 metric tonnes.

Biomass and energy

In several regions of the world, facilities to produce energy (mainly electricity) from biomass have been developed and these are largely funded by national programs that focus on the mitigation of climate changes.

These incentives are based on the assumption that replacing fossil fuels by renewable alternative fuels - such as biomass - represents a positive contribution in mitigating CO2 emissions in the long term. This has increased the usage of biomass in co-combustion processes, mainly in production units covered by the regulations on greenhouse gas emissions (e.g. facilities covered by the European Directive on Emissions Trading). Thereby, biomass contributes to the achievement of these plants' goals to reduce their CO2 emissions from fossil fuels. Within this scope, the production of pellets has been strongly encouraged as an essential activity to facilitate long distance transport of biomass fuel, increasing the wood price.

For this reason we have been arguing that energy producers who also use biomass as fuel should be obliged to demonstrate that:

The replacement of fossil fuels by biomass maintains a carbon-positive balance, even when considering the CO2 emissions associated with the shipping process and supply logistics;
The biomass is produced from sustainable managed sources and that the principles of the circular economy and of the waste hierarchy are fulfilled.

³¹ Our Components business plant had no meaningful air emissions namely CO and NOx (there was a burning boiler for the elimination of wood particles residues with the energy being used to heat the site, through a system of coils and water).

This demonstration can be easily integrated into a compulsory annual verification of greenhouse gas emissions which in most situations already exists.

With this initiative Sonae Arauco expects to contribute to restoring wood procurement competitiveness, via a rearrangement of national incentives, and to improve the total supply of wood as a raw material.

At the beginning of January 2020, the Horn biomass power plant was sold. In contrast, new investments on improvements of the energy performance of some equipment, as well as a change on a combustion system in one of Sonae Arauco sites, are setting Sonae Arauco in the direction of lower energy consumption.

Climate change

The company is committed to manage the energy consumption in a responsible way to reduce CO2 emissions (the most important element of "greenhouse effect" generated in its industrial processes) as far as possible.

One of the key environmental focus of the company is related to a successful management of the carbon emissions rights that are granted within the European Union Emissions Trading Scheme (ETS), ensuring the respect for the environment and the will to reduce CO2 emissions.

In global terms industrial production processes account for a considerable share of the overall pollution in Europe due to their emissions of air pollutants, discharges of waste water and the generation of waste.

Our products, when used for building purposes, act as carbon storage, helping to reduce CO2 emissions and to carbon storage extension and all of its products, at the end of their lifespan can be recycled and transformed into new products in a continuous recycling process.

Having in mind the above commitments, in 2020, Sonae Arauco focused on continuous development of initiatives to optimize the energy consumptions in all industrial plants, aimed to reduce the CO2 emissions and to mitigate the negative impacts in terms of "Climate change".

Tafisa Canada has been committed to using only 100% recovered and recycled fibres in the manufacturing of its panels. Tafisa's RewoodTM technology continued to play a key role in the company's commitment towards the preservation of the environment through the recycling of 244,000 tons of post-consumer wood fibre annually which are integrated into the company's panels thus saving millions of trees each year.

Our North American business used mainly biomass for energy and consumed a low amount of fossil fuels to meet very important energy needs in winter only. Although burning biomass releases carbon dioxide CO2, the wood that is the source of biomass for energy captures almost the same amount of CO2 through photosynthesis while growing as is released when biomass is burned, thus, biomass is considered a carbon-neutral energy source.

Tafisa Canada continued to work on developing initiatives to optimize its energy consumption.

How We Deal With These Concerns

Emissions

Sonae Indústria sites undertake thorough emission measurements and inspections are done to all the applicable discharge points (air, water or ground) to confirm compliance to their emission licenses in accordance with the countries were they operate.

External party audits (ISO management systems, IWAY system, among others) also act as catalysts to continuous improvement in terms of what can be done to reduce the environmental impacts of our operations.

This concern is imbedded in all investments, or changes that we do to the industrial process, and we constantly seek to optimize the existing solutions and simultaneously to prevent future problems.

Waste Management

On a broader sense, and less related with the specificities of the industrial process, waste separation is done, and enforced, in designated industrial sites as part of the certification requisites. Residues are collected and selected

by category (general, hazardous, plastic, paper and metals) and disposed of accordingly (hazardous disposed via an accredited contractor, general to municipal operators and other recycled by specific contractor). Monthly records are kept for each disposal.

During the industrial process a significant volume of non-reusable and non-recyclable material is generated which is used as fuel in the site's power plants to supplement the process energy consumption, both in the form of heat and electricity.

Sonae Indústria has, within its industrial sites, a 5-step waste hierarchy (see image below) for a more comprehensive and detailed waste prevention and management. This forces us as a company to constantly think of all materials and services entering or leaving our sites within a more holistic approach.

Closing the loops on the life cycle of our products is part of our daily praxis. The following chart shows an overall, not detailed, image of the most relevant energy and waste flows within the life cycle of our products.

Sustainable use of resources

Main raw materials

As mentioned above a significant part of the raw materials used by Sonae Indústria in the production process is derived directly from materials that would otherwise be treated as waste. We turn these materials into sustainable value-added products which may be recycled at the end of their respective lifecycle. There are few other industries can achieve similar rates of sustainability and circular bio economy business model. We are doing plans to increase the certified wood consumption, in order to ensure responsible forestry and responsible use of forest resources in accordance with our policies and social commitments, and with direct impact in biodiversity protection.

Sonae Arauco's advocacy role trough Centro Pinus (the Portuguese NGO that represents the pine value chain) was very active in 2020, with specific proposal's regarding the future forest investment support schemes, namely under the Green Deal and the Common Agricultural Policy. The knowledge transfer activity from Centro Pinus was also reinforced.

As previously referred in the "Involvement in Local Community" topic from point "4.2. Social and Employee-Related Matters" of this report, in 2020 Sonae Arauco made donations to volunteer fire brigades and supported for the second year the "Portugal Chama" campaign, aiming to tackle the forest fires problem in Portugal, by raising awareness on forest risk behaviors contributing to a fire-free country.

As recent member of the Forest Stewardship Council (FSC®) International, Sonae Arauco was able to participate in several FSC consultation processes throughout the year regarding standardization, strategy development, among others. Sonae Arauco was also sponsor and speaker at the FSC Portugal Business Forum "Sustainable options for constructions and furniture".

In 2020, Sonae Arauco has organized a meeting with the largest Federation of Forest Owners Organization's in Portugal, Forestis, held in the Mangualde Unit. The meeting, and visit to the site, allowed the company's presentation of our goals and strategy regarding forest management knowledge transfer and forest certification, aiming for future cooperation process.

Regarding our goal of increasing the certified wood consumption, because wood recycling extends the life of wood, reduce pressure on natural capital, allows the carbon to remain stored and prevents its burning and consequent release of CO2 to the atmosphere, Sonae Arauco has been actively advocating for the need to policy adjustments regarding circular bioeconomy. In 2020 Sonae Arauco participated in several public consultations process and Sonae Arauco's circular economy model was selected to be listed in the "Natural capital stories" as part of the "We Value Nature" campaign. "We Value Nature" is a campaign supporting businesses and the natural capital community to make valuing nature the new normal for businesses across Europe.

In 2020, Sonae Arauco started the Sonae Forests project, an offset joint initiative that gathers all the Sonae companies and were Sonae Arauco is responsible for all the forest related issues (licensing, plantation, certification, management, among others). This area will also be used as a ForestLAB to raise awareness among forest owners regarding good practices.

Sonae Arauco also started its first forest Research and Development project, the Gene Radiata Project. With the support of Arauco – which has developed a very successful program for improving the radiata pine – Sonae Arauco has started surveying the species' development in Portugal. Initial conclusions have revealed a lot of potential for growing this species in Portugal. Seeds from 130 radiata pine families, potentially more adapted to the country's soil and weather conditions and boasting high levels of productivity, have been planted in a forest nursery

individually to ensure the traceability of each species, as part of a scientific project. This project is aimed at testing these species together with control plants: other sources of radiata pine and maritime pine from Portugal, Spain and France will also be tested. These are planned for placement in an area of 24 hectares, in 6 different locations in Portugal in 2021.

It should also be mentioned the collaborative efforts at ForestWISE – Collaborative Laboratory for Forest and Fire Integrated Management in Portugal (for research and development, innovation and transfer of knowledge and technology in order to preserve the sustainability of the forest resources), that has Sonae Arauco as one of the founding members, started to show some results. Besides the conclusion of the kick-off process, namely with the setting up of the team, several projects were approved including the RePLANT project. With a developing period of three years, RePLANT is supported by COMPETE2020. Sonae Arauco will be the leading company in one of its areas of activity – Forest and Fire Management –, assuming the global co-coordination of all actions in partnership with the Instituto Superior de Agronomia (ISA), School of Agriculture.

Since 2005, over 20 million dollars have been invested to develop in Tafisa Canada a unique technology, named RewoodTM, which enables Tafisa Canada to replace a portion of the post-industrial wood fibres in its panels with recycled post-consumer wood fibres. This innovative technology ensures a constant and renewable supply of raw material without compromising the environment for future generations.

The RewoodTM technology enables the recycling of 244,000 tons of post-consumer wood fibre annually, thus saving millions of trees. This approach extends a tree's useful life cycle; instead of ending up in a landfill site, postconsumer wood materials are recycled and integrated into the company's panels.

Source: Tafisa Canada

Key Performance Indicators

The following sections considers information for Sonae Indústria and also for Sonae Arauco. Most indicators are calculated for wood based panel businesses on the basis of specific consumption per cubic meter produced (concept not directly applicable to the Laminates business).

Wood consumption (dry ton/m3)³²

Wood is Sonae Indústria's primary raw material, considering the business in Canada and Sonae Arauco. As a major user of this natural, renewable and recyclable material, we believe that using recycled wood and wood byproducts in our production is part of our sustained contribution towards mitigating CO2 emissions and climate change.

The figures below consider the board businesses (aggregate figures of Canada and Sonae Arauco) and show the global evolution of the wood mix consumption and wood use efficiency figures.

In 2020, due to the Covid-19 pandemic, there was an overall decrease in production. The indicator of wood consumption is usually impacted by production mix.

For Sonae Arauco the decrease in wood consumption per cubic meter is partially explained by the higher decrease on MDF (Medium Density Fibreboard) production (which is a product with higher specific consumption of wood per m3 produced) and the slighter decrease on PB (Particleboard) production.

However, in Canada and compared to previous year, wood consumption per cubic meter produced was very stable despite a small decrease of production that was impacted by Covid-19.

³² Figures for wood consumption (dry ton/m3) consider, since 2018 inclusively, the total specific wood consumption and not only the specific wood consumption in wood raw lines as reported in the previous years.

Wood consumption by type

In the year of 2020, the canadian operation maintained the level of incorporation of recycled and by products within the same values of 2019 (circa 26% and 74%, respectively).

Sonae Arauco's global mix of wood supply revealed a decline of circa 5 p.p. (to 28%) in the contribution of recycled materials, when compared to 2019, as a result of the scarcity and difficulty to source this raw material mainly in Iberia. The incorporation of by-products remained stable and the incorporation of roundwood increased by circa 5 p.p. (to 55%) to compensate the loss on recycled wood.

The increase of roundwood in Sonae Arauco, in 2020, is mainly explained by the ramp-up of a new Particleboard -Line in Germany and no wood recycling capabilities currently existing in the South African market, which led to an extensive use of wood from fire damaged plantations throughout 2020.

Water consumption (m3/m3)

Municipal, surface and underground water

Below, we present the water consumption by source:

Water consumption (thousands, m3)	2018	2019	2020
Sonae Indústria	190.1	200.9	194.5
Canada (Municipal Water)	180.9	191.1	184.5
Laminates	9.2	9.8	10.0
Municipal Water	0.2	0.2	1.2
Underground Water	8.9	9.6	8.7
Sonae Arauco 1	1,679.4	1,784.9	1,776.2
Municipal Water	975.1	1,051.7	993.6
Surface Water	161.3	178.1	206.6
Underground Water	543.1	555.1	576.1

(1) Sonae Arauco figures include Horn laminates plant and real estate.

Sonae Indústria's industrial process requires water and, conscient of this impact, efforts are done to reduce the use of fresh water and to increase the reutilization of treated wastewater. These are common environmental objectives in several industrial sites.

At Sonae Indústria the specific water consumption decreased in 2020, when compared with 2019, due to our Canadian operation, affected by the complete refurbishment of one of our two particleboard production lines and lower production due to the Covid-19.

Our Laminates Business registered a slight increase in the water consumption in 2020 when compared to 2019, explained by an increase in production (water consumption per m2 has reduced).

At Sonae Arauco the water consumption, compared to 2019, decreased by circa 0.5%, due to municipal water consumption, as a result of closure of Laminate Park operations and the sale of Horn biomass power plant. Overall consumption in the active sites was impacted by plant stoppages due to Covid-19 and investments ongoing.

Waste generation (kg/m3)

Hazardous and non-hazardous waste

In 2020, this global indicator on specific waste generation reached the lowest value of the last three years.

In our North American business, due to our focus to reduce the production residues and by monitoring closely the related indicators, in 2020 we were able to decrease the production of recycled wood fines and wood dust. In 2020 we have also managed better our use of water to clean the air purification equipment to produce less sludge.

At Sonae Arauco the specific waste generation has been decreasing yearly over the last three years. It should be noted that, in 2018, the global indicator on specific waste generation increased significantly (when compared to previous year), as a result of the long reconstruction activities in the plants of Mangualde and Oliveira do Hospital,

after significant damages suffered by the fires in October 2017. Thus, a decrease in this indicator was already expected in 2019 and 2020. It is important to notice that, in 2020, despite some construction works going on in some plants, the specific waste generation lowered in levels even below 2017, the last date before heavy construction works started. This is explained partially by an impact from the temporary stop of operations in industrial sites due to the Covid-19 pandemic, but mostly due to the achievements during the years of improvements in the production operations, that resulted in less waste generation per m³ produced.

Chemical Consumption (kgs/m3)

Together with wood, chemicals are one of the key raw materials used in the wood panels production process. As a downstream user, Sonae Indústria recognizes its obligations under REACH regulation and takes all necessary actions to ensure the continued supply of its products in accordance with this Regulation.

The figures below summarise the global evolution of the consumption of chemicals by our main businesses. This consumption registered a slight decrease at Sonae Arauco and a slight increase in the Canadian operation.

It should be mentioned that in Sonae Arauco operation the decrease of chemicals consumption per m3 produced and in absolute value in 2020, when compared to 2019, reflects a reduction in production volumes affected by the Covid-19 pandemic, but also some improvements in the glue systems introduced in 2019 and the mix of raw boards produced.

Energy use

Energy is a very relevant aspect of wood-based panel production. It is used in the day to day activities of the manufacturing processes, for example, in the drying of the wood particles, heating up the presses or driving equipment.

Sonae Indústria has a strong commitment with energy management, aiming to reduce the energy usage (by means of efficiency improvements) and, at the same time, to minimize the use of fossil fuels.

Electricity consumption by cubic meter produced (kWh/m3)

In Sonae Arauco there was a decrease of the electricity specific consumption. The negative impacts from the stoppages due to the Covid-19 pandemic (supporting equipment and buildings have to be kept operating during production stoppages) were more than offsetted by the decommission of old equipment and investments done for energy efficiency throughout the company in the last years.

Our Canadian operation registered an increase in the electricity specific consumption in 2020, mainly explained by the conclusion of a complete refurbishment of one of our two particleboard production lines in Lac Mégantic, higher electricty consumption in one of the production lines due to use of recycled wood and the impact of the Covid-19 pandemic in production volumes.

Energy consumption (million, kWh)	2018	2019	2020
Laminates	1.8	1.8	1.6

In 2020, the energy consumption for our Laminates business registered a reduction when compared to 2018 and 2019.

Greenhouse gas emissions

The most relevant emissions of Sonae Indústria group come from the electricity consumptions of the company's several plants.

In 2020, the volumes of electricity consumed, in ton of CO2 by m3 of raw board produced, registered an increase in the Canadian operation and a slight decrease in Sonae Arauco, the latter due to the reduction of production levels, with the stoppages of the plants, due to the Covid-19 pandemic and the closure of an industrial site in Germany.

The increase in the Canadian operation is mainly explained by conclusion of a complete refurbishment of one of our two particleboard production lines in Lac Mégantic and the impact of the Covid-19 pandemic in production volumes.

The charts below shows the evolution of the ratio Intensity of Indirect greenhouse gas emissions (Scope 2 as per GHG³³ Protocol³⁴):

In the Laminates business the figures for CO2 consumption are not material when compared to the other two main businesses (in 2020 CO2 consumption was of 0.4 thousands, ton).

Provisions and Impairments

The company monitors the environmental risks in a continuous way, and looks to make all necessary investments and take actions to comply with the requirements of legislation and specific regulation in necessary timings, thus looking to mitigate risks in a pro-active way.

Sonae Indústria has provisions for environmental liabilities of circa 1.2 million euros in its consolidated accounts.

4.6. MANAGEMENT SYSTEMS

Management systems are one of the core concerns of an organisation, since it allows to manage interrelated parts of the company's business, in order to achieve its objectives.

A risk-based thinking is the basis of the management system. Detecting the risks and opportunities in several contexts, drives the company to more focused and successful strategies. Being certified means, for example, that the organisation has a risk management system where work stations are systematically evaluated and actions are taken in order to eliminate or minimise those risks. With this, industrial activities stops can be avoided, the wellbeing of the employees is guaranteed and the absences due to illnesses or accidents are minimised.

In order to ensure this, Sonae Indústria holds several certifications:

ISO 9001 Quality management system;
ISO 14001 Environment management system;
OHSAS 18001 Occupational health and safety management system;
ISO 45001 Occupational health and safety management system (transition from OHSAS mandatory until 2021).

All Sonae Indústria factories are certified for Environmental Management, Quality Management and Occupational Health and Safety Management, in accordance with the ISO 9001, ISO 14001, OHSAS 18001 and ISO 45001 international standards. Most of Sonae Indústria factories are also certified for Energy Management, in accordance with the ISO 50001 international standard.

The wood used by Sonae Indústria comes from sustainably managed or responsible sources.

³⁴ Energy indirect (Scope 2) GHG emissions: GHG emissions that result from the generation of purchased or acquired electricity, heating, cooling and steam consumed by an organization.

³³ GHG: Green House Gas.

Sonae Indústria is also certified through two of the largest forest management and responsibility chain certification systems: the PEFC™ (Programme for the Endorsement of Forest Certification schemes) and the FSC® (Forest Stewardship Council®)

Source: Sonae Arauco.

ISO 9001 - Quality management system

The adoption of this standard comes from a strategic decision of organisations to improve results and create a basis for sustainable growth.

The principles of this quality standard are the following:

Focus on customer;
Leadership;
Development of employees;
Continuous improvement of processes and products;
Organisation of processes;
Decisions based on evidence (facts and data);
Relationships management (stakeholders).

Being certified means that our plants are capable of delivering its products in a systematic and consistent manner, both at the level of performance and agreed quality level, always aiming at optimizing its processes and products, involving its employees and suppliers actively throughout the process and always keeping a risk mitigation mindset. These processes are documented so that there is evidence (records) that the whole process is performed in accordance with the desired standard.

ISO 14001 - Environment management system

This standard aims at the voluntary commitment of organisations to study and minimise their environmental impact. For this purpose, the organisation develops improvement activities and integrates the "life-cycle" perspective in its operations. It is a tool for organisations that want to achieve greater trust from customers, employees, the surrounding community and society in general.

The principles of this standard are the following:

Strategic objectives through the incorporation of environmental issues in the organisation's management agenda and the increase of the top management and employees' involvement;
Reduced probability of environmental risks;
Reduced costs by improving process efficiency (energy reduction);
Improvement of the organisation's environmental image and its acceptance by clients, employees and society;

• Ensure alignment with all existing legislation that is applicable to the activity sector.

This certification demonstrates that the company is aware that its activity has an impact on the environment and that it actively and voluntarily seeks to minimise that impact.

OHSAS 18001 - Occupational health and safety management system

This standard regulates a systematic approach for the identification of risks and their elimination or minimisation.

The principles of this standard are the following:

Reduce risk in order to contribute to a healthier environment, prevent diseases and reduce the number of accidents;
Improve the well-being of employees by conducting wellness activities;
Several industries now require partners/suppliers of excellence in these areas and, in such cases, it is mandatory to have in place a risk management system;
Ensure compliance with all existing legislation applicable to the sector;
Raise awareness among all employees and among all those who, in a regular or sporadic way, carry out activities at the company's premises for the consequences of their actions, in terms of health and physical integrity.

ISO 45001- Occupational health and safety management system

This standard must replace all OHSAS18001 until end 2021 and it has, as major difference, the emphasis on improving health and safety performance by taking precautions in advance.

The other important principles of this standard are the following:

Subcontractors and suppliers in the organization are also within the scope of the management system;
More focus on risk management and continuous development;
Includes subcontractors, suppliers and contractors;
Performance evaluations are more frequently found in ISO 45001;
Brings new concepts such as Organizational Context, Leadership and Certified Knowledge.

Quality, Environmental and Health & Safety management systems are an important part of Sonae Indústria's standardised way of operating.

The situation of management systems certifications of Sonae Indústria affiliates and subsidiaries, at the end of 2020, was the following:

	Quality	Environment	Energy	Forest products chain-of-custody		Health & Safety
	ISO 9001	ISO 14001	ISO 50001	PEFC	FSC	OHSAS 18001	ISO 45001
Sonae Indústria
Maia*
Lac-Mégantic

Sonae Arauco
Mangualde
Oliveira do Hospital
Sines**
Castelo de Paiva***
Linares
Valladolid
Cuéllar****
Meppen
Nettgau
Beeskow
Kaisersesch*
White River

* HPL plant.

** Resins plant & paper impregnation.

*** Wood venner plant.

**** Sawmill.

***** Paper impregnation plant.

Actions have been implemented to ensure the transition from the current OHSAS 18001 to ISO 45001 which will be completed in 2021. In 2020 all the activities in Iberian Peninsula achieved the new ISO 45001 certification.

5. CLOSING REMARKS AND ACKNOWLEDGEMENTS

Activity carried out by the Non-Executive Board Members

With the exception of the Chairman, all Non-Executive Board Members of Sonae Indústria are members of Board Committees (for a full description of composition and main tasks of each Committee please refer to the Corporate Governance Report). In this context, these Board Members analyse matters that are within the competence of the respective Committee, providing guidance to the company about them and making proposals to the Board of Directors.

Non-Executive Board Members actively participate in meetings of the Board of Directors, intervening in the discussions and questioning the decisions taken. According to their respective professional experience, Non-Executive Board Members also participate in the analysis of industrial optimisation projects, of restructuring and expansion projects and in the development of relevant international networking with possible partners and authorities in current and potential geographical areas of investment.

Acknowledgements

The Board of Directors would like to express its sincere gratitude towards all employees for their efforts, commitment and dedication demonstrated throughout such a difficult year.

The Board of Directors would also like to thank the shareholders, customers, suppliers, financial institutions and other business associates of Sonae Indústria for their continuing involvement and for the confidence that they have once more shown in the organisation.

26 March 2021,

The Board of Directors,

_________________________________

Paulo Azevedo

Carlos Moreira da Silva

_________________________________

Albrecht Ehlers

Berta Cunha

Isabel Barros

Javier Vega

José Romão de Sousa

Christopher Lawrie

Louis Brassard

APPENDICES TO THE MANAGEMENT REPORT AND QUALIFIED SHAREHOLDINGS

Balance at

Position at

APPENDIX REGARDING ARTICLE 447 OF THE COMPANIES LAW

		Acquisitions Sales			Position at 31.12.2020	Balance at 31.12.2020
	Date	amount	€ average value	amount	€ average value		amount
Duarte Paulo Teixeira de Azevedo Efanor Investimentos, SGPS, SA (1) Migracom, SA (2)						Minoritary Dominant
Carlos António Rocha Moreira da Silva Efanor Investimentos, SGPS, SA (1)						Director

			Acquisitions		Sales	31.12.2020	31.12.2020
	Date	amount	€ average value	amount	€ average value		amount
(1) Efanor Investimentos, SGPS, SA
Sonae Indústria, SGPS, SA (Shares)							27,416,997
	03/08/2020	112,545	1.0864
	04/08/2020	196,631	1.09
	05/08/2020	19,683	1.09
	10/08/2020	66,305	1.10
	11/08/2020	1,998	1.10
	12/08/2020	5,788	1.10
	13/08/2020	3,777	1.10
	28/08/2020	30,000	1.115
	01/09/2020	78,962	1.128
	02/09/2020	10,000	1.13
	03/09/2020		1.127
	04/09/2020	25,881	1.128
	07/09/2020	35,000	1.13
		23,276
	08/09/2020	13,361	1.13
	09/09/2020	13,334	1.13
	10/09/2020	15,998	1.13
	11/09/2020	778,437	1.138
	14/09/2020	240,583	1.14
	15/09/2020	68,015	1.14
	16/09/2020	55,258	1.14
	17/09/2020	72,993	1.14
	18/09/2020	68,171	1.14
	21/09/2020	109,219	1.14
	22/09/2020	22,265	1.14
	23/09/2020	128,510	1.14
	24/09/2020	163,860	1.14
	25/09/2020	69,519	1.14
	28/09/2020	77,533	1.14
	29/09/2020	67,576	1.14
	07/10/2020	280,493	1.14
	08/10/2020	205,498	1.14
	09/10/2020	214,605	1.14
	12/10/2020	103,976	1.14
	13/10/2020	107,910	1.14
	14/10/2020	20,370	1.14
	15/10/2020	76,359	1.14
	16/10/2020	91,587	1.14
	19/10/2020	37,985	1.14
	20/10/2020	71,598	1.14
	21/10/2020	275,857	1.14
	22/10/2020	38,656	1.14
	23/10/2020	111,557	1.14
	26/10/2020	283,031	1.14
	27/10/2020	626,814	1.14
	28/10/2020	2,925,674	1.14
Sonae Indústria, SGPS, SA (subordinated bonds)							0
	21/06/2020			5,000	8,188.00


Pareuro, BV (3)						Dominant

(2) Migracom, SA
Sonae Indústria, SGPS, SA (shares)							0
	28/10/2020				1.14
				38,931
Imparfim, Investimentos e Participações						Minoritary
Financeiras, SA (4)

(3) Pareuro, BV
Sonae Indústria, SGPS, SA (shares)							11,730,752
Sonae Indústria, SGPS, SA (subordinated bonds)							5,000
	21/06/2020	5,000	8,188.00

(4) Imparfin, Investimentos e Participações
Financeiras, SA
Sonae Indústria, SGPS, SA (shares)							0
	28/10/2020			132,355	1.14

QUALIFIED SHAREHOLDINGS

Complying with Article 8, nr.1, paragraph b) of the CMVM Regulation nr. 05/2008

Shareholder	No. of shares	% Share Capital	% Voting rights
Efanor Investimentos, SGPS, SA (1)
Directly	27,416,997	60.386%	60.386%
By Pareuro, BV ( controlled by Efanor Investimentos, SGPS, SA)	11,730,752	25.837%	25.837%
Total allocation	39,147,749	86.223%	86.223%

On 30 April 2018, TEAK Capital, SA informed Sonae Indústria of having signed a services agreement with the company Pareuro, BV, through which it was granted, by way of consideration, a call option over 2,000,000 shares representative of 4.40% of the share capital and voting rights of Sonae Indústria, SGPS, S.A., exercisable on 30 April 2021. This agreement replaces and revokes the previous agreement signed on 22 February 2016.

Teak Capital, SA also informed that 40% of its share capital is held by Carlos Moreira da Silva, 45% by his wife (under the regime of separation of people and property) Fernanda Arrepia and 15% by TPR, BV, the latter being jointly held by Carlos Moreira da Silva's three descendants, Tiago Moreira da Silva, Pedro Moreira da Silva and Raquel Moreira da Silva. Fernanda Arrepia and Tiago Moreira da Silva are also directors of TEAK.

(1) Efanor Investimentos, SGPS, SA ceased, with effect from 29 November 2017, to have a controlling shareholder, according with the terms and for the purpose of articles 20º and 21º of the Portuguese Securities Code.

STATEMENT ISSUED UNDER THE TERMS AND FOR THE PURPOSE OF SUB-PARAGRAPH C) OF NR. 1 OF ARTICLE 245 OF THE PORTUGUESE SECURITIES CODE

(Free translation from the original in Portuguese)

In terms of the order in sub-paragraph c), nr. 1, Article 245 of the Portuguese Securities Code, the Board members of Sonae Indústria, SGPS, S.A. hereby declare, to the best of our knowledge, that the:

a) Management Report, the annual accounts and further related documents requested by current law have been prepared according to the applicable accountancy norms, reflecting a true and appropriate image of assets and liabilities, the financial situation and results of both the company and other companies within its consolidation perimeter; and

b) Management Report duly states the evolution of the business, performance and financial position of both the company and other companies within its consolidation perimeter business and contains a description of the main risks and uncertainties they are confronted with.

_________	_________
Paulo Azevedo	Carlos Moreira da Silva
_________ Albrecht Ehlers	_________ Berta Cunha
_________	_________
Isabel Barros	Javier Vega
_________	_________
José Romão de Sousa	Christopher Lawrie

Louis Brassard

______________________________________

GLOSSARY OF TERMS

CAPEX	Investment in Tangible Fixed Assets
EBITDA	Earnings Before Interests and Taxes + Depreciations and Amortizations + (Provisions and impairment losses - Impairment losses in trade receivables + Reversion of impairment losses in trade receivables)
FTEs	Full Time Equivalent; the equivalent of one person working full time, according to the working schedule of each country where Sonae Indústria has operations
Fixed Costs (unaudited)	Overheads + Personnel costs (internal and external); management accounts concept
Gross Debt	Bank loans + Subordinated bonds + Other bonds + Obligations under finance leases + other loans + Loans from related parties
LTM	Last Twelve Months
Proportional Senior Leverage (unaudited)	Proportional Senior Net Debt / Proportional LTM Recurrent EBITDA
Proportional Senior Net Debt (unandited)	Proportional Senior Net Debt considers the full contribution of the Senior Net Debt of the wholly owned businesses and the proportional consolidation of the 50% contribution from Sonae Arauco Net Debt
Proportional: Turnover, Recurrent EBITDA (unaudited)	Proportional Turnover and Proportional Recurrent EBITDA consider, in what regards to Turnover and Recurrent EBITDA, the full contribution of the wholly owned businesses and the proportional consolidation of the 50% contribution from Sonae Arauco.
Recurrent EBITDA	EBITDA excluding non-recurrent operational income / costs
Recurrent EBITDA margin	Recurrent EBITDA / Turnover
Senior Net Debt	Total Gross Debt - Subordinated Bonds - Cash and cash equivalents
Total Net Debt	Total Gross Debt - Cash and cash equivalents
Working Capital	Inventories + Trade Debtors – Trade Creditors

2020 CORPORATE GOVERNANCE REPORT

26 March 2021

PART I - MANDATORY INFORMATION ON SHAREHOLDER STRUCTURE, ORGANISATION AND CORPORATE GOVERNANCE	3
A. SHAREHOLDER STRUCTURE	3
I. CAPITAL STRUCTURE	3
II. SHAREHOLDINGS AND BONDS HELD	4
B. GOVERNING BODIES AND COMMITTEES	6
I. GENERAL MEETING	6
a) Composition of the Board of the General Meeting	6
b) Exercise of Voting Rights	6
II. MANAGEMENT AND SUPERVISION	8
a) Composition	8
b) Functioning	13
c) Committees within the Management or Supervisory Bodies and Managing Directors	16
III. SUPERVISION	20
a) Composition	20
b) Functioning	22
c) Responsibilities and Functions	23
IV. STATUTORY EXTERNAL AUDITOR	25
V. EXTERNAL AUDITOR	26
C. INTERNAL ORGANISATION	27
I. ARTICLES OF ASSOCIATION	27
II. REPORTING OF IRREGULARITIES	27
III. INTERNAL CONTROL AND RISK MANAGEMENT	29
IV. INVESTOR RELATIONS	42
V. WEBSITE	43
D. REMUNERATIONS	45
I. COMPETENCIES FOR APPROVAL OF REMUNERATIONS	45
II. REMUNERATIONS COMMITTEE
III. REMUNERATION STRUCTURE	46
IV. DISCLOSURE OF REMUNERATION	52
V. AGREEMENTS WITH IMPACT ON REMUNERATION	54
VI. SHARE PLANS OR STOCK OPTIONS PLANS	54
E. TRANSACTIONS WITH RELATED PARTIES	55
I. CONTROL MECHANISMS AND PROCEDURES	55
II. INFORMATION CONCERNING TRANSACTIONS	56
F. DIVERSITY POLICY IN MANAGEMENT AND SUPERVISORY BODIES	56
G. INTERNAL POLICY ON RELATED PARTY TRANSACTIONS 57 62
H. REPORT ON REMUNERATIONS
PART II - ASSESSMENT OF THE CORPORATE GOVERNANCE
1. Identification of the corporate governance code adopted	65
2. Analysis of compliance with the Corporate Governance Code adopted	65

PART I - MANDATORY INFORMATION ON SHAREHOLDER STRUCTURE, ORGANISATION AND CORPORATE GOVERNANCE

A. SHAREHOLDER STRUCTURE

I. CAPITAL STRUCTURE

1. Capital structure (share capital, number of shares, capital distribution, etc.), including information regarding shares not admitted to trading on a regulated market, different categories of shares, rights and duties incurred and share capital percentage by category (Article 245-A, number 1, paragraph a))

Sonae Indústria's share capital amounts to 253,319,797.26 euros and is represented by 45,403,029 ordinary nominative shares without nominal value. All shares are admitted to trading on the Euronext Lisbon.

Sonae Indústria´s share capital is distributed according to the illustration below (the qualified shareholding attributed to Efanor shown below is explained in item 7 of this report):

2. Restrictions to the transfer of shares, such as clauses of consent on sale of shares, or restriction on ownership of shares (Article 245-A, number 1, paragraph b))

There are no restrictions in place regarding the transfer or sale of the company's shares.

3. Number of own shares, corresponding percentage of share capital and voting rights (Article 245-A, number 1, paragraph a))

As at 31 December 2020, the company did not own any own shares.

4. Relevant agreements to which the company is a party and that come into effect, are amended or are terminated in the event of a change in the control of the company after a takeover bid, including the respective effects, unless their disclosure is materially adverse to the company; this exception does not apply where the company is specifically required to disclose said information pursuant to other legal requirements (Article 245-A/1/j)).

The company did not adopt any measure which impose payments or the acceptance of charges in the event of a change in the composition of its management body.

As at 31 December 2020, the amount of debt in loans which grant to the respective creditors the option to consider the amount of debt due in the event of a change of control (i.e. shareholder ownership) was circa 160 million euros (approximately 73% of the value of the consolidated net debt).

	Million € 1	No. Contracts
Total	160	10
	1) Debt value (nominal).

The Shareholders' Agreement subscribed by Sonae Indústria and Inversiones Arauco International, Ltda, (Arauco) in relation to Sonae Arauco, SA, confers Arauco the right to exercise a call option over the full amount of Sonae Arauco shares owned by Sonae Indústria, in the event of a change of control of Sonae Indústria, as well as it confers a call option to Sonae Indústria in the event of a change of control of Arauco.

The agreements mentioned above do not restrict the free transfer of company shares, not even the free appraisal of the Board of Directors' performance by shareholders, as they reflect the interest of the corporate purpose, aiming to guarantee the long term business sustainability in the framework of market conditions.

5. Regime applicable to the renewal or revocation of defensive measures, in particular those that foresee the limitation of the number of votes susceptible of being detained or exercised by only one shareholder, in an individual way or in cooperation with other shareholders

There are no statutory constraints regarding the number of votes that may be cast by a single shareholder.

6. Shareholders' agreements known to the company that may result in restrictions to the transfer of shares or voting rights (Article 245-A, number 1, paragraph g))

The company is unaware of the existence of a shareholders' agreement, which may restrict the transfer of its securities or voting rights.

II. SHAREHOLDINGS AND BONDS HELD

7. Identification of the individuals or companies that, directly or indirectly, hold a qualified shareholding (Article 245-A, number 1, paragraphs c) and d) and Article 16), indicating, in detail, the percentage of share capital and voting rights entitled, as well as the source and causes of such entitlement

Shareholder	Number of shares	% Share Capital	% Voting Rights
Efanor Investimentos, SGPS, S.A (1) Directly By Pareuro, BV (controlled by Efanor Investimentos, SGPS, SA)	27,416,997 11,730,752 39,147,749	60.386% 25.837% 86.223%	60.386% 25.837% 86.223%
On 30 April 2018, TEAK Capital, SA informed Sonae Indústria having signed a services agreement with the company Pareuro, BV, through which it was granted, by way of consideration, a call option over 2,000,000 shares representative of 4.40% of the share capital and voting rights of Sonae Indústria, SGPS, S.A., exercisable on 30 April 2021. This agreement replaces and revokes the previous agreement signed on 22 February 2016. Futher informed the referred to company that 40% of its share capital is held by Carlos Moreira da Silva, 45% by his wife (under the regime of separation of people and property) Fernanda Arrepia and 15% by TPR, B.V., the latter being jointly held by Carlos Moreira da Silva's three descendants, Tiago Moreira da Silva, Pedro Moreira da Silva and Raquel Moreira da Silva. Fernanda Arrepia and Tiago Moreira da Siva are also directors of TEAK.
(1) Efanor Investimentos, SGPS, SA ceased, with effects from 29 November 2017, to have a controlling shareholder, according with the terms and for the effects of articles 20º and 21º of the Portuguese Securities Code.

8. Indication of the number of shares and bonds held by members of the Management and Supervisory Boards

Sonae Indústria's Directors held the following company shares as at 31 December 2020:

CORPORATE GOVERNANCE REPORT

			Acquisitions	Sales		Position at 31.12.2020	Balance at 31.12.2020
	Date	amount	€ average value	amount	€ average value		amount

Duarte Paulo Teixeira de Azevedo
Efanor Investimentos, SGPS, SA (1)						Minoritary
Migracom, SA (2)						Dominant
Carlos António Rocha Moreira da Silva
Efanor Investimentos, SGPS, SA (1)						Director

						Position at	Balance at
			Acquisitions	Sales		31.12.2020	31.12.2020
(1) Efanor Investimentos, SGPS, SA	Date	amount	€ average value	amount	€ average value		amount
Sonae Indústria, SGPS, SA (Shares)							27,416,997
	03/08/2020	112,545	1.0864
	04/08/2020	196,631	1.09
	05/08/2020 10/08/2020	19,683 66,305	1.09 1.10
	11/08/2020	1,998	1.10
	12/08/2020	5,788	1.10
	13/08/2020	3,777	1.10
	28/08/2020	30,000	1.115
	01/09/2020	78,962	1.128
	02/09/2020 03/09/2020	10,000 25,881	1.13 1.127
	04/09/2020	35,000	1.128
	07/09/2020	23,276	1.13
	08/09/2020	13,361	1.13
	09/09/2020	13,334	1.13
	10/09/2020 11/09/2020	15,998	1.13 1.138
	14/09/2020	778,437 240,583	1.14
	15/09/2020	68,015	1.14
	16/09/2020	55,258	1.14
	17/09/2020	72,993	1.14
	18/09/2020	68,171	1.14
	21/09/2020 22/09/2020	109,219	1.14 1.14
	23/09/2020	22,265 128,510	1.14
	24/09/2020	163,860	1.14
	25/09/2020	69,519	1.14
	28/09/2020	77,533	1.14
	29/09/2020	67,576	1.14
	07/10/2020 08/10/2020	280,493	1.14 1.14
	09/10/2020	205,498 214,605	1.14
	12/10/2020	103,976	1.14
	13/10/2020	107,910	1.14
	14/10/2020	20,370	1.14
	15/10/2020	76,359	1.14
	16/10/2020	91,587	1.14
	19/10/2020 20/10/2020	37,985 71,598	1.14 1.14
	21/10/2020	275,857	1.14
	22/10/2020	38,656	1.14
	23/10/2020	111,557	1.14
	26/10/2020	283,031	1.14
	27/10/2020	626,814	1.14
Sonae Indústria, SGPS, SA (subordinated bonds)	28/10/2020	2,925,674	1.14				0
	21/06/2020			5,000	8,188.00


Pareuro, BV (3)						Dominant
(2) Migracom, SA
Sonae Indústria, SGPS, SA (shares)							0
	28/10/2020			38,931	1.14
Imparfim, Investimentos e Participações						Minoritary
Financeiras, SA (4)

(3) Pareuro, BV
Sonae Indústria, SGPS, SA (shares) Sonae Indústria, SGPS, SA (subordinated bonds)							11,730,752 5,000
	21/06/2020	5,000	8,188.00

(4) Imparfin, Investimentos e Participações
Financeiras, SA							0
Sonae Indústria, SGPS, SA (shares)	28/10/2020			132,355	1.14

9. Special powers of the managing bodies, namely in respect of resolutions concerning share capital increase (Article 245-A, number 1, paragraph i)), indicating the date these powers were attributed, the date these competencies expire, the maximum quantitative limit of the share capital increase, the amount issued in accordance with the attribution of powers and the means for accomplishment of the attributed powers

The Board of Directors of Sonae Indústria may decide to increase the company's share capital up to the amount of three hundred fifty million euros, one or more times, through cash injections under the terms established by the law. These powers were granted at the General Meeting held on 29 April 2019 and may be exercised over a period of five years from that date, notwithstanding the General Meeting decision to renew them.

10. Information regarding the existence of relevant relationships of commercial nature between the owners of qualified shareholdings and the company

There are no significant commercial relationships between the owners of the qualified shareholdings and the company.

In December 2019, Efanor Investimentos, SGPS, SA, the majority shareholder of Sonae Indústria, subscribed the first tranche of a subordinated bond loan issued by Sonae Indústria in the amount of € 50,000,000, with the duration of 10 years and a fixed interest rate of 7%.

B. GOVERNING BODIES AND COMMITTEES

I. GENERAL MEETING

a) Composition of the Board of the General Meeting

11. Identification and role of the members of the Board of the Shareholders' General Meeting and respective mandate

The Board of the Shareholders' General Meeting was elected at the Shareholders' Annual General Meeting of Sonae Indústria held on 9 May 2018, for the mandate 2018-2020 and is composed by:

Carlos Manuel de Brito do Nascimento Lucena Chairman
Maria Daniela Farto Baptista Passos Secretary

b) Exercise of Voting Rights

12. Restrictions in terms of voting rights such as limitations to vote depending on the ownership of a number or percentage of shares, deadlines to exercise the voting right, or systems that highlight rights of asset contents (Article 245-A, number 1, paragraph f))

According to Sonae Indústria's Articles of Association, the Shareholders' General Meeting is composed only of shareholders with voting rights who provide evidence of their ownership, according to the terms established by the law.

Article 23º-C of the Securities Code sets out that, who is entitled to participate, discuss and vote in the Shareholders' General Meeting, are shareholders who, at the record date, which corresponds to 0 hours of

the 5th trading day prior to the date of the meeting, hold at least one vote, according to the law and the company statutes.

According to Sonae Indústria's Articles of Association, shareholders may be represented at Shareholders' General Meetings under the terms established by the law and by the respective notice of the meeting.

Under the terms of Sonae Indústria's Articles of Association, Shareholders' General Meetings can meet at the first session, as long as shareholders representing over fifty percent of the company's share capital are present or represented.

The company's Articles of Association stipulate that, as the company is regarded as a listed and "publicly traded company", shareholders are allowed to vote by post in relation to all items in the agenda of the Shareholders' General Meeting, following the rules for the exercise of voting by post. The company's Articles of Association establish that postal votes can only be considered when sent to the company's headquarters by registered post with notice of receipt addressed to the Chairman of the Board of the Shareholders' General Meeting. These votes should be received at least three days before the date of the General Meeting and are subject to the normal rules regarding evidence of share ownership. Postal votes are considered negative votes in relation to any proposals presented after the date on which they were issued. A standard form for postal voting is available at Sonae Indústria's corporate website, www.sonaeindustria.com, and at the company's head office.

Sonae Indústria Articles of Association stipulate that postal voting may be exercised by electronic means if this medium is made available to shareholders and is included in the notice of the meeting. This possibility was made available to shareholders for the Shareholder's Annual General Meetings held in the last five years up to 2020 and was only used by one shareholder at the Shareholder's Annual General Meeting in 2017. At the Annual General Meeting held in 2020, due to the Covid-19 pandemic, postal voting was used by more than one shareholder.

Sonae Indústria's Articles of Association comprise the possibility of General Meetings to be held by telematic means as long as the respective means, the authenticity of the statements and the security of communications are protected. The Annual General Meeting 2020 was held exclusively by telematic means due to the Covid-19 pandemic. It should be noted that only one shareholder used telematic means, as all remainder shareholders used postal voting by electronic means.

The preliminary information for the General Meeting and the proposals submitted by the Board of Directors are made available at the time of disclosure of the notice of meeting.

The company has not adopted any mechanism that causes a time lag between the right to receive dividends or the subscription of new securities and the right to vote of each share.

13. Indication of the maximum percentage of voting rights that may be exercised by a single shareholder or by shareholders that are related to him according to Article 20, number 1

Each share corresponds to one vote, with no limitation.

14. Identification of the shareholders' resolutions that, under the terms of the company´s Articles of Association, can only be approved by qualified majority, apart from the legal ones, and description of those majorities

The decisions are taken by simple majority, except when the law stipulates otherwise.

II. MANAGEMENT AND SUPERVISION

a) Composition

15. Identification of the governance model adopted

Sonae Indústria's Articles of Association define a corporate governance model of the company composed by a Board of Directors, a Statutory Audit Board and a Statutory External Auditor.

The Board of Directors examines annually the advantages and possible disadvantages of adopting this model.

The Board of Directors believes that the model favours the interests of the company and its shareholders, being effective and having not faced any constraints to its operation.

16. Statutory rules concerning procedural and material requirements applicable to the appointment and replacement of the members of the Board of Directors (Article 245-A, number 1, paragraph h))

Under the terms of the Articles of Association, the Board of Directors may consist of an even or odd number of members, with a minimum of five and a maximum of nine, elected by the Shareholders' General Meeting for three-year mandates.

Members of the Board of Directors are elected by the Shareholders' General Meeting. Groups of shareholders representing between 10% and 20% of the company's share capital may submit a stand-alone proposal to nominate a Director, in advance of the Shareholders' General Meeting. Such shareholder cannot support more than one list of Directors and each list must identify at least two eligible persons to fill each position on the Board. If lists are submitted by more than one group of shareholders, the voting will be based on all of these lists.

In the event of death, resignation or temporary or permanent inability of any of the Directors, the Board of Directors is responsible for his or her replacement. If the Director in question was nominated by minority shareholders, a new separate election must be held.

The profiles of the new members of the corporate bodies must comply with the criteria and requirements set out by the company, in respect to academic qualifications, competences in industrial areas, professional skills, knowledge of the Group businesses, integrity, cultural and gender diversification.

17. Composition of the Board of Directors, indicating the minimum and maximum number of members according to the company statutes, duration of the mandate, number of effective members, date of the first appointment and date of the end of the mandate of each member

On 31 December 2020, Sonae Indústria's Board of Directors comprised nine Directors. All its members were elected at the Annual General Meeting held on 9 May 2018 for the 2018-2020 mandate.

Date of the Sonae Indústria's current Directors first appointment:

Duarte Paulo Teixeira de Azevedo 15 December 2005;
Carlos António da Rocha Moreira da Silva 12 November 2014;
Albrecht Olof Lothar Ehlers 8 September 2011;
Berta Maria Nogueira Dias da Cunha 9 May 2018;

CORPORATE GOVERNANCE REPORT

Isabel Sofia Bragança Simões de Barros 9 May 2018;
Javier Vega de Seoane Azpilicueta 29 March 2012;
José Joaquim Romão de Sousa 31 March 2015;
George Christopher Lawrie 12 April 2013;
Louis Brassard initially appointed on 15 December 2005, resigned on 28 April 2009 and was co-opted on 8 June 2016.

On 31 December 2020, the Board of Directors of Sonae Indústria comprised:

Duarte Paulo Teixeira de Azevedo Chairman (Non-Executive)
Carlos António da Rocha Moreira da Silva Vice-Chairman (Non-Executive)
Albrecht Olof Lothar Ehlers (Non-Executive and Independent)
Berta Maria Nogueira Dias da Cunha (Non-Executive and Independent)
Isabel Sofia Bragança Simões de Barros (Non-Executive)
Javier Vega de Seoane Azpilicueta (Non-Executive and Independent)
José Joaquim Romão de Sousa (Non-Executive and Independent)
George Christopher Lawrie (Managing Director)
Louis Brassard (Managing Director)

The Board of Directors appointed Javier Vega as lead independent director.

18. Distinction between executive and non-executive members of the Board of Directors and, in relation to non-executive members, identification of the members that may be considered as independent

Of the nine (9) Directors, two (2) are Managing Directors and seven (7) are non-executive members, as indicated in the previous paragraph.

It is Sonae Indústria's understanding that the number of non-executive Directors is adequate in relation to the size of the company, its shareholding structure and the level of complexity of the risks inherent to the company's activity, thus allowing the effective supervision and appraisal of the Managing Directors performance.

Among the non-executive Directors, four (4) are independent, as they comply with the independence criteria set out either by recommendation III.4 of the Corporate Governance Code released by IPCG or by Regulation 4/2013 of CMVM.

19. Professional qualifications and other relevant curricular information of each member of the Board of Directors

Paulo Azevedo (Chairman of the Board of Directors): holds a degree in Chemical Engineering from the Lausanne Polytechnic School (Switzerland) and a post-graduation in Business Studies (MBA) from the Oporto Business School (ex-EGP). He was CEO of Optimus – Telecomunicações S.A. between 1998 and 2000; CEO of Sonaecom, SGPS, S.A., between 2000 and 2007; CEO of Sonae SGPS, S.A. between May 2007 and April 2015; Chairman of the Board of Directors of Sonae SGPS, S.A. since April 2015 and co-CEO of Sonae SGPS up to April 2019. He holds a number of managerial and directorship roles in Efanor/Sonae Group. Chairman of the Board of Directors of BA Glass I- Serviços de Gestão e Investimentos, SA since February 2020.

Carlos Moreira da Silva (Vice-Chairman of the Board of Directors): degree in Mechanical Engineering – University of Porto, MSc in Management Sci. and Operational Research (University of Warwick – UK) and PhD in Management Sciences (University of Warwick – UK). He held several positions in companies of Sonae Group / Sonae Indústria Group between September 1988 and January 2000. In 2003, he was CEO of Sonae Indústria, SGPS, SA until April 2005, also holding other positions in other companies of Sonae Indústria Group. He was member of Advisory Board of 3i Spain (2005-2012), member of the Supervisory Board of Jerónimo Martins Dystrybucja, SA (from 2009 to 2012), Chairman of the Board of Directors of La Seda de Barcelona (2010-2014) and Chairman of BA Group (1998-2020). Currently, he is a member of the Board of Directors of Efanor Investimentos, SGPS, SA and of Sonae SGPS, SA.

Albrecht Ehlers (Independent): degree in Law from the University of Münster (Germany). From 1987 to 2000, he held various positions in the legal and human resources departments of Glunz AG, having been appointed in 1995 to join the Executive Board (Vorstand) of that company, with responsibilities in areas including human resources and legal departments. Between 2000 and 2004, he was senior vice-president of Hochtief AG (Germany) with particular responsibility in the areas of human resources and corporate services. From 2004 until 2009, he joined the Executive Board (Vorstand) of that company. Since 2010, he is Chancellor at the Technical University of Dortmund (Germany).

Berta Cunha (Independent): holds a degree in Economics by the University of Coimbra. She held various positions in Banco Português de Investimento, in the areas of Mergers and Acquisitions and Corporate Finance. Between 2002 and 2005, she was director of F. Turismo-Capital de Risco, SA. Between 2002 and 2018, she was director of Cosec - Companhia de Seguros de Crédito, SA.

Isabel Barros: holds a degree in Psychology by the University of Porto and an MBA by the EADA Business School Barcelona and Nagoya International School, Japan. Between 2007 and 2010, she was Senior Manager of Korn Ferry Hay Group; from 2011 to 2015 she was Talent Management & Development Director at Sonae; between 2016 and 2017, she was Human Resources Director at Sonae MC and, since 2017, she is Chief Human Resources Officer of Sonae MC.

Javier Vega (Independent): holds a degree in Mining Engineering by the Escuela Técnica Superior de Ingenieros de Minas of Madrid and a degree in Business Management from Glasgow Business School (UK). He was a member of the Board of Directors of several companies such as Robert Bosch, Red Eléctrica de España, SEAT and Grupo Ferrovial. Currently he is director of Sonae Arauco, SA and Chairman of the Board of Directors of DKV Seguros, Gestlink, SA and Vedegane, SA. He also currently holds other Board positions in other companies.

José Romão de Sousa (Independent): holds a BSc in Chemical and Industrial Engineering by IST, University of Lisbon (Portugal) and a PhD in Chemical Engineering by the Imperial College, London (UK). He has large industrial experience, particularly in chemical products (formaldehyde resins, adhesives and water-borne emulsion resins) and plastics industries (extrusion and calendaring of PVC, ABS and polyolefins). He held several management functions in the ProHolding Group (currently Promotor) and is the Non-Executive Chairman of several group companies and associated companies, including a new venture into biologic fungicides. He has experience in the financial sector, namely in private equity, portfolio management and brokerage. Currently, he is Chairman of the Board of Directors of Promotor SGPS, SA, among other companies.

Christopher Lawrie (Managing Director): he has a BA (Honours) Degree in Business Studies and Finance at Greenwich University (UK). He has broad experience in investment banking, having worked with Schroders, BZW and Credit Suisse where he was Director of the Corporate Finance Division covering specifically Southern European Telecoms markets. In 2001, he joined Sonae/Efanor Group as CFO of Sonaecom and, in 2009, he was appointed CEO of Sonae Retail Properties. In 2013, he was appointed CFO of Sonae Indústria SGPS, SA, and is currently Managing Director and Chairman of the Management Committee.

Louis Brassard (Managing Director): has a degree in Industrial Engineering by the Montreal Polytechnic School (Quebec, Canada). MBA in Finance and Marketing – University of Montreal. Since 1994, he held various positions in Sonae Indústria's Group, and, currently, he is COO of Tafisa Canada and member of the Management Committee.

20. Significant family, professional or commercial relationships between members of the Board of Directors and qualified shareholders with more than 2% of the voting rights

Paulo Azevedo is a Director and shareholder of Efanor Investimentos SGPS, SA, to whom the control of the majority of the voting rights in Sonae Indústria is attributed. Carlos Moreira da Silva is a Director of Efanor Investimentos SGPS, SA.

21. Organisational charts with distribution of competencies of the various statutory bodies, committees and/or departments of the company, including information regarding delegation of competencies, particularly in what concerns the delegation of day-to-day company business

The responsibilities of the different governing bodies and committees of the company are distributed as follows:

The Board of Directors is conferred with the widest powers to manage and represent the Company under the terms of Portuguese law and as stipulated by the Company's Articles of Association.

The Board of Directors appointed two Managing Directors, whom were delegated the broadest managing powers of the company including all legal and statutory competences that are attributed to the Board of Directors, with exception of:

a) appointing the Chairman of the Board;
b) co-opting a substitute for a member of the Board;
c) convening Shareholders' General Meetings;
d) approving of any Reports and Accounts;
e) granting any pledge, guarantee or charge over the company's assets;
f) deciding to change the company's headquarters and to approve any share capital increases;
g) deciding on mergers, de-mergers and modifications to the corporate structure of the company;
h) approving the company's business plan and annual budget;
i) deciding key features of personnel policies, and deciding on individual compensation for Executives and Senior Managers;
j) defining or changing major accounting policies of any company included in the consolidation perimeter of Sonae Indústria Group;
k) selling, acquiring directly or by long-term lease or transacting in any other way, investments classified as tangible fixed assets where the individual transaction value is in excess of 5,000,000 euros;
l) purchasing or subscribing new shares in the share capital of any subsidiary company where the accumulated amount exceeds 20,000,000 euros in any financial year;
m) investing in any other company;
n) making any other financial investment which exceeds the accumulated amount of 10,000,000 euros in any financial year, unless in the ordinary course of business, namely in short term investments of available cash;
o) disposing of assets or other divestments, if such a transaction has a significant effect on the operating results of the company (defined as equal or greater than 2,000,000 euros) or affects the jobs of more than 100 employees;
p) defining Sonae Indústria and Sonae Indústria Group strategy and general policies;
q) defining the corporate structure of Sonae Indústria Group.
r) entering into transactions with "Related Parties" (as set out by the International Accounting Standards adopted in accordance with EU regulation, except for Related Parties included in Sonae Indústria's consolidation perimeter), which amount, individually or aggregate, to an annual base value over 10 million euros.

Further to aforementioned delegation of powers, the Board of Directors is responsible, thus having the participation of its non-executive Directors, in the definition of (i) the strategy and general policies of Sonae Indústria and Sonae Indústria Group; (ii) the corporate structure of Sonae Indústria Group; and (iii) the approval of the business plan and annual budget of Sonae Indústria and Sonae Indústria Group companies.

The Board of Directors also appointed a Management Committee, composed of the Managing Directors, which meetings are also attended by persons responsible for the various corporate departments. The Management Committee's main objective is to support the Managing Directors in the functions that were delegated by the Board of Directors.

Notwithstanding the delegation of powers and the appointment of a Management Committee, all members of the Board of Directors have full access to corporate information and, at their best convenience, they may request it through the Management Committee.

When setting up the strategy and main policies of the Group, the Board of Directors aims to ensure that the necessary investments are made, in accordance with existing restraints, in order to preserve the competitiveness of its companies, by developing new and innovative products and continuously launching new decorative offers. It is also part of the referred strategy and Group policies, the commitment to respect the environment. The Group's industrial activity, which has wood as its main raw material, a renewable, reusable and recyclable material and a natural reservoir of CO2, contributes to the sustainability of both the forest and environment.

b) Functioning

22. Availability and place of disclosure of the terms of reference of the Board of Directors

The Board of Directors is regulated by the functioning rules which can be read at:

https://www.sonaeindustria.com/fileManager/orgaos\_sociais/pdf\_pt\_2.pdf (Portuguese version)

https://www.sonaeindustria.com/fileManager/orgaos\_sociais/pdf\_en\_2.pdf (English version)

23. Number of meetings held and attendance rate of each member of the Board of Directors to those meetings

The Board of Directors held 7 meetings, in 2020, with the respective minutes of meetings registering all deliberations made.

The attendance of all Board of Directors members to those meetings (physically, by electronic means or by representation) can be found in the following table:

Board Member	% Attendance
Paulo Azevedo	83.33
Carlos Moreira da Silva	83.33
Albrecht Ehlers	100
Berta Cunha	100
Isabel Barros	100
Javier Vega	100
José Romão de Sousa	100
Christopher Lawrie	100
Louis Brassard	100

The number of meetings held each year by the management bodies and their committees is available at:

https://www.sonaeindustria.com/pt/governo-societario/orgaos-sociais-e-comissoes (Portuguese version) https://www.sonaeindustria.com/en/corporate-governance/governing-bodies-and-committees (English version)

24. Indication of the corporate bodies responsible for the assessment of the performance of the Executive Directors

The Board of Directors assesses its internal functioning every year, as well as its performance, the performance of its Committees and of the Managing Directors, namely in the scope of the defined strategy and the approved budget.

Notwithstanding the assessment done by the Board of Directors, the company's Shareholder's Remuneration Committee liaises with the Board Nomination and Remuneration Committee to assess the performance of the Managing Directors. This assessment considers the degree of compliance with de Key Performance Indicators of Business Activity, as further explained in section 69, and is relevant to determine the remunerations of theses Directors.

25. Pre-defined criteria that are used to assess performance of the Executive Directors

The criteria to assess the performance of the Executive Directors are predefined, based on the performance indicators of the company, the working teams under their responsibility and their own individual performance. These criteria are further explained in the Remunerations section of this report.

The pre-determined criteria for evaluation of the Executive Directors are the following: objective criteria related to the degree of successful implementation of initiatives and actions that were agreed for implementation in the year in question; and subjective criteria related to the contribution in terms of experience and knowledge to the discussions by the Board of Directors, the quality of preparation of meetings and the contribution to discussions of the Board of Directors and Committees, as well as the commitment to the success of the company, among others.

26. Availability of each member of the Board of Directors indicating offices held in other companies, inside and outside the Group, as well as other relevant activities held by those members during the financial year

The Managing Directors work full time on the management of Sonae Indústria and its subsidiaries.

In relation to the other members of the Board of Directors, apart from their roles as Board members they also exercised administrative or supervisory functions in the companies listed below.

DUARTE PAULO TEIXEIRA DE AZEVEDO

Positions in companies directly or indirectly held by Sonae Indústria:

• Sonae Arauco, SA (Chairman of the Board of Directors)

Positions in other companies:

Efanor Investimentos, SGPS,SA (Chairman of the Board of Directors)
Sonae SGPS, SA (Chairman of the Board of Directors)
Sonae Capital, SGPS, SA (Chairman of the Board of Directors)
Imparfin Investimentos e Participações Financeiras, SA (Director)
Migracom, SA (Chairman of the Board of Directors)
Efanor Serviços de Apoio à Gestão, SA (Director)
OKUK, Lda. (Manager)
BA Glass I Serviços de Gestão e Investimentos, SA (Chairman of the Board of Directors)
Allianz SE (Member of the International Advisory Board)

CARLOS MOREIRA DA SILVA

Positions in companies directly or indirectly held by Sonae Indústria:

• Sonae Arauco, SA (Director)

Positions in other companies:

Fim do Dia, SGPS, SA (Chairman of the Board of Directors)
Lynx Finance GP, LLC (Director)
Efanor Investimentos, SGPS, SA (Director)
Teak, BV (Director)
Sonae SGPS, SA (Director)

ALBRECHT EHLERS

Positions in companies directly or indirectly held by Sonae Indústria:

• Sonae Arauco Deutschland GmbH (Vice Chairman of the Supervisory Board – "Aufsichtsrat")

Positions in other companies:

Erich-Brost-Institut für Journalismus in Europa GmbH (Director)
PROvendis GmbH (Supervisory Body and Shareholders Committee)
Salus BKK (Chairman of the Supervisory Board "Aufsichtsrat")
Invite GmbH (Vice Chairman of the Supervisory Board "Aufsichtsrat")
Durable Hunke & Jochheim GmbH & Co. KG (Chairman of the Supervisory Board)
TechnologieZentrumDortmund GmbH (Member of the Shareholders Committee)
Studierendenwerk Dortmund AöR (Member of the Supervisory Board)
University Alliance Ruhr
Technische Universität Dortmund University (Chancellor)
ClassiConn Dortmund GmbH & Co.KG (Member of the Shareholders Committee)
TU Concept GmbH (Director)

ISABEL BARROS

Positions in companies outside Sonae Indústria Group:

Modelo Continente Hipermercados, SA (Director)
Continente Hipermercados, SA (Director)
Sonae MC, SGPS, SA (Director)

JAVIER VEGA

Positions in companies directly or indirectly held by Sonae Indústria:

• Sonae Arauco, SA (Director)

Positions in other companies:

DKV Seguros (Chairman of the Board of Directors)
Gestlink, SA (Chairman of the Board of Directors)
Vedegane, SA (Chairman of the Board of Directors)
Fujitsu (Chairman of the Advisory Board)
Atrevia (Member of the Advisory Board)
Gestion y Tecnicas del Agua, SA (Gestagua) (Member of the Board of Directors)

JOSÉ ROMÃO DE SOUSA

Positions in companies outside Sonae Indústria Group:

Promotor SGPS, SA (Chairman of the Board of Directors)
CEV, SA (Chairman of the Board of Directors)
Monte das Janelas Verdes Sociedade Agrícola SA (Chairman of the Board of Directors)
DIF-Informação Cambial e de Mercados, SA (Chairman of the Board of Directors)

GEORGE CHRISTOPHER LAWRIE

Positions in companies directly or indirectly held by Sonae Indústria:

Frases e Frações Imobiliária e Serviços, SA (Director)
Glunz (UK) Holdings, Ltd. (Director)
Isoroy SAS (Director)
Maiequipa Gestão Florestal, SA (Director)
Megantic BV (Director)
Movelpartes Componentes para a Indústria do Mobiliário, SA (Director)
Novodecor (PTY) Ltd. (Director)
Parcelas e Narrativas Imobiliária, SA (Director)
Sonae Arauco, SA (Director)
Surforma, SA (Director)
Sonae Indústria Management Services, SA (Director)
Tafisa Canada Inc. (Director)
Tafisa France, SAS (Director)

LOUIS BRASSARD

Positions in companies directly or indirectly held by Sonae Indústria:

Frases e Frações Imobiliária e Serviços, SA (Director)
Isoroy, SAS (Director)
Maiequipa Gestão Florestal, SA (Director)
Megantic, BV (Director)
Movelpartes Componentes para a Indústria do Mobiliário, SA (Director)
Parcelas e Narrativas Imobiliária, SA (Director)
Surforma, SA (Director)
Sonae Indústria Management Services, SA (Director)
Tafisa Canada Inc (Director)
Tafisa France, SAS (Director)

c) Committees within the Management or Supervisory Bodies and Managing Directors

27. Identification of the Committees within the Board of Directors and place of disclosure of the terms of reference

The Board of Directors appointed two Managing Directors, George Christopher Lawrie and Louis Brassard. With the main objective of supporting the Managing Directors in the functions delegated by the Board of Directors, the Board of Directors appointed a Management Committee, composed of the two Managing Directors, which meetings are also attended by the persons responsible for the various corporate departments.

The Board of Directors also appointed two specialised committees, the Board Audit and Finance Committee ("BAFC") and the Board Nomination and Remuneration Committee ("BNRC").

The rules that regulate the functioning of the Management Committee and the terms of reference of the BAFC and BNRC can be read on the company website, through the following links:

In addition to the Committees held, non-executive directors meet twice a year, being the first part of the meetings attended only by independent non-executive directors and the second part of the meetings by all non-executive directors.

The objectives of these meetings are to review the role of the Board of Directors, ensuring that it is clear for all attendees; improve the functioning of the Board of Directors and its Committees; review the level of Corporate Governance; help the non-executive directors to work as a team; and ensure that the nonexecutive directors are comfortable in the performance of their duties.

In 2020, there were two non-executive directors meetings held.

28. Composition of the Executive Committee and/or the identification of the Managing Director(s)

The Managing Directors of the company are Christopher Lawrie and Louis Brassard.

29. Indication of the competencies of each Board Committee and summary of the main activities performed

The Board of Directors appointed three committees with specialised expertise.

MANAGEMENT COMMITTEE ("MANCOM")

The Management Committee is composed by the two Managing Directors:

Christopher Lawrie (Chairman Managing Director);
Louis Brassard (Managing Director COO Tafisa Canada);

The Managing Directors, within the respective delegation of powers, should discuss in a MANCOM meeting any of the following matters:

entering into any financial operations;
sale and purchase, long-term financial lease or any other investments in tangible fixed assets where the individual transaction value is in excess of 1,000,000 euros;
purchasing or subscribing new shares in the share capital of any subsidiary company where the cumulative amount exceeds 5,000,000 euros in any financial year;
making any other financial investments which exceed the cumulative amount of 1,000,000 euros in any financial year, unless in the ordinary course of business, namely in short term investments of available cash;
reorganisations of Sonae Indústria Group, including any increase or decrease of share capital, mergers, liquidations and changes in the bylaws.
control of implementation by Sonae Indústria Group of the strategic guidelines defined by the Board of Directors;
control of Sonae Indústria Group's financing and accounting;
control of the operational activities of the Sonae Indústria Group;
analysis of new business opportunities.

The MANCOM must provide, in a timely and appropriate manner, the information requested by members of Sonae Indústria's management and supervisory bodies, by facilitating access to all Sonae Indústria information and employees in order to allow the members of those bodies to perform the appraisal of the company performance, situation and development perspectives.

The Chairman of the MANCOM must:

guarantee that all information regarding the activity and decisions of the MANCOM is disclosed to the members of the Board of Directors;
ensure that all matters outside the scope of the Managing Directors' competencies are submitted to the approval of the Board of Directors;
send all MANCOM minutes to the Chairman and Vice-Chairman of the Board of Directors.

Over the course of 2020, the MANCOM met on eleven occasions and the respective minutes have been drafted.

BOARD AUDIT AND FINANCE COMMITTEE ("BAFC")

The BAFC is composed of the following Non-Executive Directors:

• Javier Vega (Chairman; Independent);

Albrecht Ehlers (Independent);
Berta Cunha (Independent);
José Romão de Sousa (Independent).

The BAFC normally meets at least five times a year and is responsible for:

reviewing the financial statements and earnings announcements to be disclosed to the market and to report its findings to the Board of Directors;
advising the Board of Directors in matters related to the appropriateness and accuracy of the internal information provided by the managing directors, including the internal control systems used by the company;
analysing risk management, internally control, businesses and processes;
reviewing the results of internal and external audits;
following the trends in the main financial ratios and changes in formal and informal ratings of the company, including reports from rating agencies;
analysing and advising on any changes in accounting policies and practices;
reviewing compliance with accounting standards;
verifying compliance with legal and statutory obligations, in particular within the financial domain.
analysing business continuity assumptions;
analysing relevant financial exposure in the treasury area;
analysing and advising in relation to corporate governance.

The BAFC also does a self-assessment, integrated in the periodical self-assessment processes carried out by the Board of Directors (including the request for comments to other Members of the Board of Directors).

Over the course of 2020, the BAFC held five meetings and the respective minutes have been drafted and forwarded to all members of the Board of Directors.

The number of directors in the BAFC is considered adequate according to the company size and to the relevance of its financial matters, thus allowing them to efficiently perform their roles.

Responsibilities attributed to BAFC as a specialised committee of the Board of Directors are developed in terms of company management and do not override the functions of the Statutory Audit Board, as a supervisory body. The BAFC is a committee within the Board of Directors and according to the powers it was delegated, it is responsible for an in-depth analysis of the financial statements, analysis of internal and external audit works, risk management processes and the performance of the key financial ratios, among other areas. It also issues recommendations for final deliberation at the Board of Directors, thereby improving its operational functioning.

BOARD NOMINATION AND REMUNERATION COMMITTEE ("BNRC")

The BNRC is composed of the following Non-Executive Members:

Carlos Moreira da Silva (Chairman);
Albrecht Ehlers (Independent);
Berta Cunha (Independent);
Isabel Barros;
José Romão de Sousa (Independent).

The BNRC has the following specialised competencies:

the BNRC will review and submit proposals and recommendations, on behalf of the Board, to the Shareholders' Remuneration Committee in relation to the remuneration and other compensation of members of the Board and will review and approve proposals and recommendations, on behalf of the Board, in relation to the remuneration and other compensation for other top management of the Sonae Indústria Group;
the BNRC is responsible for the succession planning and nomination processes of Board members and other top management (members of senior management), for reviewing all remuneration and other compensation policies and proposals applicable to Board members and other Sonae Indústria top management and for monitoring Sonae Indústria's talent management and contingency planning processes.

The BNRC liaises with Sonae Indústria´s Shareholders' Remuneration Committee, since this is the only means which guarantees that the Shareholders' Remuneration Committee has the necessary knowledge on the performance of every Director throughout the year. This is particularly important in the case of the Executive Directors, given that the Shareholders' Remuneration Committee does not a closely view of each Director's performance and, therefore, does not have the necessary knowledge to perform their functions in the most appropriate way. The BNRC may also be assisted by external entities, provided absolute confidentiality is ensured in relation to the information arising from that cooperation.

It is the BNRC's responsibility to establish the criteria and requirements of the profile of the new governing bodies members, taking into account, namely, the diversity policy described in this report (part I, section F).

The BNRC seeks that the selection processes are performed in a transparent manner, as it believes that the greater clarity there is in the exchange of information and share of needs, the better interaction between all and the better results. This way, the conditions are created to identify the most meritful candidates who better adequate to the job specifications, always promoting the appropriate diversity, including gender diversity.

Over the course of 2020, the BNRC met on two occasions and the respective minutes have been drafted.

The BNRC is mainly composed by independent directors.

In accordance to the terms of the Board of Directors regulation, Directors must inform the Board of Directors of facts that may constitute or cause a conflict of interests between them and/or third parties and the Company. In the event a conflict of interest arises, the respective Director must provide all the information and clarifications requested by the other members of the Board of Directors and will not be allowed to participate in the deliberation regarding the subject under discussion.

Directors cannot practice, either as self-employed persons or acting for someone else, any activity which competes with Sonae Indústria, unless authorized by the Shareholders' General Meeting. As a rule, executive directors must not hold executive functions in companies outside the Group. Whenever they intend to do so, they must previously inform the Board of Directors.

In the beginning of each fiscal year, the company circulates through the members of the Board of Directors, the Statutory Audit Board and the Board of Directors Committees, the corporate calendar with the dates of the meetings that take place in that year, so that everyone is informed of the meeting dates of the different governing bodies and committees.

III. SUPERVISION

a) Composition

30. Identification of the supervisory body

The company's supervisory body is the Statutory Audit Board, which is elected at the Shareholders' General Meeting.

31. Composition of the Statutory Audit Board, indicating the minimum and maximum number of members, duration of the mandate, number of effective members, date of the first appointment and term of the mandate of each member

The Statutory Audit Board may comprise an even or odd number of members, with a minimum of three and a maximum of five, and with one or two substitutes depending on the number of members being either three or more, respectively. The members are elected for three-year mandates.

The current Statutory Audit Board was elected at the 2018 Shareholders' Annual General Meeting for the 2018-2020 mandate and has the following composition:

António Augusto Almeida Trabulo Chairman
Óscar José Alçada da Quinta Member
Ana Luísa Nabais Aniceto da Fonte Member
Carla Manuela Geraldes Substitute Member

It is Sonae Indústria's understanding that the number of members that compose the Statutory Audit Board is adequate to the company size and to the complexity of the risks inherent to its activity, thus allowing them to perform their role efficiently.

The current members of the Statutory Audit Board were elected for the first time on the following dates:

António Augusto Almeida Trabulo March 2015
Óscar José Alçada da Quinta May 2007, as substitute member and March 2015, as effective member
Ana Luísa Nabais Aniceto da Fonte May 2018
Carla Manuela Geraldes May 2018

32. Identification of the Statutory Audit Board members as applicable, that may be considered as independent, under the terms of Article 414, number 5 of the Companies Law

All members of the Statutory Audit Board comply with the rules of incompatibilities referred to in paragraph 1 of Article 414-A and the criteria of independence set out in paragraph 5 of Article 414, both of the Companies Law.

To ensure at all times the independence of its members, the Statutory Audit Board members, prior to being appointed, issued statements attesting that they: (i) did not incur in any of the incompatibilities set out in Article 414º-A of the Companies Code and they were not in any situation that affects their independence, in accordance with paragraph 5 of Article 414º of the same law and (ii) committed to immediately notify the company of anything that may lead to their loss of independence or to any incompatibility during their mandate.

The regulation of the Statutory Audit Board also states that if, during the course of their term of office, any situation related to loss of independence or incompatibility regarding any member of the Statutory Audit Board arises, the respective member shall immediately inform the Chairman of the Board of Directors. Any situation of legal incompatibility shall lead to forfeiture of the term of office of the Statutory Audit Board member.

33. Professional experience of the members of the Statutory Audit Board

ANTÓNIO AUGUSTO ALMEIDA TRABULO (Chairman of the Statutory Audit Board): degree in Economics – University of Porto, post-degree in Accounting and Corporate Finance – Universidade Aberta (Portugal), Diploma in Suficiência Investigadora in the field of Financial Economics and Accounting – University of Valladolid (Spain), Phd in Management and Business Administration – University of Valladolid (Spain), completed curricular part (in the final stages of completion Thesis), Statutory Auditor. Currently, he is a Statutory Auditor and Partner of Velosa, Silva, Marques e Trabulo, SROC.

ÓSCAR ALÇADA DA QUINTA (Statutory Audit Board Member): degree in Economics (University of Porto). He has held various roles in both administrative and financial departments of different companies (1982-1986) and since 1986 has provided audit services in the Official Statutory Auditors Association. In 1990, he was included in the List of Official External Auditors, a function which he works on exclusivity, initially on a standalone basis and subsequently as partner of Óscar Quinta, Canedo da Mota & Pires Fernandes, SROC.

ANA LUÍSA NABAIS ANICETO DA FONTE (Statutory Audit Board Member): degree in Business Administration and Management – Universidade Católica Portuguesa. From 2001 to 2016, she worked in several audit companies. Since 2016, she is a Statutory External Auditor. Since 2017, she is a Professor of Audit for the graduation studies in Management and for the master studies in Audit and Tax of the Universidade Católica Portuguesa.

CARLA MANUELA GERALDES (Statutory Audit Board Substitute Member): degree in Economics by the University of Porto. Since 2001, she is a Statutory External Auditor. From 1996 to 2003, she was Audit Manager in Deloitte and, since 2004, she is a partner of Crowe Horwath Portugal.

All members of the Statutory Audit Board have adequate competencies to exercise their respective functions.

b) Functioning

34. Existence and place for disclosure of the terms of reference of the Statutory Audit Board

The Statutory Audit Board has a functioning regulation that can be read at the company website, through the following links:

https://www.sonaeindustria.com/fileManager/orgaos\_sociais/pdf\_pt\_3.pdf (Portuguese version) https://www.sonaeindustria.com/fileManager/orgaos\_sociais/pdf\_en\_3.pdf (English version)

35. Number of meetings held and attendance rate of each member of the Statutory Audit Board

In 2020, the Statutory Audit Board met seven times. The minutes were drawn up registering the respective deliberations. The attendance rate of all members was 100% of the meetings.

The number of annual meetings held by the supervisory body is available at:

https://www.sonaeindustria.com/pt/governo-societario/orgaos-sociais-e-comissoes (Portuguese version)

https://www.sonaeindustria.com/en/corporate-governance/governing-bodies-and-committees (English version)

36. Availability of each member of the Statutory Audit Board, indicating simultaneously offices held in other companies, inside and outside the Group, as well as other relevant activities held by those members during the financial year

The Statutory Audit Board members performed their roles together with other functions and roles listed below, as outlined in section 33.

Positions held by Statutory Audit Board members on 31 December 2020:

ANTÓNIO TRABULO

Positions in companies directly or indirectly held by Sonae Indústria:

• Sonae Arauco Portugal, SA (Statutory Audit Board)

Positions in other companies:

Sonae MC, SGPS, SA (Chairman of the Statutory Audit Board)
Visabeira Infraestruturas, Lda. (Statutory Audit Board)
Velosa, Silva, Marques e Trabulo, SROC (Director)
ACAT Consultoria de Gestão, Lda (Manager)
Sonaecom-SGPS, SA (Statutory Audit Board Substitute Member)

ÓSCAR ALÇADA DA QUINTA

Positions in companies directly or indirectly held by Sonae Indústria:

• Sonae Arauco Portugal, SA (Statutory Audit Board)

Positions in other companies:

Sonaecom SGPS, SA (Statutory Audit Board)
BA Glass I Serviços de Gestão e Investimentos, SA (Statutory Audit Board)
Caetano Baviera Comércio de Automóveis, SA (Statutory Audit Board)
Óscar Quinta, Canedo da Mota & Pires Fernandes, SROC (Director)

ANA LUÍSA NABAIS ANICETO DA FONTE

Positions in companies outside Sonae Indústria Group:

SDSR SPORTS DIVISION SR, SA (Statutory Audit Board Member)
NOS, SGPS, SA (Statutory Audit Board Substitute Member)
Sociedade Gestora do Fundo de Pensões do Banco de Portugal, S.A. (Statutory Audit Board Member)
Ana Fonte & Associados, SROC (Manager)

c) Responsibilities and Functions

37. Description of the procedures and criteria applicable to the involvement of the supervisory body in relation to hiring additional services of the External Auditor

If the company or any of its subsidiaries has the intention to hire the services of the External Auditor or any entities with which they have joint shareholdings or which are part of the same network, other than auditing services, the Statutory Audit Board must previously approve such hiring.

Thus, if Sonae Indústria or any Group subsidiary intends to hire services to the External Auditor or to any entity that is in a group relationship with it, the Statutory Audit Board must be previously informed, so that such hiring does not affect the independence of the External Auditor and does not, in the overall services provided, have a significant relevance when compared to the auditing services. The Statutory Audit Board must also ensure that the necessary conditions are in place to perform such services with autonomy and independence in relation to the ongoing audit services.

The regulation of Statutory Audit Board establishes that it must receive, on a quarterly basis, detailed information of all the amounts invoiced to Sonae Indústria Group by the Statutory External Auditor or by any member of its network, with information of the services rendered.

The Statutory External Auditor or any member of its network may not render any services forbidden by law to any company of the Group, no matter the location of the respective company head office.

38. Other roles of the supervisory body

The Statutory Audit Board's main responsibilities are as follows:

a) supervising the company's management;
b) overseeing the compliance with legal and regulatory requirements and with the rules issued by supervisory authorities, as well as the internal general procedures, rules and practices;
c) preparing an annual report on the supervisory work performed and express an opinion on the report, accounts and other proposals submitted by the Board of Directors;
d) convening the Shareholders' General Meeting, whenever the Chairman of the General Meeting fails to convene it when being obliged to do this;
e) overseeing the effectiveness of the risk management, internal control and internal audit system, when applicable, being responsible for the assessment of the relevant operating procedures in respect to the existence of an adequate control environment, an efficient management of the respective activities through the appropriate risk management and the complete, prompt and reliable accounting and financial information, and an adequate system of supervision and communication;
f) receiving communications of alleged irregularities presented by the company's shareholders, employees or others;
g) monitoring and overseeing the adequacy of the process of preparation and disclosure of financial information, including the adequacy of the accounting policies, estimates, forecasts, relevant information and their consistent application between accounting periods in a duly documented and released manner, as well as presenting recommendations or proposals to ensure its integrity;
h) selecting the statutory external auditor or the statutory external audit firm to be proposed for appointment to the Shareholders' General Meeting and recommend justifiably the preference for one of the selected companies;
i) overseeing and monitoring the independence of the statutory external auditor and, most importantly and according to the law, overseeing the adequacy and approve the hiring of other services either by the statutory external auditor or by any other entity in a relation of partnership or which is part of the same network, apart from the audit services being rendered;
j) supervising the revision to the Company's separate and consolidated accounting statements, particularly its execution, highlighting the factors that influenced the integrity of the process of preparation and release of the financial information, bearing in mind potential remarks and conclusions by the Portuguese Securities Market Commission (CMVM), as part of its role as the authority responsible for audit supervision;

k) informing the management body on the conclusions of the statutory audit work, explaining how it contributed to the integrity of the process of preparation and release of financial information, along with the role performed by the supervisory board over that process.

Besides the aforementioned responsibilities, the Statutory Audit Board must issue binding prior opinion on Sonae Indústria's internal policy regarding related party transactions, as well as it must confirm, under the terms of the approved policy, whether the related party transactions were made in the scope of the company's current activity and in accordance with market conditions and must issue prior opinion regarding the company's related party transactions under the terms set out by the internal policy of related party transactions. Any member of the Statutory Audit Board can:

a) obtain from management the Company's accounting books, records and documentation for revision and verification, as well as verify the carrying amounts of any kind of assets, namely money, securities and goods;
b) obtain from management or from any director, information or explanations regarding the Company's ongoing operations, activities or any of its businesses;
c) under the terms established by law, obtain from a third party that has carried out operations on the Company's behalf, information they may need to explain those operations;
d) attend board meetings, whenever deemed convenient.

According to the terms of the Statutory Audit Board regulation, its members must promptly inform the Statutory Audit Board of any facts that may cause a conflict of interest between their interest and that of the Company. In the event of a conflict of interest, the respective member of the Statutory Audit Board must provide all information and clarification requested by the other members and will be not allowed to participate in the deliberation of such matter. The communication between the Statutory Audit Board and the Board of Directors will be assured by the Chairman of the Statutory Audit Board and by the member of the Board of Directors appointed for this purpose. Currently, this role has been attributed to the company CFO.

A member of the Statutory Audit Board who attends a meeting of the Board of Directors must previously inform the other members of his/her intention and, afterwards, they must brief the other members in relation to the items concerning the Statutory Audit Board discussed at such meetings.

The regulation of the Statutory Audit Board establishes that the selection of the Statutory External Auditor to be proposed to the Shareholders' General Meeting must comprise a request made to international audit firms, with selection criteria that include resources and coordination ability, quality and dedication to field work, types, number and deadlines of reports to be issued, communication tools and cost of services.

The referred regulation also establishes the methodology of communication between the company and the Statutory External Auditor, imposing that the Statutory Audit Board must be the main interface between the Statutory External Auditor and the Company and the first recipient of the respective reports.

It is also responsibility of the Statutory Audit Board to present a proposal for the Statutory External Auditor remuneration and make sure that the Company provides adequate working conditions.

The Statutory External Auditor must cooperate with the Statutory Audit Board by providing information in respect to any relevant irregularities that affect the performance of its role, as well as any difficulties that may have arisen in the course of its work.

IV. STATUTORY EXTERNAL AUDITOR

39. Identification of the Statutory External Auditor and its representative partner

The Statutory External Auditor is Deloitte & Associados, Sociedade de Revisores Oficiais de Contas, SA, represented by António Manuel Martins Amaral or Nuno Miguel dos Santos Figueiredo.

40. Indication of the number of consecutive years the Statutory External Auditor works for the company and/or group

Deloitte & Associados, SROC, S.A. was elected at the Annual General Meeting of 2018 for the mandate 2018- 2020.

41. Other services provided to the company by the Statutory External Auditor

In 2020, Deloitte also provided reliability services to Sonae Indústria related with the compliance with financial ratio covenants.

V. EXTERNAL AUDITOR

42. Identification of the External Auditor

The External Auditor of the company is Deloitte & Associados, Sociedade de Revisores Oficiais de Contas, SA, represented by António Manuel Martins Amaral or Nuno Miguel dos Santos Figueiredo, registered in the CMVM under nr. 20161389.

43. Permanence of functions

Deloitte is the External Auditor of the company since May 2018.

44. Policy and periodicity of rotation of the External Auditor and its representative

Sonae Indústria will, at least, comply with the law regarding the rotation of the External Auditor and of the respective Statutory External Auditor partner. A cost benefit analysis of the rotation and an assessment to guarantee the independence of both will always be performed.

45. Indication of the governing body responsible for the appraisal of the External Auditor and periodicity of such appraisal

The Statutory Audit Board monitors the performance and execution of the works conducted by the External Auditor throughout each financial year, meeting with him whenever it deems fit. Moreover, the Statutory Audit Board assesses, on a yearly basis, the global performance of the External Auditor, including an appraisal on his independence.

In the event of a just cause for the dismissal of the External Auditor, the Statutory Audit Board must propose its dismissal.

46. Identification of the works, other than auditing, performed by the External Auditor in the company and/or other companies in relation of domain, as well as indication of the internal procedures in place for the approval of such services and indication of the reasons that led to such hiring

During 2020, no services other than audit related were hired to the External Auditor.

47. Indication of the annual remuneration paid by the company, and/or companies in relation of domain or group, to the External Auditor and to other individuals or companies belonging to the same network and discrimination of the percentage

Sonae Indústria and its subsidiaries in a controlling or in a group relationship paid Deloitte the following amounts in 2020:

By the company
Audit related services (€)	19,304€ / 14.85 %
Other reliability services (€)	500 € / 0.38%
By other group entities
Auditing services (€)	110,200€ / 84.77%

C. INTERNAL ORGANISATION

I. ARTICLES OF ASSOCIATION

48. Rules applicable to the amendment of the company's Articles of Association (Article 245-A, number 1, paragraph h))

The rules applicable to amendments made to the company's Articles of Association are established by law. It is the Shareholders' General Meeting's responsibility to decide on the amendment of the Articles of Association. However, the Board of Directors can decide to change the registered office within the national territory, as well as deliberate on increases in the company's share capital through new cash injections up to three hundred fifty million euros, on one or more times.

II. REPORTING OF IRREGULARITIES

49. Tools and policy for reporting of irregularities

Sonae Indústria has a Code of Conduct that includes a policy for the communication of irregularities, which is available at the company website, www.sonaeindustria.com. Sonae Indústria's Code of Conduct and policy for communication of irregularities aims to create the climate and means for its employees and service providers to express their concerns about any behaviour or decision that they believe does not respect the company's ethics or Code of Conduct. The company elected an Ethics Committee, composed of the Chairman of the Board Audit and Finance Committee and the head of the Group's legal department, which is responsible for receiving any communication of irregularity, for initiating and supervising the investigation of all alleged irregularities. The Ethics Committee is composed of Javier Vega and Júlia Moreira da Silva.

CORPORATE GOVERNANCE REPORT

Any information on an alleged irregularity should be sent via e-mail or post to one of the following addresses:

By e-mail: [email protected]
By post: Sonae Indústria SGPS, S.A. Ethics Committee Lugar do Espido, Via Norte Apartado 1096 4470-177 Maia Portugal

When requested, a meeting may be scheduled to clarify the possible situation with the Ethics Committee.

Each irregularity communication will be received by the Ethics Committee, which is responsible for initiating and supervising the investigation of all denounced situations. Once the inquiry is concluded and if the reported irregularity corresponds to wrongful conduct, the Ethics Committee shall notify the employee's hierarchical responsible or the service provider's employer so that corrective actions and/or disciplinary proceedings are applied.

As the company wishes to encourage good faith, reporting of any alleged irregularity while avoiding damage to the reputation of innocent persons initially indicated as allegedly suspect of wrongful misconduct, anonymous reports are not accepted. The investigation will be conducted in a confidential manner and the company ensures that there will be no discriminatory or retaliatory action against any employee or service provider who reports an alleged irregularity in good faith. If any employee or service provider believes that he or she has been subject to retaliation for reporting or participating in an investigation, he/she should immediately report such perceived retaliation to the Ethics Committee.

The company provides a form to report irregularities on its intranet.

The Ethics Committee informs the Statutory Audit Board of any reported denunciation.

The company maintains records of all complaints and situations that were investigated and the respective findings, which are available for consultation by the statutory bodies and the Ethics Committee.

The Code of Conduct of Sonae Indústria contains a set of standards based on our shared values that govern the activities of Sonae Indústria. It applies to everyone employed by the Group, including members of the statutory bodies of Group companies, managing directors, senior executives, employees and people whose status is equivalent to that of employees, such as temporary staff and service providers. The Code of Conduct sets out guidance on those matters of business ethics to be complied with by all employees and service providers when carrying out their professional duties.

Sonae Indústria adheres to and actively promotes the highest ethical standards of professional conduct at all levels of the Group. Commitment to standards of conduct must emanate from the top. Therefore, Sonae Indústria's top managers are expected to set an example for the rest of the organisation through their actions, by actively leading the adoption and by monitoring the enforcement of these standards. As such, the senior managers must guarantee, in their area of responsibility, strict compliance with the law, permanently monitoring such compliance, and clearly explaining to their employees that the transgression of any law will have both legal and disciplinary consequences.

It is particularly important that a commitment to these standards of conduct is accepted by all employees and service providers at all Group companies, wherever they operate. Country operations are also required to adopt appropriate principles and actions to deal with specific ethical issues that may arise in their own countries.

The Code of Conduct of Sonae Indústria was defined in such a way that clearly explains the conduct to be followed with all stakeholders, as well as to connect it with the company's values. The Code of Conduct is structured in the following way:

RELATIONS WITH EMPLOYEES AND SERVICE PROVIDERS

Knowledge sharing and personal development
Innovation and initiative
Respect, accountability and cooperation
Confidentiality and responsibility
Sustainability
Conflict of interest
Health and safety at work
Social conscience
Communication
Compliance

RELATIONS WITH SHAREHOLDERS AND OTHER INVESTORS

Value creation
Transparency
Compliance

RELATIONS WITH GOVERNMENTS AND LOCAL COMMUNITIES

Ethical behaviour
Social conscience
Tax statement
Environmental awareness

RELATIONS WITH BUSINESS PARTNERS

Customer focus
Integrity
Ethical behaviour
Transparency

RELATIONS WITH COMPETITORS

Enforcement of competition laws
Ethical behaviour

The complete Code of Conduct can be found at the company website, www.sonaeindustria.com.

III. INTERNAL CONTROL AND RISK MANAGEMENT

50. Individuals, bodies or committees responsible for the internal audit and/or the implementation of internal control systems

Internal Audit and Risk Management for Sonae Indústria are currently provided by the Internal Audit and Risk Management team of Sonae Arauco that reports its activities and findings to the Board Audit and Finance Committee and to the Statutory Audit Board.

The support of Sonae Arauco's team to Tafisa Canada must comply with behavioural best practices regarding antitrust regulations for North America business, which led to the internalisation, by Tafisa Canada, of some of the Internal Audit and Risk Management activities and of the Operational Risk Management functions. For the same reason, Sonae Arauco and Tafisa Canada Information Technology (IT) systems are segregated. It should also be noted that in respect of accounting and administrative functions, Tafisa Canada keeps its

independence, as Canada was never included in the scope of the Shared Services Centre (which is under the responsibility of Sonae Arauco).

Internal Control and Risk Management are important parts of Sonae Indústria's culture and are integrated into the management processes and responsibilities of all Group employees, at all levels of the organization. This is supported by Group transversal functions, notably Risk Management, Internal Audit and Planning and Management Control, with specialised teams.

The mission of Risk Management is to support the companies in achieving their business objectives through a structured and systematic approach of identifying and managing risks and opportunities. It has also the objective to promote the consistency of principles, concepts, methodologies and tools to evaluate and manage the risks of all business units.

The mission of Internal Audit is to identify and evaluate, in a systematic and independent way, the correct functioning of the risk management and internal control systems, as well as the implementation effectiveness and efficiency of the controls and mitigation actions. It must also inform and alert the Board Audit and Finance Committee and the Statutory Audit Board of the more relevant observations and recommendations, identifying improvement opportunities.

The Planning and Management Control (PMC) department promotes and supports the integration of the risk management activities in the planning and management control processes of the companies. This department, supported by robust information systems, prepares analysis and reports containing operational, financial and compliance-related information. Exceptionally, during 2020 a new set of reports was implemented to monitor the evolution of the Covid-19 pandemic and its impact in the normal course of the business. Through its Procedural Manual, it ensures and defines a set of rules and procedures relative to the planning processes, reporting, management accounts and investment approval process.

Ongoing monitoring activities of control are in place, namely approvals, authorisations, verifications, reconciliations, reviews of operating performance, security of assets and segregation of duties. Pertinent information is identified, captured and communicated within a form and time frame which enables employees to fulfil their responsibilities.

Sonae Indústria has its own corporate team responsible for Planning and Management Control in parallel with Sonae Arauco team and each business unit has in its team a controller which ensure that procedures of the group are properly implemented.

As with Internal Audit & Risk Management, Accounting, Administration and Transaction Services are provided by Sonae Arauco centralised accounting back-office and Shared Service Centre (SSC) providing accounting and administration services for all Sonae Indústria affiliates with the exception of Tafisa Canada, thus helping to guarantee alignment of policies and strengthening of procedures and controls.

The reliability and integrity risks of the accounting and financial information are also evaluated and reported by the External Audit activity.

Sonae Indústria has a reasonable level of confidence in the internal control framework which is currently in place. Communication of the Vision, Values and Principles throughout the organization reinforces the importance in terms of ethical behaviour. The existence of the Code of Conduct, of the whistleblower tool (reporting of irregularities) and the Ethics Committee enhance the control culture of the organisation.

At Sonae Arauco there is also a Code of Ethics aiming at reinforcing the awareness of Sonae Arauco's Vision, Values and Principles and encouraging the good conduct of its employees.

The Internal Audit and Risk Management team integrates and participates periodically in the meetings and activities of two "Sonae companies' committees" (groups composed of representatives from several Sonae companies): the Audit Committee and the Risk Management Consulting Group. The participation in these bodies contributes to the strengthening of processes and to the increased effectiveness of the internal audit and risk management activities of the companies that are represented.

51. Explanation of the hierarchical and functional reporting lines to other corporate governing bodies or committees

It is the responsibility of the Board of Directors to define, at all times, the objectives related with the assumption of risks, as well as to create the necessary structures and services to ensure that the internal control and risk management system works properly. For this purpose, the Board of Directors, through the Board Audit and Finance Committee, monitors the activities of Internal Audit and Risk Management.

The planning of annual activities, along with the analysis of the activity carried out are presented to the Statutory Audit Board, which enables this body to monitor and advise on the defined risk policy, namely by proposing other activities, evaluating the accuracy of the resources allocated to those activities, etc..

The Statutory Audit Board advises on its performance and connection with other governing bodies and company departments in its annual report and opinion, disclosed together with other financial statements.

The Internal Audit and Risk Management reports to the Statutory Audit Board and the Board Audit and Finance Committee. These bodies can, at their discretion, request meetings to discuss and review internal audit and risk management matters and can also request information or clarifications whenever they wish.

The competences of the Statutory Audit Board include reviewing the effectiveness of the risk management system as well as that of the internal control and audit systems. The Statutory Audit Board has access to all the information whenever it deems necessary and can liaise with the head of the department, receiving the reports related to those activities.

The company CFO reports into the Statutory Audit Board meetings and updates them on the company and group activities, either through a presentation of the main facts occurred or reporting any potential changes to the company strategy, so that the Statutory Audit Board is capable of monitoring and advising on such activities.

The Statutory External Auditor reviews the effectiveness and operation of the internal control mechanisms according to work plan aligned with the Statutory Audit Board, to whom it also reports its findings.

52. Existence of other functional areas with competencies in terms of risk control

Sonae Indústria's culture is based on integrity and ethical values, as outlined in the company's Code of Conduct, which emanate from the top with the example thus being set by management.

The different governing bodies were born from a management philosophy and operating style based on a strong organizational structure with adequate assignment of authority and responsibilities. Solid Human Resources policies and procedures and the existence of the Code of Conduct are enshrined in such structure.

Sonae Indústria faces a variety of external and internal risks that must be assessed and for this purpose the company has installed a culture of prevention and early detection. Additionally, it is also each functional area of the Group the responsibility of controlling and monitoring of the risks inherent to each function.

53. Identification and description of the main types of risk (economic, financial and legal) the company may be subject to in the exercise of its activities.

The production of wood-based panels is an industrial activity that is exposed to various types of risks. Consequently, risk management is a key concern of the company and Sonae Indústria is active in the implementation of standards and best practices and in the selection of systems aimed at reducing risks.

MACROECONOMIC INFLUENCES

Description of the risk: Sonae Indústria's activity is reliant on the general macroeconomic environment and on the developments of the markets in which it operates. Part of the products produced by Sonae Indústria's

subsidiaries are commodities, having the nature of durable goods and are mainly intended for the construction and furniture sectors. The Group's operational activity is, therefore, cyclical, being positively correlated with general economic cycles and, in particular, with the evolution of the construction and furniture sectors. Thus, the activity of Sonae Indústria and its subsidiaries businesses can be negatively affected by periods of economic recession, in particular by a drop in household consumption levels. In turn, these levels are influenced, among other factors, by wage policies and unemployment levels, as well as prevailing confidence and social protection levels. The availability of credit in the economy is also relevant for Sonae Indústria Group's business due to its potential impact on the property market. Equally, possible political and/or social and/or religious tensions in any of the markets may have a material impact on Sonae Indústria Group's operations and financial situation that is impossible to estimate. In 2020, many businesses, including Sonae Indústria, faced extreme challenges related with the macroeconomic effects of the Covid-19 pandemic. The Covid-19 pandemic had a negative impact in Sonae Indústria turnover levels, particularly significant in the period from mid March to May, which caused a material negative impact in Sonae Indústria profitability in that period.

Mitigating actions: Sonae Indústria, through its subsidiaries, has a strong presence in international markets, having as most important markets the Eurozone, North America (namely Canada and the United States) and South Africa. These markets have different macroeconomic, political and social profiles and, as such, are likely to react differently to any global economic and financial crisis, thus potentially reducing the overall volatility. The launch of innovative and non-commodity products and long term partnerships with key customers are important initiatives to mitigate this risk. In order to offset as much as possible the negative effects of the pandemic, during the most critical period but also in the remaining of the year, management teams have put into place important actions at different levels of all businesses including adjusting production levels (according to demand), costs (optimizing fixed costs) and investment plans. Whenever possible and adequate Sonae Indústria also made use of the governments support measures that were created to partially offset the negative effects of the pandemic in the businesses.

COMPETITION

Description of the risk: The activity developed by Sonae Indústria faces significant challenges in the worldwide sector of wood based panels industry, as it is subject to hard competition in all the markets in which it is present (namely in Iberian Peninsula, Germany, North America and South Africa). This could have adverse effects on the Group's financial situation and results to the extent that the increase of production capacity, new competing industrial units and/or the adoption of a more aggressive pricing policy by competitors, could lead to a reduction in turnover and/or the need to review prices by Sonae Indústria's subsidiaries, with a knock-on effect on the profitability and sustainability of its operations.

Mitigating actions: Sonae Indústria's diversified assets and geographical exposure to various European markets, along with the North American and South African markets, and also other markets through exports, also contributes to potentially reduce these risks. In addition, the increased focus on higher added value products as a way of differentiating and the effort to contain costs as part of the strategy already being implemented, could protect the competitive position of Sonae Indústria and allow it to further progress in its objectives of being recognised as a reference player in the wood-based panels sector.

COST STRUCTURE RISKS

Description of the risk: Since the industrial activity in the sector is dependent on considerably large industrial units, Sonae Indústria's consolidated cost structure has a significant fixed component, i.e. not dependent on sales volume and upon which the Group can only act through restructuring or efficiency increase initiatives. An insufficient turnover or gross margin on sales to offset fixed costs could determine losses to be registered by Sonae Indústria and its subsidiaries.

On the other hand, the variable cost structure of Sonae Indústria's subsidiaries, notably in the case of raw materials, mainly wood, chemicals and air-dried paper, is exposed to external factors (that are outside the

company´s control), with a positive or negative impact on the availability of such raw materials and their purchase price. In particular, the risk associated with access to wood, the raw material essential to the production process, in terms of suitable quantity, type, quality and price, may impact not only the subsidiaries ability to provide its customers with products according to agreed time frames and conditions, but could affect expected profitability when it comes to setting a sale price for its products. In an extreme scenario, the inability to buy wood in sufficient quantities could lead to a temporary interruption in production at the affected industrial unit, with knock-on effects on operational profitability. As explained in the previous section (macroeconomic risks) the Covid-19 pandemic caused direct and indirect negative impacts in Sonae Indústria businesses, including a reduction on turnover levels, particularly in the period between March and May, which caused a material negative impact in Sonae Indústria profitability in that period due to the referred significant fixed costs component.

Mitigating actions: To mitigate the risk of fixed costs not covered, there is a continuous development and implementation of initiatives and actions to diversify products and markets, as well initiatives to increase efficiency and cost reduction at industrial operations. Regarding variable costs, the Group have diversified their supply sources and the types of wood used, namely through recycling waste, and introducing different types of wood and alternative by-products. In order to offset as much as possible the negative effects of the pandemic management teams have put into place important actions at different levels of all businesses including adjusting production levels (according to demand), costs (optimizing fixed costs) and investment plans. Whenever possible and adequate Sonae Indústria also made use of the governments support measures that were created to partially offset the negative effects of the pandemic in the businesses. When possible layoff or short work schemes were implemented (mainly in 2Q20), according to the countries' legislations, to minimize fixed costs and preserve available cash and financing facilities.

CYBERSECURITY

Description of the risk: The risk of digital attacks on systems, networks, and programs of operational technology (OT) and information technology (IT). OT cybersecurity: costly production outages leading to financial losses, catastrophic safety failures and environmental damage leading to potential liability issues, and theft of intellectual property leading to loss of competitive advantage. IT cybersecurity: exposure to harm or loss resulting from breaches of or attacks on information systems, risk events resulting from malicious or unintentional acts and coming from sources outside or inside the company. During 2020, and due to the pandemic, the "home office" has been adopted for all functions possible to be held remotely, increasing the cybersecurity risk.

Mitigating actions: Continuous development and implementation of initiatives to protect systems, networks, devices and data from cyber-attacks. Implementation of different awareness and training actions about cybersecurity, involving systems users. During 2020, to mitigate the increasing risk associated with "home office" practices, different actions have been put in place focusing in communications about remote work security best practices.

OPERATIONAL RISKS

Description of the risk: Sonae Indústria is an industrial group operating production facilities in several countries. The industrial production activities are exposed to a wide range of operational risks which can interrupt production and have potentially negative effects on operations and, consequently, its financial situation and results. From all the operational risks present in the production of wood-based panels, (namely fire and explosions incidents, trampling situations, dust explosions, hot work, exposure to hazardous material, among others) fire and explosion accidents are considered the most relevant ones.

Mitigating actions: To address the referred operational risks the industrial subsidiaries are continuously monitored within the framework of a comprehensive risk management system.

Part of the risk management system, centralized and monitored by the Corporate Center, is to develop standards and practices as well as to define and implement new systems to reduce the likelihood and consequence of any industrial incident.

As mentioned the combustible dust explosions and thermal oil fires pose the biggest threats to our industrial activities therefore Sonae Arauco continues to rely on specialised companies that support the implementation of sustainable measures on a step by step program. This program encompasses the retrofit of assets with state-of-the-art protection features and comprehensive training to increase knowledge of our employees.

FINANCIAL RISKS

The Group is exposed to a variety of financial risks including credit risk, capital risk and liquidity risk.

Credit Risk

Description of the risk: The credit risk is related to receivables from customers, i.e. the risk that a customer is late in paying or does not pay for the goods and services acquired.

Mitigating actions: There are credit risk control systems and procedures developed to maximize the effective collection of the receivables from customers in accordance with the agreed conditions. Sonae Indústria makes use of credit insurance, as a tool to mitigate this risk, in all regions where it is present. In specific situations (for certain customers) where we are not able to contract credit insurance to mitigate this risk, alternative and/or complementary solutions (such as bank guarantees, letters of credit and confirming, among others) are explored in order to achieve the largest possible turnover volumes in an environment of minimum and controlled risk. If it is not possible to obtain sufficient risk coverage for a specific customer or operation, a detailed internal process has been developed with the objective of analysing every particular aspect of such business, so an informed and complete and approved decision can be taken over a possible own risk-taking situation, escalating the decision to higher management levels.

It should be noted that none of Sonae Indústria customers, including Sonae Arauco customers represents more than circa 6.6% of its aggregate turnover (considering 100% of Sonae Arauco turnover).

Capital Risk

Description of the risk: The capital structure of Sonae Indústria, determined by the proportion of the company equity and net debt is managed in order to ensure the continuity and development of its operations considering also efficiency criteria in financing costs.

Mitigating actions: Sonae Indústria closely monitors its capital structure, identifying risks, opportunities and the necessary measures for the achievement of those objectives.

Liquidity risk

Description of the risk: Liquidity risk arises when a company does not have the cash or the financing required to properly carry on its business activities on time, implement its strategy and meet its payment obligations when due, while avoiding the need for having to obtain funding under unfavourable terms. The existence of financial covenants in Sonae Indústria financing agreements is also a possible cause of liquidity risk since

breach of the financial ratios may lead to an event of default in the respective financing agreements, which could lead to their termination, including the early repayment of debt.

Mitigating actions: Liquidity risk management at Sonae Indústria comprises mainly: consistent financial planning, diversification of financing sources, diversification of debt maturities, and arrangements to secure committed credit facilities with relationship banks. Also with the goal of mitigating liquidity risk there is a continuous monitoring of the financial ratios agreed in order to anticipate potential non-compliance situations and implement corrective measures in advance. The referred mitigating actions were reinforced in the context of the Covid-19 pandemic particularly due to the significant increase uncertainty it generated. Close communication was kept with bank creditors in different regions throughout 2020 in order to inform on the actual situation as Sonae Indústria went through the pandemic crisis.

BUSINESS CONTINUITY RISKS

Description of the risk: Some of the businesses developed by Sonae Indústria may require additional investment, the conditions of which could depend on the financial framework, on its current indebtedness level and by the evolutions of its activity and that of its subsidiaries. Financing of the additional component may be obtained through its own and/or external capital. Sonae Indústria cannot guarantee that these funds, if necessary, will be obtained, or that they will be subject to the predicted conditions. If there is a need for external capital, the macroeconomic and financial framework could present constraints both at the available liquidity level and at the financing cost level, which may affect or preclude access to credit. Even under a recovery context, the speed and manner in which this takes place is subject to considerable uncertainty, meaning the financing of Sonae Indústria and/or of its subsidiaries possible future investments cannot be guaranteed.

Mitigating actions: Actions referred above to mitigate macroeconomic and financial risks.

ECONOMIC RISKS

The economic risks that Sonae Indústria is exposed to include: interest rate risk and foreign exchange risk.

Interest rate risk

Description of the risk: Interest rate risk depends on the proportion of floating rate debt and the consequent cash flows related to interest payments.

Mitigating actions: As a general rule, Sonae Indústria does not hedge its exposure to floating interest rates through financial derivatives. This approach is based on the principle of the existence of a positive correlation between the interest rate levels and the "operating cash flow before net interest charges" which creates a natural hedge on the "operating cash flow after net interest charges" for Sonae Indústria. As an exception to this general rule, Sonae Indústria Group may engage into interest rates derivatives, and is this case, the following principles should be observed: (i) derivatives should not be used for trading, profit making, or speculative purposes; (ii) engage preferably in derivative transactions with Investment Grade financial institutions; (iii) match exact periods, settlement dates and base interest rate of the underlying exposures; and (iv) maximum financial charges (aggregate of the derivative and the underlying exposure) should be known and limited on the inception of the hedging period. The inefficiencies, whenever they exist, are booked under the financial results item of the consolidated income statement.

Foreign exchange risk

Description of the risk: Foreign exchange risk exposure is due to the fact that Sonae Indústria is a geographically diversified group, present in three different continents, and as such subject to transactions and balances denominated in pound sterling, South African rand, Canadian dollar, American dollar, Swiss franc and Polish zloty. The Consolidated Statements of Financial Position and Income Statement are exposed

to the risk of a change in the value of capital invested in subsidiaries outside the Eurozone. Sonae Indústria's subsidiaries are exposed to the risk associated with commercial transactions made in currencies other than their local currency.

Transaction risk arises when there is exchange risk related to a cash flow in other than a subsidiary local currency.

Currency conversion risk emerges from the fact that, when preparing the Group's consolidated accounts, the financial statements of the subsidiaries denominated in currencies other than that of the consolidated accounts (euro), must be converted into euros. As exchange rates vary between accounting periods and as the value of the subsidiaries' assets do not match their liabilities, volatility in the consolidated accounts arise as a result of conversion in different periods at different exchange rates.

Mitigating actions: The Group companies cash flows are largely denominated in the respective subsidiary local currency. This is valid independently of the nature of the cash flows, i.e.: operating or financial, and provides a degree of natural hedging, reducing the Group's transaction risk. Aligned with this reasoning, Sonae Indústria's subsidiaries only contract debt that is denominated in the respective local currency. Additionally, whenever there are relevant business flows in a currency different from the subsidiary local currency, a natural hedge strategy may be implemented, if feasible from a business perspective, seeking to offset purchases (payments) or sales (receivables) in that currency with sales (receivables) and purchases (payments) in the same currency for similar amounts. In situations where there is a relevant exchange risk as a result of operational activity involving currencies other than the local currency of each subsidiary which cannot be naturally hedged, the exchange risk must, as a general rule, be mitigated by the subsidiary exposed to the exchange rate risk contracting foreign exchange derivatives.

LEGAL AND REGULATORY RISKS

Description of the risk: The activities of Sonae Indústria and its subsidiaries and affiliated companies are, as industrial activities, subject to regulatory frameworks in a number of areas, including national regulations, European Union directives and international agreements, by which Sonae Indústria is bound and which may influence its management and strategic decisions. Indeed, Sonae Indústria, through its subsidiaries and affiliated companies, is subject not only to different legal frameworks in different countries as diverse as Canada, Germany, Portugal, South Africa and Spain, but also to legislation in different areas, such as industrial and forestry, environmental, labour, hazardous materials transportation, health and safety, construction and housing, urban planning, among others. Possible changes to regulations, legislation, or changes in interpretation on the part of competent authorities, could lead to increased adjustment costs, namely industrial and operational, or, in the limit, constricting the respective operating income. In addition, the noncompliance with such regulations could lead to operational restrictions, investment needs or even the revocation of licences, authorization or permits or in sanctions.

It is worth referring formaldehyde that is naturally emitted by vegetation (leaves and wood).

In 2015, formaldehyde was reclassified as a carcinogenicity Cat 1B substance, when present above certain values, which results in new challenges for the wood-based products industry. This reclassification triggered new obligations under various European and national legislations.

Mitigating actions: continuous monitoring of legal and regulatory requirements and its changes and training to update knowledge. When needed, legal and tax advice is also provided by outsourced resources selected from firms with established reputation and which have the highest standards of competency, ethics and experience. Establishment and disclosure of written policies and procedures on relevant legal or regulatory matters to ensure compliance.

HUMAN RESOURCES

Description of the risk: Lack of necessary knowledge, skills, experience or adapting capacity of key resources, may threaten business model execution and prevent critical business objectives to be achieved and risks reduced to an acceptable level. The incapacity to retain key human resources can lead to high "replacement" costs. The restrictions imposed by the pandemic conditioned the number of training hours in 2020.

Mitigating actions: Implementation of different initiatives and actions to develop, retain and recruit people at the different levels of the organization. Continuous training and education actions and development of initiatives to improve communication with all employees. The commitment of Sonae Indústria to shifting from legal compliance to international best practices in health and safety, is also an action to retain and attract people. Considering the Covid-19 pandemic, health and safety measures to protect our people at the workplace (plants and offices) and minimize the risks of contamination, were Sonae Indústria main priority in training during 2020.

54. Description of the process for identification, evaluation, monitoring, control and management of risks

For further information on mitigation and management of risks see also topic 53.

The management of risks is an important part of Sonae Indústria's culture and is mainly supported by Internal Audit and Risk Management activities.

Internal Audit is an independent and objective activity, which aims helping Sonae Indústria to achieve its goals by participating in the process of value creation. It uses a systematic and structured approach to evaluate and improve the effectiveness of risk management, internal control procedures and corporate governance.

Internal Audit operates in accordance with International Standards for the Professional Practice of Internal Auditing, established by The Institute of Internal Auditors, including its Code of Ethics.

Internal Audit reports to the Board Audit and Finance Committee and to the Statutory Audit Board. These Boards are responsible for overseeing the effectiveness of the internal audit function.

The planning of the activity of Internal Audit is essentially developed based on a prior assessment of the systematic business risks of Sonae Indústria. An annual plan of Internal Audit activity is submitted to and discussed with the Board Audit and Finance Committee and to the Statutory Audit Board.

Descriptive reports of the activity of Internal Audit are prepared and sent to the Board Audit and Finance Committee and to the Statutory Audit Board of Sonae Indústria, including the summary of significant internal control deficiencies and shortcomings in procedures and policies set by company.

The existing reporting system ensures regular feedback, a proper review of the activities and the possibility to adjust the plan of activities to emerging needs.

Risk Management is a key concern within the Sonae Indústria culture and is present in all management processes, forming part of the delegated responsibility of managers and employees at all levels within the Sonae Indústria Group.

Internal Audit and Risk Management services, including Operational Risk Management, for Sonae Indústria companies, except for Tafisa Canada that has internalised these functions, are provided by teams at Sonae Arauco.

Risk Management comprises the process of identifying potential risks, analysing their possible impact on the organisation's strategic goals and seeking ways to minimise the probability of their materialisation, in order to determine the best procedures to manage exposure to them.

The risk management is part of the Internal Audit & Risk Management function.

This department is focused in the promotion of a culture of risk awareness throughout the organization and in the coordination of risk management activities and respective reporting of results. It is also responsible for implementing the Enterprise Wide Risk Management (EWRM) methodology, detecting, assessing and prioritising the risks and their potential impact on the organisation's activities.

The company risk model aggregates the risks in two major categories (Business Processes Risks and Business Environment Risks) and quantifies the relevance (impact on EBITDA and operating efficiency) and the probability (frequency of the event or scenario occurring) of the critical risks.

The management of financial risks incorporated into the business process risks is carried out and monitored within the scope of the finance function.

The risk management also cooperates with the insurance management, whose goal is to bring about more efficient and effective management of the different insurance policies, in order to mitigate insurance risks.

The general approach seeks to assure a suitable and balanced coverage of the operational risk by transferring it to the company's insurance partners. Sonae Indústria developed various insurance programs to transfer the risk to the market, aiming to cover:

property damage (including machinery breakdown) and business interruption;
damages in transportation;
damages caused to third parties (product, public and environmental liability);
credit risk;
working accidents.

Sonae Indústria contracts insurance policies as a back up to its risk management processes that better approach specific risks and topics and is committed to improve its assets protection and prevention levels in order to reinforce the partnership with the insurance market.

The production of wood-based panels is an industrial activity with a significant operational risk arising from fire and explosion. Accordingly, the protection of core assets, as well as programs for prevention loss of income are constant concerns of Sonae Indústria.

Sonae Indústria kept the focus on the Continuous Improvement Programme supported by a specialised Continuous Improvement Team of Sonae Arauco, which promotes the implementation of continuous improvement best practices that lead to higher efficiency and productivity levels in the group, gradually implementing a cultural change in the company's employees. The objective is to involve all employees in developing a faster and more efficient way to work, not only in the industrial areas, but also in commercial and supporting activities of the company.

Operational Risk Management:

Given the already mentioned operational risks associated to such an industrial activity as that of Sonae Indústria, protection of assets is essential to ensure business continuity and prevent negative impacts, including financial impacts. Constant evaluation of the exposures and of how the operating risks can be reduced to an acceptable level are mandatory activities.

In 2020, Risk Management activities at Sonae Arauco, as planned, kept aiming to improvements targeted on the Thermal oil systems and dust explosion protection. It is expected that the focus on this particular areas will be maintained in the upcoming years given its importance, and relevance, with regards to the asset protection and business continuity.

Corporate Operational Risk Standards (CORS)

Corporate Operational Risk Standards are an important tool for a clear guidance and for standardization of the Hazards Management program. These principles were developed with reference to international standards such as NFPA¹ and/or FMG ² data sheets, bringing together the best protection engineering practices for the wood industry. These standards were validated in coordination with external experts and specialists from risk management and insurance market fields.

The Corporate Operational Risk Standards (CORS) are divided in three areas:

1. Management Programs and Procedures:

industry best practices in loss prevention involving the human element;
preparation for emergencies;
management programs (maintenance, inspections equipment, training, contractors, housekeeping).

2. Fire Protection Systems:

reference to internationally recognised standards, mainly NFPA;
general requirements in fire detection and protection in industrial premises, fire water supply specifications and building materials characteristics;
integration of a component for surveillance practices (hardware).

3. Special Hazards:

world class developed knowledge in fire detection and protection inherent to the wood based panels industry: wet and dry particle handling and transport, dryers, hot presses, etc.;
specific issues, such as thermal and hydraulic oil installations, electrical cabinets and rooms or transformers.

In 2020, Sonae Arauco developed a new standard– protection of electrical rooms – in order to standardize required protection of these assets.

Inspections

External Risk Inspections

Due to the Covid-19 pandemic, in 2020, there were no presential risk inspections at any industrial sites. A remote version of the risk visits was carried out with success.

Internal Risk Inspections

Also due to the pandemic no internal risk inspections took place.

Risk Plan

In addition to the recommendations issued by the external risk engineers, each industrial unit has further measures to be implemented in order to comply with the corporate guidelines, with the recommendations resulting from internal and external inspections and (in the case of Sonae Arauco) with the Corporate Operational Risk Standards. This planning was revised and a quarterly update that enables a more regular follow up of the plan execution was implemented.

¹ National Fire Protection Association.

² Factory Mutual Global.

55. Main components of the internal control systems and risk management adopted by the company in relation to the process of disclosure of financial information (Article 245-A, number 1, paragraph m))

For Sonae Indústria, the internal control system implemented, that also covers the process of preparation, management and disclosure of financial information, is a transversal set of procedures implemented by the Group's executive governing bodies, supported by principles of coherence, consistency, transparency, accountability, honesty, integrity, reliability and relevance, aiming to assure the reliability and the accuracy of the financial information, the compliance with accounting rules and regulations, whilst promoting operational effectiveness. The internal control system monitors the application of management best practices and procedures, the compliance with the management established policies and aims to provide reasonable assurance in the preparation of the company's financial statements, in accordance with the adopted accounting standards and the mandatory applicable reporting frameworks while ensuring the quality of the financial reporting.

In this global internal control system, the Group's first point of control is associated with the organization, procedures and tasks related with process of decision-making and execution, which translate, in a systematic, controlled and validated way, in the authorizations of the operations by management.

Sonae Indústria aims to ensure that those management transactions turn into procedures and movements related with accounting and financial records which, consequently, are elaborated in a way to allow a reasonable level of certainty that such transactions are executed in accordance with a general or specific management authorization, that transactions are registered in order to enable the adequate preparation of the financial statements in accordance with the generally accepted accounting standards and to keep an adequate accounting record of the company financial situation. The accounting evidence of the company financial situation is compared, in frequent time intervals, with existing assets and liabilities and appropriate measures are taken whenever relevant material differences are registered.

The reliability, independence, integrity and the opportunity of the financial information are guaranteed not only by the clear separation between who executes the operations, prepares the information and its internal users (and naturally external users), but also by the realization of several control activities throughout the process of preparation, validation and disclosure of financial information.

The internal control system for the accounting and preparation and disclosure of financial information includes the following key controls:

The process of reporting financial information is documented. The risks, tasks and associated controls are identified, individualized and segregated, being properly established and approved the criteria for its preparation and disclosure, which are periodically reviewed;
The utilization of consistent accounting principles in compliance with the rules in force, which are explained in the notes to the financial statements and are present in the company formal document – "Group's Accounting Policies" – is updated and validated by the Board Audit and Finance Committee and approved by the Board of Directors;
The plans, procedures and records of Group companies allows a reasonable assurance that the transactions are executed only with proper authorization, approved by management, registered in compliance with accounting standards and subject to internal audit procedures, also ensuring that the Group companies maintain a proper record of its assets with their existence reconciled with the accounting records, being adopted appropriate measures always when differences are verified;
The financial, accounting and management information is reviewed regularly by the management of each business unit and by the persons in charge of the results' centres, ensuring continuous monitoring and related budget control;

During the process of preparation and review of financial information, detailed schedules are set out and shared with the areas involved, being all documents reviewed in detail, including the review of principles used, verifying the accuracy of the information and its consistency with principles and policies defined in the "Group's Accounting Policies" document and used in previous periods;
With regard to the individual companies, with the exception of Tafisa Canada that performs its own accounting records, accounting records are ensured by the Sonae Arauco Shared Services Centre that guarantees the control and consistency in recording business processes transactions and the recording of the assets, liabilities and equity accounts balances. The financial statements are prepared by the different functions of administrative services, in the different geographies. Compliance with the rules and the schedule mentioned above ensures the consistent respect for criteria and the early detection of any potential deviation or inaccuracy in the records. Financial statements are prepared by chartered accountants of each company and reviewed by Planning and Management Control, Consolidation, the Statutory External Auditor and by the supervisory bodies;
Consolidated financial statements are prepared on a monthly basis. This process represents an additional control of the reliability of financial information, as regards the consistent application of accounting principles, cut-off procedures and control of related parties transactions and balances;
In the assessment process of the company risk, the Management Committee permanently identifies the relevant risks to the preparation of the financial statements in order to ensure an appropriate and real image of the company situation in every moment. A monthly detailed analysis of the financial statements aims to ensure that these reflect the risks, events and external and internal circumstances that impacted the reporting period;
The Management Report is prepared by the Investors Relations Department with contributions and reviews made by several business and supporting departments. The Corporate Governance Report is also prepared by the same department in cooperation with the Legal Department;
The Group financial statements are prepared under the supervision of the Management Committee. The documents that constitute the Annual Report and Accounts are sent for review and approval by Sonae Indústria Board of Directors, after being previously verified with the Statutory External Auditor and reviewed by the Board Audit and Finance Committee. Once approved, the documents are sent to the Statutory External Auditor, who issues the accounts legal certification and audit report, both object of a detailed analysis and deliberation by the Statutory Audit Board;
The process of preparing separate and consolidated financial information and the Management Report is supervised by the Statutory Audit Board and by the Board Audit and Finance Committee of the Board of Directors. These bodies meet, at least, quarterly to review the individual and consolidated financial statements. The Statutory External Auditor presents the main conclusions of the work carried out regarding the annual financial information, directly to the Statutory Audit Board and to the Board Audit and Finance Committee. Promptly and when something material happens with relevant impact in the accounts, the Statutory External Auditor meets with the Statutory Audit Board to discuss and validate the implications of those situations in the results' announcements;
Internal rules applicable to the disclosure of financial information aim to warrant that information is disclosed to the market in a timely manner, in order to prevent information asymmetry.

Among the risks that may materially affect the financial and accounting report preparation, the following are worth highlighting:

• Accounting estimates – major accounting estimates are described in the notes to the financial statements. Estimates are based on information made available during the preparation of the financial statements and in the best knowledge and experience of past and present events;

Balances and transactions with related parties balances and transactions with related parties are disclosed in the notes to the financial statements. These transactions are related mainly to the operational recurrent activities of the Group, and to the granting and obtaining of loans under arm's length conditions and supported in good transfer pricing practices;
Compliance and updating of rules and accounting policies the accounting policies produced by the different regulators are permanently being updated. Financial statements are presented according to the most recent versions of rules and accounting policies, whenever it impacts the disclosure of the financial information reports, to prevent incompleteness, inaccuracy or ill-time of the financial statements, as referred in the notes to the financial statements;
New, revised or discontinued information systems the adoption of new information systems or its constant updates could impact the timely presentation of the financial information and even its reliability and consistency. The permanent update of the decision-making information systems is accompanied by multidisciplinary internal and external teams that provide an adequate control environment. In turn, the company risk of not having an effective and redundant information and technology infrastructure in the processes scope used to define, develop, keep and operate a timely and adequate treatment information environment, could lead to information loss and/or in the availability of the systems to report the information in a complete manner and on time. To minimize this potential risk, the Group has been developing and implementing information technology solutions that allow to face this risk in a more controlled way;
Fraud and human errors the fraud situation in which an individual or a group of people in collusion, namely those with higher management responsibility positions, engages in fraud practices related with the financial information preparation can be hard to detect, depending on the hierarchical level of the intervenient. The existence of different information internal recipients, namely the top management level, the Planning and Management Control, the Investor Relations Department and local teams allows successive and redundant controls which enable the identification of potential fraud and human errors situations. Fraud is also understood as a key audit matter by the Statutory External Auditor and specific procedures are developed in order to assure the inexistence of any material misstatement in the financial information, providing an additional control point for the preparation of that information;
Cost/benefit relation of the internal control process the implementation of an internal control system related with the preparation and disclosure of financial information can represent a cost that has to be assessed in terms of benefit. There must be a direct relation between benefits (security) that the company aims to achieve with the internal control system implementation and the reasonable security that this may provide. The business processes optimization, which includes the process of preparation and disclosure of business information, has been permanently analysed and updated, in terms of processes optimization and internal control environment;
Company's less common transactions sometimes company´s less common transactions occur and, because they are exceptional, they could not be timely detected and identified by the internal control system as it may not be prepared to deal with it. When an exceptional situation occurs, it is immediately identified at local or consolidated level, analysed by the several internal departments and, if need be, the Statutory External Auditor and/or experts are requested to confirm it.

IV. INVESTOR RELATIONS

56. Department responsible for investor relations, composition, roles, information made available by the department and contact details

Sonae Indústria has its own Investor Relations Department, which is responsible for managing the relationship between the Company and shareholders, investors, analysts and market authorities, including CMVM (the Portuguese Securities Market Commission).

Each semester, the Investor Relations Department is responsible for coordinating the preparation of an earnings announcement to be issued to the market and provides statements whenever necessary to disclose or clarify any relevant fact or event that could affect the share price. The Investor Relations Department is available at all times to respond to any general questions posed by the market. The Company is available to meet investors, either at road shows or in one-on-one meetings upon request, or by participating in conferences.

Sonae Indústria's Investor Relations Department comprises one staff member. Its manager is João Mangericão. The Department may be contacted by e-mail to [email protected] or by phone at +351 220 106 359.

In addition to the compliance of all legal obligations regarding the disclosure of information to the market, this department ensures timely disclosure of information to its shareholders, investors and to the markets in general.

57. Representative for the Relations with Capital Markets

Sonae Indústria's legal representative for Relations with Capital Markets is its Managing Director George Christopher Lawrie, who can be contacted via the Investor Relations Department or, alternatively, directly by e-mail to [email protected].

58. Information on the volume and time of response to information requests received during the year or pending from previous years

The company keeps a record of the requests made to the Investor Relations Department and how each request was dealt with. In 2020, the department received 41 contacts and requests for clarification from investors, of which 4 were non-resident. In overall terms, the average response time to the information requests from investors was less than 48 hours. No information requests from earlier years are pending.

V. WEBSITE

59. Website address

The company's website is www.sonaeindustria.com.

60. Place where information on the firm, public company status, registered office and the remaining information is available set out in Article 171 of the Portuguese Companies Law

Information on the company's firm, the quality of publicly traded company, headquarters and other elements mentioned in Article 171 of the Companies Code is available at:

https://www.sonaeindustria.com/pt/governo-societario/identificacao-da-sociedade (Portuguese version) https://www.sonaeindustria.com/en/corporate-governance/corporate-details (English version)

61. Place where the company's Articles of Association and terms of reference of the governing bodies and/or committees are available

The company's Articles of Association are available at:

https://www.sonaeindustria.com/pt/governo-societario/estatutos-da-sociedade (Portuguese version) https://www.sonaeindustria.com/en/corporate-governance/company-statutes (English version)

The functioning regulations of the Board of Directors, Management Committee and the Statutory Audit Board, as well as the terms of reference of the BAFC and of the BNRC are available at:

62. Place where information regarding the identification of the members of the governing bodies, the representative for the Relations with the Capital Markets, the Investor Relations Department or its equivalent, respective roles and contact details is available

The identification of the members of the company's governing bodies is available at:

Information about the representative for the Relations with the Capital Markets is available at:

https://www.sonaeindustria.com/pt/governo-societario/representante-relacoes-mercado (Portuguese version)

https://www.sonaeindustria.com/en/corporate-governance/market-relations-representative (English version)

Information about the Investor Relations Department is available at:

https://www.sonaeindustria.com/pt/investidores/departamento-relacoes-investidores (Portuguese version)

https://www.sonaeindustria.com/en/investor/investor-relations-department (English version)

63. Place for disclosure of the company financial statements, which must be available for at least five years, as well as the half-year calendar of corporate events, released at the beginning of each semester, which must include dates of Shareholders' General Meetings and dates of release of annual, half-year and, if applicable, quarterly results

The company's accounting documents are available at:

https://www.sonaeindustria.com/pt/investidores/relatorios-e-contas (Portuguese version) https://www.sonaeindustria.com/en/investor/management-reports (English version)

The half-year schedule of company events is available at:

https://www.sonaeindustria.com/pt/investidores/calendario-financeiro (Portuguese version) https://www.sonaeindustria.com/en/investor/financial-calendar (English version)

64. Place for disclosure of the notice of General Meeting and all the preparatory and subsequent information

The notifications convening the General Meetings and all the preparatory and subsequent meeting information are available at:

https://www.sonaeindustria.com/pt/governo-societario/assembleias-gerais (Portuguese version) https://www.sonaeindustria.com/en/corporate-governance/general-meetings (English version)

65. Place for the release of the historic records of all resolutions approved at the Shareholders' General Meetings, the percentage of share capital represented and the results of the votes cast, all in relation to the last three years

The record of the deliberations made in the General Meetings, capital represented and the results of the votes are available at:

https://www.sonaeindustria.com/pt/governo-societario/assembleias-gerais (Portuguese version) https://www.sonaeindustria.com/en/corporate-governance/general-meetings (English version)

D. REMUNERATIONS

I. COMPETENCIES FOR APPROVAL OF REMUNERATIONS

66. Details of the powers for establishing the remuneration of the governing bodies, Executive Committee members and of the company persons discharging managerial responsibilities

As defined in the company Articles of Association, the Shareholders' General Meeting is responsible for establishing the remuneration of the members of the governing bodies or for electing a committee for this purpose. As for the members of the Board of Directors, the Shareholder's Remuneration Committee liaises with the Board Nomination and Remuneration Committee. This is the only way the Shareholder's Remuneration Committee gets the necessary knowledge about the performance of each Director, and especially the Executive Directors, throughout the year.

II. REMUNERATIONS COMMITTEE

67. Composition of the remunerations committee, including identification of the individuals or companies who have been retained to support the decision process and information regarding the independence of each member and advisor

Sonae Indústria's Shareholders' Remuneration Committee is appointed at the Shareholders' General Meeting for a three-year term and was elected at the Shareholders' General Meeting held on 9 May 2018 for the mandate 2018-2020. Currently, this committee comprises Efanor Investimentos - SGPS, SA, represented by Duarte Paulo Teixeira de Azevedo, by Imparfin, Investimentos e Participações Financeiras, SA, represented by José Fernando Oliveira de Almeida Côrte-Real and by Professor José Manuel Neves Adelino.

Professor José Manuel Neves Adelino is an independent member of the Shareholder's Remuneration Committee.

The participation of Paulo Azevedo at the Shareholders' Remuneration Committee, who is also Chairman of the Board of Directors, is in representation of shareholder interests in the Shareholders' Remuneration Committee, as he intervenes in that capacity. Paulo Azevedo does not participate in the discussion nor is

present in the moment of the meeting in which his own remuneration is discussed therefore ensuring the necessary impartiality and transparency.

The Shareholders' Remuneration Committee may retain specialised consulting services whenever it deems convenient and within budget limits. The Shareholders' Remuneration Committee must ensure that the services are performed with independence and that the respective consultants will not be rendering other services to Sonae Indústria or to other companies in a relationship of control or group without prior consent.

During 2020, no company was hired to assist the Shareholders' Remuneration Committee nor the Board Nomination and Remuneration Committee. For benchmarking the salary level of Board of Directors members, these Committees use multi-company studies prepared by international consultants present in Portugal which are available in the market.

Paulo Azevedo was present at the Shareholders' General Meeting held in 2020.

68. Experience and knowledge of the members of the Shareholders' Remuneration Committee in remuneration policy issues

The representative of Imparfin, José Côrte Real, worked in Human Resources area of Efanor Group; his extensive knowledge and vast experience in Human Resources, namely in what concerns remuneration policies, contribute very positively to the work of the Shareholders' Remuneration Committee.

III. REMUNERATION STRUCTURE

69. Description of the remuneration policy of the management and supervisory bodies as mentioned in Article 2 of Law nr. 28/2009, dated 19 June

At the Shareholders' General Meeting held in 2020, the Shareholder's Remuneration Committee presented a declaration concerning the remuneration and compensation policy of the governing bodies and the persons discharging managerial responsibilities.

The remuneration and compensation policy to be applied to the statutory governing bodies of Sonae Indústria and other senior management complies with the European guidelines, the Portuguese law and the Corporate Governance Code released in 2018 by the Portuguese Institute of Corporate Governance (IPCG), within the protocol set up between IPCG and the Portuguese Market Securities Commission (CMVM), and is based on the understanding that initiative, competence and commitment are the essential foundations for good performance and that the latter must be aligned with the medium and long term interests of the company, in order to achieve sustainability.

In the definition of the remuneration and compensation policy of members of the Company's statutory bodies, the main objective is to seize talent with high performance level, which represents a relevant and material contribution to the sustainability of the Company's businesses. The remuneration policy is set out based on comparisons made with market and practices of comparable companies and with information collected by market studies prepared by specialised consultants in Portugal and other European countries, in particular those prepared by Hay Group.

With that in mind, the remuneration parameters of statutory bodies are set and periodically reviewed in accordance with remuneration practices of comparable national and international companies, aligning, the maximum target amounts to be paid to members of the statutory bodies with market practices, both in individual and aggregate terms, differentiating on an individual and positive manner the members of statutory bodies according to, amongst others, the respective profile and curriculum, the nature and job description and the responsibilities of the relevant statutory body and of the member itself, and the direct correlation degree between individual performance and businesses performance.

To determine the global market reference values, it is considered the average of values applicable to top management in Europe. The companies considered as peers for remuneration purposes are those included in the group of companies which are listed in Euronext Lisbon, and the maximum potential amounts to be paid to members of the statutory bodies are the following, according to market references:

Board of Directors	Components		Market positioning	Circumstances in which remuneration is due
Executive Directors	Fixed	Base remuneration	Median	N/A
	Variable	Short term variable component	Third quartile	Compliance with objective and subjective KPIs
		Medium term variable component		Compliance with objective KPIs
		Long term variable component		Compliance with objective KPIs
Non Executive Directors	Fixed	Remuneration	Median	N/A
Statutory Audit Board	Fixed	Remuneration	Median	N/A
Statutory External Auditor	Fixed	Remuneration	Median	N/A

The fixed remuneration of Directors is determined according to their level of responsibility, is subject to annual review and is placed in the median position in comparable circumstances.

Besides the fixed remuneration, the executive directors participate on an incentives plan, with a variable component, which is divided in three elements, one of short term, one of medium term and another of long term nature. The total remuneration is positioned in the median position, in respect to the fixed remuneration, in the third quartile in respect to the variable component, and the total remuneration is positioned between the median and the third quartile in comparable circumstances.

The fixed remuneration and the incentives plan are approved by the Shareholders' Remuneration Committee in coordination with the Board Nomination and Remuneration Committee.

The incentives plan awarded to Executive Directors is subject to maximum percentage limits and is determined by pre-established and measurable performance criteria - performance indicators - agreed with each Executive Director for each financial year.

This incentives plan is established based on a set of performance indicators at business level, mainly of economic and financial nature, also designated "Key Performance Indicators of Business Activity" (or Business KPIs) and also at individual level, "Personal Key Performance Indicators" (or Personal KPIs).

The content of the performance indicators and their specific weight in determining actual remuneration awarded ensure the alignment of Executive Directors with the strategic objectives defined for the organisation and the compliance with the laws that apply to the company's activities.

The award of the incentives plan is based on an individual performance assessment made by the Shareholders' Remuneration Committee, in coordination with the Board Nomination and Remuneration Committee. This assessment takes place after the results of the company are known.

Thus, for each financial year, an evaluation is made of business activity and of the individual performance and contributions to the collective success which, obviously, impacts the awards of the fixed and variable components of the remuneration package of each Executive Director.

In applying the Remuneration and Compensation Policy, consideration is given to roles and responsibilities performed in affiliated companies.

The company's Remuneration and Compensation Policy incorporates the principle of not providing any compensation to members of the Board of Directors or members of other statutory governing bodies, related with the termination of a mandate, whether such termination occurs at the end of the respective mandate, or there is an early termination for any reason or on any basis, without prejudice of the company's obligation to comply with the applicable law.

The Remuneration and Compensation Policy does not include any additional benefits policy, particularly retirement benefits, in favour of the members of the governing bodies or other "Senior Management", without prejudice of the Shareholders' Remuneration Committee having the option to proceed with the payment of part of the amounts due through the attribution of retirement saving plans.

To ensure the effectiveness and transparency of the objectives of the Remuneration and Compensation Policy, the Executive Directors have not, and will not, enter into agreements with the company or third parties that have the effect of mitigating the risk inherent in the variability of their remuneration awarded by the company.

For the company's statutory governing bodies, the approved policy establishes the following:

EXECUTIVE DIRECTORS (EDS)

The Remuneration and Compensation Policy for the Executive Directors (EDs) includes, in the way it is structured, control mechanisms, taking into account the connection to personal and collective performance, to prevent behaviours that involve excessive risk-taking. This objective is also reinforced by the fact that each Key Performance Indicator (KPI) is limited to a maximum value.

The remuneration of EDs normally includes two components: (i) a fixed component, which includes a Base Remuneration paid with reference to one year period (remuneration is paid in 12 months) and an annual responsibility allowance and, (ii) a total variable component (TVC) which comprises three elements: (ii.1) a first element of Short Term, awarded in the first half of the year following the year to which it relates (the "Performance Year"), subject to the accomplishment of the objectives fixed for the Performance Year, paid immediately after its award, (ii.2) a second element of Medium Term, awarded in the first half of the year to which it relates, subject to the accomplishment of the objectives in each year until its payment and paid after a three years deferral period, and (ii.3) a third element of Long Term, awarded in the first half of the year following the year to which it relates, subject to the accomplishment of the objectives fixed in each of the following five years and paid five years after its award.

(i) The fixed component of the remuneration (FR) of the EDs is based on the personal competences and level of responsibility of the function exercised by each ED and is reviewed annually. Each ED is attributed a classification named internally as Management Level ("Grupo Funcional"). EDs are classified under one of the following Management Levels: "Group Leader", "Group Senior Executive" and "Senior Executive". The Management Levels are structured according to Hay's international model for the classification of corporate functions, thereby facilitating market comparisons as well as helping to promote internal equity.
(ii) The variable component of the remuneration (VR) is designed to motivate and reward the EDs to achieve predetermined objectives and reinforce the alignment of the EDs with the shareholders' interests and increasing their awareness of the importance of their performance in a sustainable manner on the overall success of the organisation. These objectives should be based on indicators of company performance, of the working teams under their responsibility and of their own personal performance. This variable

component will be awarded after the annual accounts are closed and after their performance evaluation has been completed.

a) Short Term Variable Bonus

The target value of the Short Term Variable Bonus (STVB) is equivalent to a maximum of 1/3 of the target value of the TVC.

The amount of the variable bonus of EDs without a specific geographic responsibility is based on the company consolidated KPI's achievement, resulting 40% from the Operational Cash Flow, 20% from Department KPIs, of which one performance indicator is Fixed Costs (10%) and others to be approved by the Shareholders' Remuneration Committee, and 10% from continuous improvement performance indicators, also to be approved by the Shareholders' Remuneration Committee. The remainder 30% result from individual KPIs achievement.

Regarding EDs with geographic responsibility, the calculation is similar to the previously described but the company's consolidated Operational Cash Flow has a weight of 10%, the weight of the relevant geography represents 40%, allocated as follows: (i) 30% to Total EBITDA, (ii) 5% to Working Capital, and (iii) 5% to Fixed Costs; 20% depend on continuous improvement performance indicators, namely related to the performance of the working teams under the responsibility of the ED, approved by the Shareholders' Remuneration Committee. The weight of individual KPIs is also 30%.

b) The Medium Term Variable Bonus (deferred for three years)

The Medium Term Variable Bonus (MTVB) of the EDs is limited to a maximum of one third of the target value of the TVC , and is intended to strengthen the alignment of the EDs with the strategic objectives of the company and the interests of the shareholders. The payment of the amount awarded is deferred for three years and adjusted proportionally in the year it relates to and in the following two years, in the portion of one third in each year.

In relation to EDs with no specific geographic responsibility, the indicators to be applied are the Return on capital employed consolidated (40%), the achievement of strategic objectives regarding business activity in Canada (25%), the level of achievement of the reorganisation process of the laminates and components business (15%) and individual KPIs (20%) achieved in the adjustment year.

In relation to EDs with geographic responsibilities, the indicators to be applied are the Return on capital employed of the business (50%) and the achievement of the business strategic objectives (50%), which includes the percentage of sales in value added products, the increase of the installed production capacity and the general assessment.

c) The Long Term Variable Bonus (deferred for five years)

The Long Term Variable Bonus (LTVB) is designed to increase awareness of the importance of a sustainable performance on the overall success of the organisation. The maximum amount of this bonus, in euros, is equivalent to the Short Term Variable Bonus awarded, will be deferred for a five years period and will only be due if the company registers consolidated profits in all years during the deferral period and if such profits are, in each year, in an amount equal or higher than 20% of the consolidated shareholders' funds registered in the beginning of the year they respect to.

Considering all the elements of short, medium and long term of the TVC, the target values set in advance are in the range of 50%-70% of the total annual remuneration (fixed remuneration and variable component target value).

In respect to the calculation of the results and in respect to the Short-term Variable Bonus and to the Medium Term Variable Bonus, the total amount receivable is limited to the minimum 0% and the maximum of 250% of the total target value set in advance for those variable components.

The payments can be made by any means of termination of an obligation as set forth in the law and in the company's Articles of Association, at the Shareholders' Remuneration Committee criteria, which may, namely, at its free criteria, fix the receipt of any of the parts of the variable component through the sale of shares of Sonae Indústria, SGPS, S.A. at a discount. Such discount corresponds to a contribution to the acquisition of shares that will be supported by the persons to whom the variable component remuneration was awarded, which shall correspond to a percentage of the trading price of the shares, at the date of the share transmission, up to a maximum percentage of 5% of such value.

The right of receiving the deferred parts of the variable component remuneration expires if the contractual link between the Director and the company ceases before its vesting date.

However, this right will remain valid in case of permanent incapacity or death of the Director, in which case the payment is made to himself/herself or to his/her legal successor on the vesting date.

In case of retirement of the Director, the awarded right can be exercised in the respective vesting date.

NON-EXECUTIVE DIRECTORS (NEDS)

The remuneration of the Non-Executive Members of the Board of Directors (NEDs) is based on market comparables and is structured as follows: (i) a fixed remuneration (of which approximately 15% depends on attendance at Board of Directors and Board Committees meetings); (ii) an annual responsibility allowance. Fixed remuneration may be increased by up to 5% for those NEDs serving as Chairman at any Board Committee. There is no variable remuneration attributed as a bonus.

In relation to the other statutory governing bodies and members of senior management, the policy establishes the following:

STATUTORY AUDIT BOARD

The remuneration of the members of the company's Statutory Audit Board is based exclusively on a fixed component, which includes an annual responsibility allowance. The levels of remuneration are determined by taking into consideration the company's situation and by benchmarking against the market.

STATUTORY EXTERNAL AUDITOR

The company's Statutory External Auditor is remunerated in accordance with normal fee levels for similar services, benchmarked against the market, under the supervision of the Statutory Audit Board and the Board Audit and Finance Committee.

BOARD OF THE SHAREHOLDERS' GENERAL MEETING

The remuneration of the members of the Board of the Shareholders' General Meeting correspond to a fixed amount, based on the company's situation and benchmarked against the market.

SENIOR MANAGEMENT

Under the terms of paragraph 25, number 1 of Article 3º of EU Regulation 596/2014, dated 16 April, in addition to the members of the statutory governing bodies mentioned above, Senior Management also

includes top management who have regular access to Privileged information directly or indirectly related to the Company and have the power to take managerial decisions affecting the future developments and business prospects of the Company.

The remuneration policy applicable to other individuals who, under the terms of the law, are considered to be Senior Management, shall be equivalent to the one adopted for other managers with the same function and responsibility level, without awarding of any additional benefits other than those inherent to the respective Management Level.

The Executive Directors of Sonae Indústria's subsidiary companies are also eligible to be awarded the variable component, as well as, and in accordance with the remuneration policy approved by the Board of Directors, the employees who are entitled to the incentives plan in the scope of that policy.

The remuneration policy approved by the Shareholders' General Meeting in 2020 also includes the remuneration of Executive Directors in 2019.

The policy also includes the statement of the Shareholders' Remuneration Committee by which, in the attribution of the total remuneration, this Committee applied, on a regular and ordinary manner, the principles and rules of the Remuneration and Compensation Policy of the Statutory Governing Bodies and Senior Management approved at the Shareholders' General Meeting on 29 April 2019, as detailed below:

a) The fixed remuneration awarded to the Board members is the median of the market values and takes into account the level of responsibility of the respective Board member;
b) The non-executive directors were not awarded any variable remuneration;
c) The STVB corresponds to the performance of Executive Directors according to the terms described in the policy, and includes the weighing of the achievement of the individual and business KPIs previously defined, after the results of the company are closed and the performance appraisal is carried out;
d) The MTVB was awarded as set out in the policy and its payment is deferred for three years and adjusted proportionally in the year to which it relates and in the following two years, in order to align the executive directors interests with the Company's strategic objectives and the shareholders' interests;
e) The LTVB was awarded as set out in the policy and its payment is deferred for five years and is due only if the Company registers positive consolidated results in every year of the deferral period and if, in each year, those results are equal or above 20% of the consolidated Shareholders' Funds;
f) There are no agreements that determine the award of compensations to the Board members related with the termination of a mandate or that consider the possibility of requesting the refund of a variable remuneration, without prejudice of the Company's obligation to comply with the applicable law.
70. Information on how the remuneration is structured, so that the interests of the members of the management body are aligned with the long-term interests of the company, how it is related to the performance evaluation and how it discourages the excessive assumption of risks

With regard to Non-Executive Directors, the attribution of only a fixed remuneration, as explained in the previous point, allows the interests of these Directors to be matched to the long-term interests of the company.

As for the Executive Directors, the attribution of remuneration comprising a fixed component and a variable component, the latter calculated in line with a series of specifically weighted performance indicators, ensures that the Executive Directors' interests are aligned with the long-term interests of the company and discourages risk taking.

The company has an internal regulation that defines the scope and rules applicable to the Medium Term Variable Bonus.

71. Reference to the existence of a variable component of the remuneration and information regarding the potential impact of the performance evaluation on the variable component

As mentioned in the two previous points, the remuneration of the Executive Directors comprises a variable component, whereby the performance assessment impacts on this part of the remuneration (for more detailed explanation of the impact of the performance assessment on the variable remuneration component see point 69).

72. Deferred payment of the variable component remuneration, identifying the deferral period

The Medium Term Variable Bonus is deferred for a three-year period and the Long Term Variable Bonus is deferred for a five-year period.

73. Criteria for the attribution of variable remuneration in the form of shares, retention of shares by Executive Directors, potential agreements over shares, namely hedging or risk transfer agreements, respective limit, and relation to the total annual remuneration

The remuneration policy approved at the Annual General Meeting held in 2020 does not contemplate the remuneration in the form of shares. To ensure the effectiveness and transparency of the Remuneration and Compensation Policy, the Executive Directors have not entered and should not enter into agreements with the company or with third parties with the objective of mitigating the risk inherent to the variability of the remuneration that is fixed by the company.

74. Criteria for the attribution of variable remuneration in the form of options and indication of the deferral period

The company does not attribute options.

75. Main parameters and assumptions of any system of annual bonuses and other non-monetary benefits

The parameters and assumptions of the annual bonus system are outlined in the remuneration policy mentioned in point 69 above.

76. Main characteristics of the complementary long-term or advanced retirement plans for Directors and date of approval at the Shareholders' General Meeting for each individual

The company has not implemented any supplementary pension or early retirement regime.

The company's articles of association do not include any provision regarding directors pension benefits, thus the approved remuneration and compensation policy does not include any pension system, without prejudice of the Shareholders' Remuneration Committee being able to proceed with the payment of part of the amounts due through the attribution of retirement saving plans.

IV. DISCLOSURE OF REMUNERATION

77. Indication of the total annual remuneration, both in aggregate and individual terms, of the members of the management bodies, paid by the company, including fixed and variable compensation and, for the latter, describing the different remuneration components involved

CORPORATE GOVERNANCE REPORT

2020		Total Fixed Annual Remuneration	Total Short Term Variable Bonus		Total Medium Term Variable Bonus		Total Long Term Variable Bonus		Total
	2019	2020	2019 (a)	2020 (b)	2019 (c)	2020 (d)	2019 (e)	2020 (f)	2019	2020
Paulo Azevedo	51,800.00	51,800.00							51,800.00	51,800.00
Javier Vega	54,890.00	56,140.00							54,890.00	56,140.00
Albrecht Ehlers (g)	40,600.00	40,450.00							40,600.00	40,450.00
Carlos Moreira da Silva	31,700.00	31,700.00							31,700.00	31,700.00
José Romão de Sousa	28,700.00	28,700.00							28,700.00	28,700.00
Berta Cunha	28,700.00	28,700.00							28,700.00	28,700.00
Isabel Barros	24,700.00	24,700.00							24,700.00	24,700.00
Christopher Lawrie	261,600.00	257,266.70	118,745.00 (1)	125,000.00	125,000.00	125,000.00	118,745.00	125,000.00	624,090.00	632,266.70
Louis Brassard (h)	199,561.55	194,195.49	112,688.24 (2)	126,745.20	96,340.05	95,446.07	109,453.44	126,745.20	518,043.28	543,131.96
Total Board of Directors			722,251.55 713,652.19 231,433.24	251,745.20					221,340.05 220,446.07 228,198.44 251,745.20 1,403,223.28 1,437,588.66

(a) Relative to 2019, amount approved and paid in 2020.

(b) Relative to 2020 - target values. Final values to be determined according to KPI's achievements and to be approved by the Shareholder's Remuneration Committee.

(c) The initial amount related to 2019 is deferred for three years and adjusted proportionally in the year to which it relates and in the two subsequent years, in the proportion of one third in each year. The indicator to be used is the increase of the theoretical value of the shareholders' funds (calculated using a multiple of Recurrent EBITDA).

(d) The initial amount related to 2020 is deferred for three years and adjusted proportionally in the year to which it relates and in the two subsequent years, in the proportion of one third in each year. The indicators to be used for the executive directors without a specific geographic responsibility are the Return on capital employed consolidated (40%), the achievement of the business strategic objectives in Canada (25%), the achievement of the transformation process of the laminates & components business (15%) and Individual KPI's (20%), registered in the year of the adjustment. For the executive directors with geographic responsibilities, the indicators to be used are the Return on capital employed of the business (50%) and the achievement of the business strategic objectives (50%), which include the sales percentage of value-added products, the increase of the utilization capacity and the general assessment.

(e) Relative to 2019, amount equal to the Short Term Variable Bonus allocated is deferred for five years and will only be due if the company registers consolidated profits in all the years of the deferred period and if, in each year, those profits are equal or higher than 20% of the consolidated shareholders' funds registered in the beginning of the year to which they relate.

(f) Relative to 2020, amount equal to the Short Term Variable Bonus allocated is deferred for five years and will only be due if the company registers consolidated profits in all the years of the deferred period and if, in each year, those profits are equal or higher than 20% of the consolidated shareholders' funds registered in the beginning of the year to which they relate. Final values of the Short Term Variable Bonus to be determined according to KPI's achievements and to be approved by the Shareholder's Remuneration Committee.

(g) Out of the amount paid in 2019, 28.300 euros were paid by Sonae Indústria and 12,300 euros by Sonae Arauco Deutschland GmBh. Out of the amount earned in 2020, 28.300 euros were paid by Sonae Indústria and 12,150 euros by Sonae Arauco Deutschland GmBh.

(h) Values in euros correspondent to the values in Canadian dollars paid by Tafisa Canada

(1) Fixed from the target value of 125,000 euros.

(2) Fixed from the target value of 127,932.70 euros.

78. Compensation of any kind paid by other companies in relation of domain or group, or subject to a common domain

The amounts paid by other Group companies are shown on the table above.

79. Remuneration paid in the form of participation in the company's results and/or bonuses

The bonuses paid to the Executive Directors are outlined on the table in point 77 above.

80. Indemnities paid or due to former Executive Directors resulting from the termination of their responsibilities during the financial year

No indemnity was paid to former Executive Directors upon termination of their functions during the year.

81. Indication of the total annual remuneration, both in aggregate and individual terms, of the Statutory Audit Board

In 2020, the members of the Statutory Audit Board earned the following remuneration:

STATUTORY AUDIT BOARD REMUNERATION (EUROS)

Statutory Audit Board member

António Trabulo (Chairman)	9,900
Óscar Quinta	7,900
Ana Fonte	7,900
TOTAL	25,700

82. Indication of the remuneration for the reference year of the Chairman of the Board of the General Meeting

In 2020, the Chairman of the Board of the Shareholders' General Meeting earned the total remuneration of 5,000 euros.

V. AGREEMENTS WITH IMPACT ON REMUNERATION

83. Contractual restrictions applied to the compensation due by ungrounded dismissal of Director and its relation with the variable component of the remuneration

The Remuneration and Compensation Policy approved by the Shareholders' General Meeting maintains its principle of not awarding compensation to the Directors upon termination of their mandate, notwithstanding mandatory compliance by the company with the legal stipulations in force concerning this matter. This principle is the legal instrument deemed adequate to prevent that the early termination of mandate leads to the payment of any compensation beyond that set out in the law.

84. Reference to the existence and description, indicating the amounts involved, of agreements between the company and members of the management bodies and other officers ('dirigentes'), in accordance to the terms of Article 248-B, number 3, of the Securities Code, which foresee compensation in case of resignation, ungrounded dismissal or termination of the work contract subsequent to a change in the company control (Article 245-A, number 1, paragraph l))

Compliant with the approved Remuneration and Compensation Policy, no agreements were signed between the company and the Directors or "Dirigentes" that stipulate indemnity in the event of resignation, dismissal without justification or termination of the employment relationship following a change in the control of the company.

VI. SHARE PLANS OR STOCK OPTIONS PLANS

85. Identification of the plan and of the respective recipients

The current remuneration policy approved at the Annual Shareholders' General Meeting does not contemplate any variable remuneration in the form of share attribution.

86. Description of the plan

There is no remuneration plan in the form of share attribution.

87. Option rights for the acquisition of shares (stock options), whose beneficiaries are company employees.

The company does not have plans to attribute share purchase options.

88. Internal control tools to be used in a potential participation in the share capital by company employees, so that the voting rights are not directly exercised by them (Article 245-A, number 1, paragraph e))

No control mechanisms are in place regarding an employee participation system in the company's share capital.

E. TRANSACTIONS WITH RELATED PARTIES

I. CONTROL MECHANISMS AND PROCEDURES

89. Mechanisms implemented by the company to monitor transactions with related parties

The mechanisms implemented by the company for the purpose of controlling transactions with related parties are thorough, transparent and in strict compliance with the market competition rules. Such transactions are subject to specific administrative procedures that are regulated by regulatory impositions, namely transfer pricing policies, or by the voluntary adoption of internal verification and control systems.

Every month, all transactions and operational balances with related parties are identified and verified by a specific team of the Shared Services Centre, which renders services to the company, and validated with administrative teams of related entities when it refers to external operations.

Less recurrent transactions are subject to an ad-hoc and more detailed analysis by the company's appropriate departments or by the services providers (always with the participation of the Tax area in order to ensure compliance with the existing transfer pricing policies) to support the possible transaction values. In the case of an asset transfer/sale, these assets are subject to an external and independent evaluation to support the respective transaction.

The Board of Directors excluded from the terms of the delegation of powers to the Managing Directors, all Sonae Indústria transactions with "Related Parties" (as set out in the International Accounting Standards adopted in the EU, except for the Related Parties within Sonae Indústria consolidation perimeter) involving a value, individual or aggregate, with an annual base above 10 million euros.

In order to comply with Article 249-A and further paragraphs of the Securities Code, as set out by Law 50/2020 dated 25 August, the Board of Directors approved an internal policy regarding related party transactions, with prior favourable opinion of the Statutory Audit Board of the company, which is described in Chapter G of this report.

90. Prior to the approval of such internal policy, Sonae Indústria had in place, since 2012, a specific procedure approved by the Statutory Audit Board in respect to related party transactions, with a purpose substantially similar to that arising by Law 50/2020 which, as from 26 August 2020, established a formal set of rules and procedures for monitoring and disclosure of such transactions, without prejudice of the fiscal law in matters of transfer pricing remaining in force. Indication of the transactions which were monitored in the reference year

Sonae Indústria did not carry out any transactions with members of the Board of Directors nor with the Statutory Audit Board members.

All transactions with related companies represent normal operational activity and were made under "open market" conditions and at prices that comply with transfer pricing regulations.

The Statutory Audit Board did not issue any opinion in relation to related party transactions.

91. Description of the procedures and criteria applicable to the intervention of the supervisory body for the purpose of previous assessment of the transactions to be carried out between the company and the holders of a qualified shareholding, or entities related thereto, in accordance to the terms of Article 20 of the Securities Code.

With exception of transactions with related parties included in the company consolidation perimeter, in the scope of their respective activities, any related parties transactions with individual or aggregate value higher than 10 million euros, on a yearly basis, must be subject to prior opinion of the Statutory Audit Board. The request for an opinion must be accompanied by all the elements required to allow a comparative analysis with the market and how potential conflicts of interest will be managed.

Any transactions that have been completed with related parties must result from a comparative process.

II. INFORMATION CONCERNING TRANSACTIONS

92. Indication of the section in the financial statements documents where the information regarding related parties transactions is made available

The information in relation to related parties transactions may be found in point nr. 34 of the Notes to the Consolidated Financial Statements.

F. DIVERSITY POLICY IN MANAGEMENT AND SUPERVISORY BODIES

Sonae Indústria recognizes that diversity in the composition of its management and supervisory bodies, especially in respect of the Board of Directors, boosts creativity and supports informed decision making based on different perspectives.

Sonae Indústria aims to combine in its management and supervisory bodies a diverse set of competencies, knowledge, experiences and relevant perspectives, together with a knowledge of its business and a high integrity, so that the members of those government bodies effectively fulfil their responsibilities.

Therefore, the members of these governing bodies shall have the required academic qualifications for the exercise of their respective functions. In particular, we will strive to have members of the Board of Directors, that have combined competencies in different professions and industrial areas in order to ensure informed decision making.

As an international Group, it is expected that the Board of Directors comprises persons of different nationalities and, consequently, different cultures, usually persons who are born native in one of the countries in which Sonae Indústria is present. This way, it is possible to bring to the Board of Directors the cultural and social perspective of such countries.

In relation to the members of the Statutory Audit Board, it is always expected that they have the qualifications required by law, such as knowledge of auditing and/or accounting which are considered to be the most relevant for the exercise of their respective duties.

Age is not considered a determining factor for the choice of the members of these government bodies.

Sonae Indústria recognizes and supports the regime of balanced distribution of men and women in management and supervisory bodies of listed companies, published on 1 August 2017. At the Shareholders' General Meeting held in May 2018, the proposal presented complied with the established in the law, in respect to the proportion of persons of each gender in the management and supervisory bodies, with the Board of Directors being now constituted by seven male members and two female members and the

Statutory Audit Board by two male members and two female members, being one of them a substitute member.

G. INTERNAL POLICY ON RELATED PARTY TRANSACTIONS

The Board of Directors approved, with the prior favourable opinion of the Statutory Audit Board, an internal policy regarding Related Party Transactions as described:

"1. FRAMEWORK

Sonae Indústria SGPS, SA (the "Company" or "Sonae Indústria") has in practice, since 2012, a specific procedure concerning related parties transactions, approved by the Statutory Audit Board, with a purpose substantially similar to the one arising from Law no. 50/2020 that, as from 26 August, established a formal set of rules and procedures for monitoring and disclosure of related parties transactions, without prejudice to the tax law regarding transfer pricing, that remain in force.

Sonae Indústria's original procedure concerning related parties transactions aimed at ensuring that these transactions are concluded (i) on an "arm's length basis", consistently with the legal requirements, being fully and transparently disclosed; and (ii) in a way in which minority shareholders are protected, as these transactions should benefit all shareholders equally.

2. OBJECT AND SCOPE

2.1. This Policy establishes the internal procedures applicable to Related Party transactions, as provided in the applicable legal framework, including articles 249-A to 249-D of the Portuguese Securities Code, article 397 of the Portuguese Companies Code, the relevant provisions of IAS 24 and chapter I.5 of the 2020 IPCG Corporate Governance Code.

2.2. This Policy relates to the following types of transactions:

a) transactions to be executed by Sonae Indústria, on the one side, and a Related Party of the Company, on the other side ("RPT"); and

b) transactions between a Related Party of the Company and a Company's Subsidiary, for an amount that is equal to or exceeds 2.5% of the Company's Consolidated Assets ("Subsidiary Transaction").

2.3. For the avoidance of doubt, transactions to be executed between a member of the Board of Directors and the Company or companies that are in a group or control relationship with the Company ("Management Transaction") may also be considered RPTs or Subsidiary Transactions, as the case may be.

3. GENERAL PRINCIPLES

3.1. Corporate interest and fairness

Each member of the Board of Directors shall promote that RPTs:

a) have the best interests of the Company into consideration; and

b) are carried out in arms' length i.e., as if the parties to the transaction were independent entities carrying out comparable transactions, consistent with market conditions, in order to ensure the protection of the Company's minority shareholders as well as all the remaining stakeholders.

3.2. Transparency

Each member of the Board of Directors shall, where applicable under the terms of this Policy:

a) promote that RPTs and, to the extent under their reasonable influence, Subsidiary Transactions are properly documented and, where relevant, disclosed in accordance with this Policy; and

b) keep the Board of Directors, through the Board Audit & Finance Committee ("BAFC"), informed in relation to any RPT or Subsidiary Transaction that may come to their knowledge.

3.3. Ordinary Course

The Board of Directors or, where applicable, the Managing Directors shall promote that RPTs and Subsidiary Transactions are:

a) entered into in the ordinary course of business of the Company (considering that the Company is a holding company, subject to the legal regime applicable to holding companies, presently set out in Decree-Law no. 495/88, of 30 December) or of the relevant Subsidiary; and

b) concluded on normal market terms (without any special, unusual or non-market standard terms and conditions applying) and, in what concerns Management Transactions, no special benefit is granted to the other contracting party.

Transactions complying with both requirements shall, for the purposes of this Policy, be deemed "Ordinary Course Transactions".

3.4. No credit to members of the Board of Directors

The Company is not allowed to execute, and the Board of Directors and the Managing Directors shall not approve or execute, any Management Transaction whereby the Company (or a company that is in a group or control relationship with the Company), directly or indirectly, grants a loan or credit to any member of the Board of Directors or issues guarantees for obligations incurred by them, nor pays more than one month of their respective remuneration in advance.

4. INTERNAL RECORD AND STATUTORY AUDITOR REVIEW

4.1. All RPTs shall be notified by the Company Chief Financial Officer (CFO) to the BAFC who, with the assistance of the Secretary of the Board of Directors, shall keep a full record of such transactions, together with all relevant documentation related therewith.

4.2. The Board of Directors, through the CFO, shall send to the Statutory Audit Board, at least every six months, the list of RPTs entered into since the most recent communication, together with supporting documentation and information, notably the elements set out in Section 7.2.a) to d).

4.3. Following receipt of the elements referred to in paragraph 4.2 above, the Statutory Audit Board shall review such documentation and, verify whether such RPTs are Ordinary Course Transactions; the conclusions of this review shall be included in its annual report and presented to the Board of Directors by the CFO.

4.4. The Statutory Audit Board may request to the CFO any relevant information regarding each RPT , and may issue recommendations as deemed appropriate.

ORDINARY COURSE TRANSACTIONS AND EXEMPTED TRANSACTIONS

5.1. The following transactions are deemed to be Ordinary Course Transactions and, where applicable, are only subject to the provisions regarding internal record and review set forth in Section 4:

a) RPTs the terms and conditions of which (including their respective price) are in line with usual transactions of the Company and determined by external factors not controlled by the Company (for example, transactions executed on a regulated market in line with prevailing market prices);

b) All RPTs the conditions and/or pricing of which are previously determined and are indistinctly applicable to any counterparty.

5.2. The procedural and the disclosure requirements provided in paragraphs 6.1 and 7.1 shall not apply in respect of the following transactions ("Exempted Transactions"):

a) transactions carried out between the Company and its Subsidiaries (to the extent these are in a control relationship with the Company and no Related Party of the Company has an interest in that Subsidiary);

b) transactions concerning the remuneration of members of the Board of Directors, or certain elements of such remuneration; and

c) transactions proposed to all shareholders of the Company on the same terms, with equal treatment of all such shareholders and the protection of the Company's interests.

TRANSACTIONS BETWEEN THE COMPANY AND ITS RELATED PARTIES (RPT)

6.1. All transactions that are not excluded or exempted under Section 5 that are contemplated to be entered between the Company and one or more of its Related Parties shall firstly be reviewed by the Company's Corporate Finance department, in respect to financial transactions, and by the Corporate Management Control department, in respect to operational transactions, which shall deliver to the corporate body competent to approve the transaction a report:

a) Indicating the transaction estimated value (as well as, if the relevant Related Party entered into other RPTs with the Company in the past 12 months that were not publicly disclosed in accordance with this Policy, indicating the amounts of such RPTs);

b) Indicating whether such transaction is an Ordinary Course Transaction (and why); and

c) Confirming that the Company's tax services have been informed of the potential transaction for the purposes of, where relevant, complying with transfer pricing requirements.

6.2. The Managing Directors may approve a RPT if (i) it falls within the their powers of resolution, (ii) the report provided by the Company's Corporate Finance department or Corporate Management Control department, as appropriate, confirms that the intended RPT is an Ordinary Course Transaction (and the Managing Directors agree with such analysis) and (iii) the value of the intended transaction does not exceed € 10,000,000.00 (considering all relevant RPTs completed between such Related Party and the Company in the past 12 months that were not publicly disclosed in accordance with Section 7) .

6.3. If the Managing Directors approve the intended RPT in accordance with paragraph 6.2 above, they shall promptly, inform the BAFC, through the Secretary of the Board of Directors, of such resolution, in compliance with paragraph 4.1 above.

6.4. Prior opinion issued by the Statutory Audit Board and by the BAFC (both to be issued up to 10 working days, which may be shorter or longer depending on the complexity of the matter and/or the urgency

involved), followed by a resolution by the Board of Directors is required for the approval of RPTs not excluded or exempted under paragraph 5 that:

a) are not Ordinary Course Transactions; or
b) exceed the amount of € 10,000,000.00.

6.5. Related Parties or their representatives may not be involved in the approval of any RPT in respect of which they are a party.

7. PUBLIC DISCLOSURE OF RELATED PARTY TRANSACTIONS

7.1. The Board of Directors shall ensure that the Company publicly discloses all RPTs that (i) are not Ordinary Course Transactions and (ii) have a value that (individually or together with other RPTs entered into by the same Related Party in the past 12 months not publicly disclosed in accordance with this Policy) is equal to or exceeds 2.5% of the Company's Consolidated Assets, no later than on the date in which such RPT is executed.

7.2. The public disclosure mentioned in the aforementioned paragragh 7.1 shall comprise, at least, the following elements:

a) identification of the Related Party;
b) information on the nature of the relationship with the Related Party;

c) the date and value of the RPT;

d) the substantiation as to the fair and reasonable nature of the transaction, from the point of view of the Company and the shareholders who are not Related Parties, including minority shareholders; and

e) reference to the fact that the opinion of the Statutory Audit Board regarding such RPT was not favourable, if that was the case.

7.3. The Board of Directors shall specify in the Company's annual report all the approvals of RPTs authorized by the Board of Directors under article 397 of the Portuguese Companies Code, and the Statutory Audit Board's report shall mention the opinion issued in respect of those authorizations.

7.4. The duties of public disclosure set out in this Policy are applied without prejudice to the rules on public disclosure of inside information as referred to in article 17 of Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014.

8. SUBSIDIARY TRANSACTIONS

8.1. Whenever a Company's Subsidiary intends to enter a transaction with one of the Related Parties of the Company that (i) has a value equal to or higher than 2.5% of the Company's Consolidated Assets (considering all the relevant Subsidiary Transactions entered with such Related Party in the past 12 months that were not publicly disclosed in accordance with this Section) and (ii) is not exempt in accordance with Section 5, must inform the Company CFO. Such notification must include:

a) all the elements set out in paragraph 7.2 above;

b) whether such transaction is an Ordinary Course Transaction (and why); and
c) if possible, copy of the transaction documentation or drafts thereof.

8.2. If the Subsidiary Transaction referred to in paragraph 8.1 is not an Ordinary Course Transaction, then it must be publicly disclosed by the Company no later than on the date in which such transaction is executed, in accordance with paragraph 7.2 above.

IDENTIFICATION OF RELATED PARTIES, COMPANY'S SUBSIDIARIES AND KEY MANAGEMENT PERSONNEL

9.1. The Company's Financial department in coordination with the Secretary of the Board of Directors, and the Company's Human Resources department shall keep permanently updated lists of ("Lists"):

a) The Key Management Personnel;

b) The Company's Subsidiaries; and

c) The Related Parties of the Company.

9.2. The Lists shall be available for consultation by the Board of Directors and the Statutory Audit Board for the purposes of complying with their duties under this Policy.

10. FINAL PROVISIONS

10.1. The Statutory Audit Board has issued a favourable prior opinion on this Policy on 9 December and the Board of Directors approved it on 16 December 2020.

10.2. Any amendment to this Policy must be approved by the Board of Directors, following a favourable opinion of the Statutory Audit Board.

10.3. This Policy shall be disclosed in the Company's corporate governance report or in any other publicly available manner.

ANNEX I

RELATED PARTIES ACCORDING TO IAS 24

The list below includes a summary of natural and legal persons deemed related parties, as per paragraph 9 of IAS 24 as adopted by Commission Regulation (EC) No 1126/2008 of 3 November 2008.

A. Individuals

i. Person who has Control or Joint Control over the Company;

ii. Person who has Significant Influence over the Company;

iii. Person who is a member of the Key Management Personnel of the Company or of a parent company of the Company;

iv. Any Close Family Member of a person identified in points i. to iii. above.

B. Legal persons

i. Entity belonging to the same group of the Company;

ii. Entity that is an Associate of the Company (or is an Associate of a member of the group to which the Company belongs);

iii. Entity that is a joint venture of the Company (or is a joint venture of a member of the group to which the Company belongs);

iv. Entities that are joint ventures of the same third party;

v. One entity is a joint venture of the third-party entity and the other entity is an Associate of that thirdparty entity;

vi. The entity is a post-employment benefit plan for the employees of the Company, or an entity related to the Company;

vii. The entity is controlled or jointly controlled by a natural person listed in A. above;

viii. Entity in which a person who has Control or Joint Control over the Company (or a Close Family Member of that person) has Significant Influence or is a member of the Key Management Personnel of the entity (or the entity's parent company);

ix. Entity, or any member of the group of which it forms part, that provides the services of Key Management Personnel to the Company or its parent company.

C. Glossary:

a) Associate: means an entity, including an unincorporated entity such as a partnership, over which a relevant person or entity has significant influence, and which is neither a Subsidiary nor a joint venture;

b) Close Family Member: means the family members who may be expected to influence, or be influenced by, that person in their dealings with the Company, which may include:

i. the person's children and domestic partner;

ii. children of that person's domestic partner; and

iii. dependents of that person or that person's domestic partner.

c) Control: has the meaning set out in IFRS 10 (in general terms, an entity controls another entity when it has power over such entity with the ability to direct the relevant activities or it is exposed, or has rights, to variable returns from its involvement with such entity and has the ability to affect those returns through its power over such entity);

d) Joint control: means the contractually agreed sharing of control of an arrangement, which exists only when decisions about relevant activities require the unanimous consent of the parties sharing control;

e) Significant influence: means the power to participate in the financial and operational decisions of an entity, but not the control over those policies. It can be obtained by stock ownership, statute or agreement."

H. REPORT ON REMUNERATIONS

This chapter was inserted to comply with Article 245-C of the Securities Code.

The Annual Shareholders' General Meeting held in 2020 approved a remuneration policy in accordance with the terms applying at the date it was held. The approved policy is described in paragraph 69 of this report.

According to the remuneration policy approved at the General Meeting, the remuneration attributed to the members of the Board of Directors in 2020, including remuneration awarded by Sonae Indústria Group subsidiaries, were the following:

Executive	Total fixed	STVB*(a)	MTVB*	LTVB*(a)	Total*	Ratio Fixed
Directors	remuneration*					Remuneration/Variable Remuneration*
George Christopher	257,266.70	125,000	125,000	125,000	632,266.70	68.60%
Lawrie
Louis Brassard**	194,195.49	126,745.20	95,446.07	126,745.20	543,131.96	55.65%
Non Executive
Directors
Duarte Paulo	51,800	-	-	-	51,800
Teixeira de
Azevedo
Carlos António	31,700	-	-	-	31,700
Rocha Moreira da
Silva
Albrecht Olof	28,300	-	-	-	28,300
Luther Ehlers
Berta Maria	28,700	-	-	-	28,700
Nogueira Dias da
Cunha
Isabel Sofia	24,700	-	-	-	24,700
Bragança Simões
de Barros
Javier Vega de	56,140	-	-	-	56,140
Seoane
Azpilicueta
José Joaquim	28,700	-	-	-	28,700
Romão de Sousa

* Values in euros

** Values in Euros which correspond to the amounts paid in Canadian Dollars by the Company's subsidiary Tafisa Canada, Inc. (a) In relation to 2020 - target values; final values to be determined according to KPI's achievements and to be approved by the Shareholders' Remuneration Committee

The remunerations awarded by the Statutory Audit Board in 2020 were the following:

António Trabulo (Chairman)	9,900€
Óscar Quinta	7,900€
Ana Fonte	7,900€
TOTAL	25,700€

Audit services	129,504€
Other reliability services	500€
TOTAL	130,004€

The remuneration of the External Auditor paid by the company or its subsidiaries was the following:

In the definition of total remuneration, the Company's Shareholders' Remuneration Committee applied, in a regular and ordinary manner, the principles and rules of the Remuneration and Compensation Policy of the Statutory Governing Bodies and Senior Management approved at the Shareholders General Meeting as detailed below:

a) The fixed remuneration awarded to the Board members is the median of the market values and takes into account the level of responsibility of the respective Board member.
b) The non-executive directors were not awarded any variable remuneration.
c) The STVB value corresponds to the performance of the executive directors according to the achievement of the individual and business KPIs previously defined, after the results are closed (for executive directors without a specific geographic responsibility, it is based on the company consolidated KPI's, resulting 40% from the Operational Cash Flow, 20% from Departmental KPIs, of which one is from Fixed Costs (10%) and the remainder 10% are related to the management of the Covid-19 pandemic impact on the business, and 10% from continuous improvement performance indicators and on individual KPI's, these with a weight of 30%; for executive directors with geographic responsibilities, the calculation is similar to the previously described but the Company's consolidated Operational Cash Flow has a weight of 10%, the weight of the relevant geography represents 40%, allocated as follows: (i) 30% to Total EBITDA; (ii) 5% to Working Capital and (iii) 5% to Fixed Costs; 20% are dependent on continuous improvement performance indicators, namely related to the performance of the working teams under the responsibility of the ED which, in 2020, (i) 5% were related to the level of customer claims, (ii) 5% were indexed to productivity levels, (iii) 5% were related to service quality and (iv) 5% were related to working incidents, and the weight of Individual KPI's is also 30%.
d) The MTVB payment will be deferred for three years and adjusted proportionally in the year to which it relates and in the following two years, based on the indicators defined in the remuneration policy (in relation to EDs with no specific geographic responsibility, the indicators are the Return on capital employed consolidated (40%), the achievement of strategic objectives regarding business activity in Canada (25%), the level of achievement of the reorganisation process in the laminates and components business (15%) and individual KPIs (20%) achieved in the adjustment year; in relation to EDs with geographic responsibilities, the indicators to be applied are the Return on capital employed of the business (50%) and the achievement of the business strategic objectives (50%), which includes the level of sales in value added products, the increase of the installed production capacity and the general assessment.
e) The LTVB value is equal to the STVB awarded and its payment is deferred for five years and is due only if the Company registers positive consolidated results in every year of the deferral period and if, in each year, those results are equal or above 20% of the consolidated Shareholders' Funds.

Sonae Indústria did not attributed any shares or stock options.

The approved remuneration policy does not foreseen the possibility of requesting the refund of a variable remuneration.

In 2020, the member of the Board of Directors, Paulo Azevedo relinquished part of his remuneration as Chairman of the Board of Directors of Sonae Arauco, SA, as from 1 January 2019 totalling 49,900 euros, as he

is not remunerated for such role, and this waiver will be valid until Sonae Indústria has its business plan fully financed and its proportional debt level is 3.5x below EBITDA.

In 2020, the Managing Directors have relinquished part of their fixed remuneration (4,333.34 euros in the case of George Christopher Lawrie and 5,373 Canadian Dollars in the case of Louis Brassard), due to the impact of Covid-19 pandemic on Sonae Indústria's subsidiaries and the measures applied to their employees.

PART II - ASSESSMENT OF THE CORPORATE GOVERNANCE

1. Identification of the corporate governance code adopted

Sonae Indústria, SGPS, SA adopted the Corporate Governance Code of the Portuguese Institute of Corporate Governance released in 2018 and revised in 2020, which is disclosed at https://cam.cgov.pt/en/the-ipcgcorporate-governance-code-2018.

2. Analysis of compliance with the Corporate Governance Code adopted

Sonae Indústria did not comply with one of the recommendations of the aforementioned Corporate Governance Code, during the 2020 exercise, being the non-compliance explained at the end of this section. Besides fulfilling the legal requirements and recommendations of the referred Code, Sonae Indústria, being aware of the importance of good corporate governance for business and for its shareholders, constantly seeks to adopt best practices in all areas in which operates, and as such prepared its own Code of Conduct, which can be found on the company's website www.sonaeindustria.com.

RECOMMENDATION*	DEGREE OF COMPLIANCE	CORPORATE GOVERNANCE REPORT
I. GENERAL PROVISIONS
I.1. Company's relationship with investors and disclosure
I.1.1. The company should establish mechanisms to ensure the timely disclosure of information to its governing bodies, shareholders, investors and other stakeholders, financial analysts, and to the markets in general.	Compliant	29 and 55 to 58
I.2. Diversity in the composition and functioning of the company's governing bodies
I.2.1. Companies should establish standards and requirements regarding the profile of new members of their governing bodies, which are suitable according to the roles to be carried out. Besides individual attributes (such as competence, independence, integrity, availability, and experience), these profiles should take into consideration general diversity requirements, with particular attention to gender diversity which may contribute to a better performance of the governing body and to the balance of its composition.	Compliant	16 and Chapter F
I.2.2. The company's managing and supervisory boards, as well as their committees, should have internal regulations — namely regulating the performance of their duties, their Chairmanship, periodicity of meetings, their functioning and the duties of their members –, disclosed in full on the company's website. Minutes of the meetings of each of these bodies should be drawn out. a) Internal regulations disclosed in full on the company's website:
a.1) Board of Directors a.2) Statutory Audit Board a.3) Board Committees	Compliant Compliant Compliant	22 and 61 34 and 61 27 and 61
b) Prepare detailed minutes of meetings: b.1) Board of Directors b.2) Statutory Audit Board b.3) Board Committees	Compliant Compliant Compliant	29 29 29
I.2.3. The composition and the number of annual meetings of the managing and supervisory bodies, as well as of their committees, should be disclosed on the company's website.		6
a) Composition of the bodies and bodies committees; b) Number of annual meetings.	Compliant Compliant	2 23 and 35

RECOMMENDATION*	DEGREE OF COMPLIANCE	CORPORATE GOVERNANCE REPORT
I.2.4. A policy for the communication of irregularities (whistleblowing) should be adopted that guarantees the suitable means of communicating and treatment of those irregularities, with the safeguarding of the confidentiality of the information transmitted and the identity of its provider, whenever such confidentiality is requested.	Compliant	49
I.3. Relationships between the company bodies
I.3.1. The bylaws, or other equivalent means adopted by the company, should establish mechanisms that, within the limits of applicable laws, permanently ensure the members of the managing and supervisory boards are provided access to all the information and company's collaborators, in order to appraise the performance, current situation and perspectives for further developments of the company, namely including minutes, documents supporting decisions that have been taken, calls for meetings, and the archive of the meetings of the managing board, without impairing the access to any other documents or people that may be requested for information.	Compliant	21, 29 and 38
I.3.2. Each of the company's boards and committees should ensure the timely and suitable flow of information, especially regarding the respective calls for meetings and minutes, necessary for the exercise of the competences, determined by law and the bylaws, of each of the remaining boards and committees.	Compliant	29 and 38
I.4. Conflicts of interest
I.4.1. The members of the managing and supervisory boards and the internal committees are bounded, by internal regulation or equivalent, to inform the respective board or committee whenever there are facts that may constitute or give rise to a conflict between their interests and the company's interest.	Compliant	29 and 38
I.4.2. Procedures should be adopted to guarantee that the member in conflict does not interfere in the decision-making process, without prejudice to the duty to provide information and other clarifications that the board, the committee or their respective members may request.	Compliant	29 and 38
I.5. Related party transactions
I.5.1. The managing body should disclose in the corporate governance report or by other means publicly available the internal procedure for verifying transactions with related parties. I.5.2. The managing body should report to the supervisory body the results of the internal procedure for verifying transactions with related parties, including the transactions under analysis, at least every six months.	Compliant Compliant	Chapter G Chapter G

RECOMMENDATION*	DEGREE OF COMPLIANCE	CORPORATE GOVERNANCE REPORT
II. SHAREHOLDERS AND GENERAL MEETINGS
II.1. The company a) should not set an excessively high number of shares to confer voting rights; and b) it should make its choice clear in the corporate governance	Compliant Not applicable	13
report every time its choice entails a diversion from the general rule: that each share has a corresponding vote.
II.2. The company shall not adopt mechanisms that make decision making by its shareholders (resolutions) more difficult, specifically, by setting a quorum higher than that established by law.	Compliant	14
II.3. The company should implement adequate means for the remote participation by shareholders in the general meeting, which should be proportionate to its size.	Compliant	12
II.4. The company should implement adequate means for the exercise of remote voting, including by correspondence and electronic means.	Compliant	12
II.5. The bylaws, which specify the limitation of the number of votes that can be held or exercised by a sole shareholder, individually or in coordination with other shareholders, should equally provide that, at least every 5 years, the amendment or maintenance of this rule will be subject to a shareholder resolution - without increased quorum in comparison to the legally established - and in that resolution, all votes cast will be	Not applicable
counted without observation of the imposed limits. II.6. The company should not adopt mechanisms that imply payments or assumption of fees in the case of the transfer of control or the change in the composition of the managing body, and which are likely to harm the free transferability of shares and a shareholder assessment of the performance of the members of the managing body.	Compliant	4
III. NON-EXECUTIVE MANAGEMENT, MONITORING AND SUPERVISION
III.1. Without prejudice of the legal powers of the Chair of the managing body, if he or she is not independent, the independent directors should appoint a coordinator from amongst them, namely, to: (i) act, when necessary, as an interlocutor near the chair of the board of directors and the other directors, (ii) make sure there are the necessary conditions and means to carry out their functions; and (iii) coordinate the independent directors in the assessment of the performance of the managing body, as established in recommendation V.1.1.	Compliant	17

RECOMMENDATION*	DEGREE OF COMPLIANCE	CORPORATE GOVERNANCE REPORT
III.2. a) The number of non-executive members in the managing body, as well as b) the number of members of the supervisory body and c) the number of the members of the committee for financial matters should be suitable for the size of the company and the complexity of the risks intrinsic to its activity, but sufficient to ensure, with efficiency, the duties which they have been attributed. The formation of such suitability judgment should be included in the corporate governance report.	Compliant Compliant Compliant	18 31 29
III.3. In any case, the number of non-executive directors should be higher than the number of executive directors.	Compliant	17, 18, 21 and 28
III.4. Each company should include a number of non-executive directors that corresponds to no less than one third, but always plural, who satisfy the legal requirements of independence. For the purpose of this recommendation, an independent person is one who is not associated with any specific group of interest of the company, nor under any circumstance likely to affect his/her impartiality of analysis or decision, namely due to: i) having carried out functions in any of the company's bodies for more than twelve years, either on a consecutive or non-consecutive basis; ii) having been a prior staff member of the company or of a company which is considered to be in a controlling or group relationship with the company in the last three years; iii) having, in the last three years, provided services or established a significant business relationship with the company or a company which is considered to be in a controlling or group relationship, either directly or as a shareholder, director, manager or officer of the legal person; iv) having been a beneficiary of remuneration paid by the company or by a company which is considered to be in a controlling or group relationship other than the remuneration resulting from the exercise of a director's duties; v. having lived in a non-marital partnership or having been the spouse, relative or any first degree next of kin up to and including the third degree of collateral affinity of company directors or of natural persons who are direct or indirect holders of qualifying holdings, or vi. having been a qualified holder or representative of a shareholder of qualifying holding. III.5. The provisions of paragraph (i) of recommendation III.4. does	Compliant Not applicable	17 and 18
not inhibit the qualification of a new director as independent if, between the termination of his/her functions in any of the company's bodies and the new appointment, a period of 3 years has elapsed (cooling-off period).

RECOMMENDATION*	DEGREE OF COMPLIANCE	CORPORATE GOVERNANCE REPORT
III.6. The supervisory body, in observance of the powers conferred to it by law, should assess and give its opinion on a) the strategic lines and b) the risk policy prior to its approval by the managing body.	Compliant Compliant	51 38 and 51
III.7. Companies should have specialised committees, separately or cumulatively, on matters related to a) corporate governance, b) appointments, and c) performance assessment. In the event that the remuneration committee provided for in article 399 of the Commercial Companies Code has been created and should this not be prohibited by law, this recommendation may be fulfilled by conferring competence on such committee in the aforementioned matters.	Compliant Compliant Compliant	29 29 29
IV. EXECUTIVE MANAGEMENT
IV.1. The managing body should approve, by internal regulation or equivalent, the rules regarding the action of the executive directors applicable to their performance of executive functions in entities outside of the group.	Compliant	29
IV.2. The managing body should ensure that the company acts consistently with its objects and does not delegate powers, namely, in what regards:
a) the definition of the strategy and main policies of the company;	Compliant	21
b) the organisation and coordination of the business structure;	Compliant	21
c) matters that should be considered strategic in virtue of the amounts involved, the risk, or special characteristics.	Compliant	21
IV.3. In the annual report, the managing body explains in what terms the strategy and the main policies defined seek to ensure the long-term success of the company which are the main contributions resulting therein for the community at large.	Compliant	21
V. EVALUATION OF PERFORMANCE, REMUNERATION AND

APPOINTMENT
V.1. Annual evaluation of performance
V.1.1. The managing body should annually evaluate
a) its performance, as well as	Compliant	24
b) the performance of its committees and	Compliant	24
c) executive directors,	Compliant	24
taking into account the accomplishment of the company's
strategic plans and budget plans, the risk management, the
internal functioning and the contribution of each member of the
body to these objectives, as well as the relationship with the
company's other bodies and committees.

RECOMMENDATION*	DEGREE OF COMPLIANCE	CORPORATE GOVERNANCE REPORT
V.2. Remuneration
V.2.1. The company should create a remuneration committee, the composition of which should ensure its independence from the management, which may be the remuneration committee appointed under the terms of article 399 of the Commercial Companies Code.	Compliant	66 and 67
V.2.2. The remuneration should be set by the remuneration committee or of the general meeting, on a proposal from that committee.	Compliant	66 to 68
V.2.3. For each term of office, the remuneration committee or the general meeting, on a proposal from that committee, should also approve the maximum amount of all compensations payable to any member of a board or committee of the company due to the respective termination of office. The said situation as well as the amounts should be disclosed in the corporate governance report or in the remuneration report.	Compliant	69
V.2.4. In order to provide information or clarifications to shareholders, the chair or, in case of his/her impediment, another member of the remuneration committee should be present at the annual general meeting, as well as at any other, whenever the respective agenda includes a matter linked with the remuneration of the members of the company's boards and committees or, if such presence has been requested by the shareholders.	Compliant	67
V.2.5. Within the company's budgetary limitations, the remuneration committee should be able to decide, freely, on the hiring, by the company, of necessary or convenient consulting services to carry out the committee's duties.	Compliant	67
V.2.6. The remuneration committee should ensure that those services are provided independently and that the respective providers do not provide other services to the company, or to others in controlling or group relationship, without the express authorization of the committee.	Compliant	67
V.2.7. Taking into account the alignment of interests between the company and the executive directors, a part of their remuneration should be of a variable nature, reflecting the sustained performance of the company, and not stimulating the assumption of excessive risks.	Compliant	69 and 70
V.2.8. A significant part of the variable component should be partially deferred in time, for a period of no less than three years, being necessarily connected to the confirmation of the sustainability of the performance, in the terms defined by a company's internal regulation.	Compliant	69 to 72
V.2.9. When variable remuneration includes the allocation of options or other instruments directly or indirectly dependent on the value of shares, the start of the exercise period should be deferred in time for a period of no less than three years.	Not applicable

RECOMMENDATION*	DEGREE OF COMPLIANCE	CORPORATE GOVERNANCE REPORT
V.2.10. The remuneration of non-executive directors should not include components dependent on the performance of the company or on its value.	Compliant	69
V.3. Appointments
V.3.1. The company should, in terms that it considers suitable, but in a demonstrable form, promote that proposals for the appointment of the members of the company's governing bodies are accompanied by a justification in regard to the suitability of the profile, the skills and the curriculum vitae to the duties to be carried out.	Non-compliant	See explanation below
V.3.2. The overview and support to the appointment of members of senior management should be attributed to a nomination committee unless this is not justified by the company's size.	Compliant	29
V.3.3. This nomination committee includes a majority of non executive, independent members.	Compliant	29
V.3.4. The nomination committee should make its terms of reference available, and should foster, to the extent of its powers, transparent selection processes that include effective mechanisms of identification of potential candidates, and that those chosen for proposal are those who present a higher degree of merit, who are best suited to the demands of the functions to be carried out, and who will best promote, within the organization, a suitable diversity, including gender diversity.	Compliant	29
VI. INTERNAL CONTROL
VI.1. The managing body should debate and approve a) the company's strategic plan and b) risk policy, which should the establishment of limits on risk taking.	Compliant Compliant	21 50 to 52
VI.2. The supervisory board should be internally organised, implementing mechanisms and procedures of periodic control that seek to guarantee risks which are effectively incurred by the company are consistent with the company's objectives, as set by the managing body.	Compliant	38 and 51
VI.3. The internal control systems, comprising the functions of risk management, compliance and internal audit should be structured in terms adequate to the size of the company and the complexity of the inherent risks of the company's activity. The supervisory body should evaluate them and, within its competence to supervise the effectiveness of this system, propose adjustments where they are deemed to be necessary.	Compliant	29, 38 and 50 to 52

RECOMMENDATION*	DEGREE OF COMPLIANCE	CORPORATE GOVERNANCE REPORT
VI.4. The supervisory body should provide its view on the work plans and resources allocated to the services of the internal control system, including risk management, compliance and internal audit activities, and may propose the adjustments deemed to be necessary.	Compliant	38, 51, 54 and 55
VI.5. The supervisory body should to be recipient of the reports prepared by internal control services, including the risk management functions, compliance and internal audit, at least regarding matters related to the approval of accounts, the identification and resolution of conflicts of interest, and the detection of potential irregularities.	Compliant	54
VI.6. Based on its risk policy, the company should establish a risk management function, identifying
(i) the main risk it is subject to in carrying out its activity;	Compliant	50 to 55
(ii) the probability of occurrence of those risks and their respective impact;	Compliant	50 to 55
(iii) the devices and measures to be adopt towards their mitigation, and	Compliant	50 to 55
(iv) the monitoring procedures, aimed at their accompaniment.	Compliant	50 to 55
VI.7. The company should establish procedures for the supervision, periodic evaluation, and adjustment of the internal control system, including an annual evaluation of the level of internal compliance and the performance of that system, as well as the perspectives for amendments of the risk structure previously defined.	Compliant	50 to 55
VII. FINANCIAL INFORMATION
VII.1. Financial information
VII.1.1. The supervisory body's internal regulation should impose the obligation to supervise the suitability of the preparation process and the disclosure of financial information by the managing body, including suitable accounting policies, estimates, judgments, relevant disclosure and its consistent application between financial years, in a duly documented and communicated form.	Compliant	38

RECOMMENDATION*	DEGREE OF COMPLIANCE	CORPORATE GOVERNANCE REPORT
VII.2. Statutory audit of accounts and supervision
VII.2.1. By internal regulations, the supervisory body should define, according to the applicable legal regime, the monitoring procedures aimed at ensuring the independence of the statutory audit.	Compliant	37
VII.2.2. a) The supervisory body, should be the main interlocutor of the statutory auditor in the company and the first recipient of the respective reports,	Compliant	38
b) having the powers, namely, to propose the respective remuneration and to ensure that adequate conditions for the provision of services are ensured within the company.	Compliant	38
VII.2.3. The supervisory body should annually assess the services provided by the statutory auditor, their independence and their suitability in carrying out their functions, and propose their dismissal or the termination of their service contract by the competent body when this is justified for due cause.	Compliant	45

* According to the table of multiple recommendations prepared by the Executive Committee for the Monitoring and Supervising of the Code, ("Comissão Executiva de Acompanhamento e Monitorização do Código"), whenever the recommendations apply.

EXPLANATION FOR NON-COMPLIANCE WITH RECOMMENDATIONS

RECOMMENDATION V.3.1. – Taking into account that the final version of the Corporate Governance Code was only published at the end of the first quarter of 2018, Sonae Indústria could not implement this recommendation in relation to the proposal of the appointment of the company's governing bodies for the new mandate presented in its Shareholders' General Meeting held on 9 May. Sonae Indústria expresses, in advance, its intention to comply with this recommendation in the future.

Separate Financial Statements

Separate Statement of Financial Position Separate Income Statement Separate Statement of Comprehensive Income Separate Statement of Changes in Shareholders' Funds Separate Statement of Cash Flows

Notes to the Separate Financial Statements

Sonae Indústria,SGPS,SA

SEPARATE STATEMENTS OF FINANCIAL POSITION

(Amounts expressed in EUR)

ASSETS	Notes	31.12.20	31.12.19
NON CURRENT ASSETS:
Tangible fixed assets	3	14.651,00	37.195,00
Investment in subsidiaries and joint ventures	´4/5	445.612.884,02	449.388.487,81
Other financial Investments	´4/5	1.360,00	1.360,00
Other non current assets	´4/6	12.285.404,65	11.550.996,09
Total Non Current Assets		457.914.299,67	460.978.038,90
CURRENT ASSETS
Trade debtors	´4/7	122.677,81	50.854,01
Other current debtors	´4/7	1.835.136,62	2.606.212,28
Current tax asset	7	569.678,83	515.129,79
Other current assets	´4/8	333.567,24	388.908,14
Cash and cash equivalents	´4/9	18.565,41	781.753,81
Total Current Assets		2.879.625,91	4.342.858,03
Total Assets		460.793.925,58	465.320.896,93

SHAREHOLDER'S FUNDS AND LIABILITIES SHAREHOLDER'S FUNDS:
Share Capital		253.319.797,26	253.319.797,26
Legal reserve		1.807.489,48	1.807.489,48
Other reserves and accumulated earnings		18.154.223,68	30.572.699,22
Total Shareholder's Funds	10	273.281.510,42	285.699.985,96
NON CURRENT LIABILITIES
Subordinated bonds	´4/11	49.944.304,13	49.938.115,70
Unsubordinated bonds	´4/11	15.452.929,21	7.951.240,33
Bank loans - long term - net of current portion	´4/11	97.447.467,88	94.578.685,91
Other current liabilities	´4/12	83.167,00
Provisions	17	6.235.863,00	9.182.460,93
Lease creditors - long term - net of current portion	´4/16	9.636,50	20.452,24
Total Non Current Liabilities		169.173.367,72	161.670.955,11
CURRENT LIABILITIES
Current portion of non-current bank loans	´4/11	6.800.000,00	4.550.000,00
Bank loans - short term	´4/11	419.562,54
Trade creditors	´4/13	118.278,38	175.228,52
Current portion of long term lease creditors	´4/16	5.653,82	17.321,83
Other current creditors	´4/14	4.075.472,06	3.909.149,70
Current tax payable	14	27.318,66	68.931,62
Other taxes and contributions payable	14	19.407,23	30.549,06
Other current liabilities	´4/15	676.220,17	510.048,13
Provisions	17	6.197.134,58	8.688.727,00
Total Current Liabilities		18.339.047,44	17.949.955,86
Total Liabilities		187.512.415,16	179.620.910,97
Total Shareholder's Funds and Liabilities		460.793.925,58	465.320.896,93

Sonae Indústria,SGPS,SA

SEPARATE INCOME STATEMENT

(Amounts expressed in EUR)

	Notes	31.12.20	31.12.19
Operating Income:		0	0
Services rendered	21	309.057,49	302.854,08
Other income and gains	22	9.095.199,51	6.718.936,86
Total operating income		9.404.257,00	7.021.790,94
Operating Costs:		0,00	0,00
External supplies and services		-664.556,49	-790.012,78
Staff expenses	´19/20	-918.645,83	-783.604,72
Depreciation and Amortization	3	-17.069,75	-15.557,73
Provisions and impairment losses	17	-3.732.573,58	-13.018.768,03
Other expenses and losses	22	-7.199.778,15	-6.843.664,18
Total operating costs		-12.532.623,80	-21.451.607,44
Operating profit/(loss)		-3.128.366,80	-14.429.816,50
Financial profit/(loss)	23	-7.001.123,42	-7.132.170,99
Financial expenses		-7.677.817,07	-7.825.455,03
Financial income		676.693,65	693.284,04
Results related on investments in subsidiaries and joint ventures	24	-2.286.179,34	18.241.848,10
Profit/(Loss) before taxation		-12.415.669,56	-3.320.139,39
Corporate income tax - current tax	25	-2.805,98	-5.499,64
Net Profit/(loss) from continuing operations, after taxation		-12.418.475,54	-3.325.639,03
Profit/(loss) for the period	26	-12.418.475,54	-3.325.639,03
Profit (loss) per Share
From continuing operations
Basic	26	-0,27352	-0,07325
Diluted	26	-0,27352	-0,07325

SEPARATE STATEMENT OF PROFIT (LOSS) FOR THE PERIOD AND COMPREHENSIVE INCOME (Amounts expressed in EUR)

		31.12.20	31.12.19
Net profit/(loss) for the period	´10/26	-12.418.475,54	-3.325.639,03
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD		-12.418.475,54	-3.325.639,03

SEPARATE STATEMENTS OF CHANGES IN SHAREHOLDERS` FUNDS (Amounts expressed in EUR)

	NOTES	Share capital	Legal reserve	Other Reserves and accumulated earnings	Total shareholder's funds

Balance as at 1 January 2020		253.319.797,26	1.807.489,48	30.572.699,22	285.699.985,96
Total comprehensive income
Net profit /( loss) for the period				-12.418.475,54	-12.418.475,54
Total				-12.418.475,54	-12.418.475,54
Balance as at 31 December 2020	10	253.319.797,26	1.807.489,48	18.154.223,68	273.281.510,42

Balance as at 1 January 2019		253.319.797,26	1.807.489,48	33.898.338,25	289.025.624,99
Total comprehensive income
Net profit /( loss) for the period				-3.325.639,03	-3.325.639,03
Total				-3.325.639,03	-3.325.639,03
Balance as at 31 December 2019	10	253.319.797,26	1.807.489,48	30.572.699,22	285.699.985,96

SONAE INDÚSTRIA,SGPS,S.A.

SEPARATE STATEMENTS OF CASH FLOWS

(Amounts expressed in EUR)

OPERATING ACTIVITIES	Notes	2020		2019
Receipts from trade debtors		237.234		335.893
Payment to trade creditors		700.615		686.448
Payments to staff		820.305		970.883

Net cash flow from operations		-1.283.686		-1.321.438
Payment/(receipt) of corporate income tax		5.487		4.018
Other receipts/ ( payments) relating to operating activities		-234.376		-72.310
Net cash flow from operating activities [1]			-1.523.549		-1.397.766
INVESTMENTS ACTIVITIES:
Cash receipts arising from:
Loans granted to related parties - medium and long term	6	1.599.591		9.898.500
Loans granted to related parties - short term	7.2.1	5.181.900
Dividends	24	3.957.000	10.738.491	23.636.729	33.535.229

Cash payments arising from:
Investments	5	2.650.036		3.938.818
Loans granted to related parties - short term	6	2.334.000		1.498.600
Loans granted to related parties - medium and long term	7.2.1	4.390.500		1.424.000
Cash compensation	22	6.897.624	16.272.160	6.714.262	13.575.680
Net cash flow from investing activities [2]			-5.533.669		19.959.549
FINANCIAL ACTIVITIES
Cash receipts arising from:
Interest and similar income		687.296		1.045.160
Subordinated bonds	11.2			50.000.000
Unsubordinated bonds	11.2	7.500.000		8.000.000
Loans obtained	11.2	643.150.000		1.473.050.000
Loans obtained from related parties - short term	11.2	15.863.945	667.201.241	16.886.600	1.548.981.760

Cash payments arising from:
Interest and similar charges		7.277.891		7.976.413
Finance lease		17.381		14.974
Loans obtained	11.2	638.250.000		1.541.235.022
Loans obtained from related parties - short term Others	11.2	15.747.945 33.557	661.326.774	17.566.700	1.566.793.109

Net cash used in financing activities [3]			5.874.467		-17.811.349
Net increase in cash and cash equivalents (4) = (1)+(2)+(3)			-1.182.752		750.435
Cash and cash equivalents - at the beginning of the period	9		781.754		31.319
Cash and cash equivalents - at the end of the period	9		-400.998		781.754
Net increase / (decrease) in cash and cash equivalents			-1.182.752		750.435

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2020

(Amounts expressed in Euros)

1. Introduction

SONAE INDÚSTRIA, SGPS, S.A. head-office is at Lugar do Espido, Via Norte, 4470-177 Maia, Portugal.

The Company's shares are listed on NYSE Euronext.

Separate financial statements are presented as required by the Commercial Companies Code. As permitted by Decree-Law no. 158/2009 of July 13, the separate financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union (IFRS - EU). Consolidated financial statements are also presented, in accordance with current legislation.

The Company's main activity is the management of shareholdings (note 5).

2. Main Accounting Policies

The main accounting policies adopted in preparing the accompanying financial statements are as follows:

2.1. Basis of Preparation

Management assessed the Company's ability to operate on a continuous basis, based on all relevant information, facts and circumstances of a financial, commercial or other nature, including events subsequent to the reference date of the financial statements, available on the future. As a result of the evaluation, Management concluded that the Company has adequate resources to maintain its activities, with no intention of ceasing its activities in the short term, and considered it appropriate to use the assumption of continuity of operations in the preparation of the financial statements.

These financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and with Interpretationsissued by the IFRS Interpretations Committee (IFRS IC), applicable to the period beginning 1 January 2020 and endorsed by the European Union.

In the year ended 31 December 2020, the following standards and interpretations, which have been endorsed by European Union, became effective:

IAS 1 and IAS 8 (amendment), Definition of Material (effective for annual periods beginning on or after 1 January 2020). Under this amendment, information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the user of financial statements make on the basis of those financial statements.

IFRS 3 (amendment), Business Combinations (effective for annual periods beginning on or after 1 January 2020). This amendment clarifies that to be considered a business combination, an acquired set of activities and assets must include, at minimum, an input and a substantive process that together significantly contribute to the ability to create outputs;

IFRS 9, IAS 39 and IFRS 7 (amendments), Interest rate benchmark reform – phase 1 (effective for annual periods beginning on or after 1 January 2020).

IFRS 16 (amendment), Leases – Covid 19–related rent concessions (effective for annual periods beginning on or after 1 June 2020. Early application is allowed.). This amendment exempts lessees who have been granted lease payment concessions as a direct consequence of Covid-19 pandemic from assessing whether these concessions are lease modifications. If lessees

apply this exemption, the aforementioned lease payment concessions shall be accounted for as if they were not lease modifications. This exemption can only be applied if the aforementioned lease payment concessions are reflected in a reduction of lease payment to take place before 30 June 2021.

Amendments to References to the Conceptual Framework in IFRS Standards (effective for annual periods beginning on or after 1 January 2020). This amendment contains changes to several standards, whose references to the Conceptual Framework have been updated.

The application of these amendments to accounting standards from 1 January 2020 did not have significant effects on these separated financial statements.

At 31 December 2020, the following standards and interpretations had been issued by IASB and had been endorsed by the European Union, but had not been applied as they only become effective in later periods:

IFRS 4 (amendment), Insurance contracts – deferral of IFRS 9 (effective for annual periods beginning 1 January 2021). The temporary exemption from applying IFRS 9 – Financial instruments, which is included in IFRS 4, is changed by this amendment so as IFRS 9 is applied in periods beginning on or after 1 January 2023.

IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (amendments), Interest rate benchmark reform – phase 2 (effective for annual periods beginning on or after 1 January 2021). These amendments are still subject to endorsement by the European Union. These amendments relate to modification of financial assets, financial liabilities and lease liabilities and to requirements for using hedging accounting, as well as the respective disclosures.

The company does not expect any significant effect on its future financial statements from the application of this amendment to IFRS.

At 31 December 2020, the following standards, effective 1 January 2020 or later, had been issued by IASB but still had not been endorsed by the European Union:

IAS 1 (amendment), Presentation of Financial Statements (effective for annual periods beginning on or after 1 January 2023). This amendment is still subject to endorsement by the European Union. This amendment clarifies certain aspects of classification of liabilities as current or non-current, namely, that this classification should be based on rights that are in existence at the end of the reporting period, that it should not be affected by expectations about whether an entity will exercise its rights to defer settlement of a liability and it makes clear that settlement refers to the transfer to the counterparty of cash, equity instruments and other assets or services;

IAS 16 (amendment), Tangible fixed assets (effective for annual periods beginning on or after 1 January 2022). This amendment is still subject to endorsement by the European Union. According to this amendment, the proceeds from the sale of products which are produced while bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management should be recognized through profit or loss, along with the respective cost;

IAS 37 (amendment), Provisions, contingent liabilities and contingent assets (effective for annual periods beginning on or after 1 January 2022). This amendment is still subject to endorsement by the European Union. This amendment specifies that the cost of fulfilling a contract comprises the costs that relate directly to the contract, whether these costs are incremental or allocated;

IFRS 3 (amendment), Business combinations (effective for annual periods beginning on or after 1 January 2022). This amendment is still subject to endorsement by the European Union. This amendment changes references to 1989 Framework for references to 2018 Conceptual Framework. Furthermore, this amendment does not allow the recognition of contingent assets acquired in a business combination and clarifies that an entity should use IAS 37 or IFRIC 21 to identify liabilities assumed in business combination that generally are within the scope of these two standards;

IFRS 17 (new), Insurance contracts (effective for annual periods beginning 1 January 2021). This standard is still subject to endorsement by the European Union. This standard will revoke IFRS 4 – Insurance contracts and applies to all entities issuing insurance contracts, reinsurance contracts and investment contracts with discretionary participation characteristics. IFRS 17 is based on the current measurement of technical liabilities at each reporting date. The current measurement can be based on a complete "building block approach" or "premium allocation approach". The recognition of the technical margin is different depending on whether it is positive or negative. IFRS 17 is of retrospective application;

IFRS 17 (amendment), Insurance contracts (effective for annual periods beginning 1 January 2023). This standard is still subject to endorsement by the European Union. This amendment affects a diverse range of aspects relating to mensuration and recognition;

Annual improvements 2018 – 2020 (effective for annual periods beginning on or after 1 January 2022). These improvements are still subject to endorsement by the European Union. These improvements affect IFRS 1, IFRS 9, IFRS 16 (illustrative examples) and IAS 41;

The company does not expect any significant effect on its future financial statements from the application of these changes to IFRS.

2.2. Investments in subsidiaries and joint ventures

Assets and liabilities of each subsidiary and joint venture are recorded at cost less any impairment losses. Financial investments in subsidiaries and joint ventures are tested for imparity when appropriate. If an impairment loss exists, it is recorded as a cost.

Subsidiaries are all entities (including special purpose entities) over which the Sonae Indústria, has the power to govern the financial and operating policies of those normally associated with the control, directly or indirectly, more than half of the voting rights.

Sonae Indústria has control over the subsidiaries in situations where cumulatively: i) it has power over the subsidiary; ii) is exposed to, or is entitled to, variable results through its relationship with the investee; iii) has the ability to use its power over the investee to affect the amount of its results.

Joint ventures are entities from which Sonae Indústria has joint control with another partner under a particular economic activity (represented by a contractual agreement)

Beyond the recognition of the impairment of the investment in subsidiary/joint ventures, Sonae Indústria recognize additional losses if incurred obligations or has made payments on behalf of subsidiary / joint ventures.

Entities that qualify as subsidiaries and as joint ventures are listed in Note 5.

Revenues from financial investments (dividends received) are recorded on the Profit and Loss statement of the period in which distribution is decided and announced.

2.3. Tangible Fixed Assets

Tangible assets acquired up to 1 January 2004 (transition date to IFRS) are recorded at their deemed cost, which corresponds to their acquisition cost or revaluated acquisition cost, in accordance with generally accepted accounting principles in Portugal at 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 from the moment the assets are available for use, in accordance with the straight-line method in accordance with the estimated useful life for each group of assets.

Maintenance and repair costs related to tangible assets are recorded directly as expenses in the year they are incurred.

Gains or losses arising from the sale or write-off of tangible assets are determined as the difference between the sale price and the accounting net value at the sale/write-off date and are registered as Other Operational Income/ Other Operational Losses.

2.4. Accounting for leases

The company recognizes on the Statement of Financial Position those tangible assets used by the company under lease contracts in which the company acts as a lessee, except for leases classified as low value leases or short-term leases, whose lease payments are recognized as an expense on the Income Statement on a straight line basis over the lease term.

The right-of-use asset is recognized for its cost under Tangible fixed assets, on the Statement of Financial Position, when the assets becomes available for use by the company. At the same time, the lease liability is recognized under Lease creditors, on the Statement of Financial Position, for the present value of lease payments set to be paid over the lease term.

The Group uses incremental borrowing rates to calculate the present value of lease payments. For Group companies which hold external loans, this incremental borrowing rate is calculated using the market yield curves for each functional currency of each of those companies added up by a spread which corresponds to the average cost of external debt of each of those companies. The incremental borrowing rate used for each lease remains unchanged until the end of the lease term, unless the lease undergoes significant changes in the lease term, changes in the assessment of an option to purchase the underlying asset or modifications which increase the scope of the lease, in which cases a revised incremental borrowing rate shall be used.

Depreciation and impairment losses of right-of-use assets are calculated and recognized as set out on note 2.3 for tangible fixed assets, taking into consideration the nature of the underlying asset. Whenever there is no reasonable certainty as to the acquisition of leased assets upon end of contract, the right-of-use asset is depreciated from the commencement date to the earlier of the end of the asset's useful life or the end of the lease term .

The lease term is the period over which the contract is enforceable. To determine the period over which the contract is enforceable, the company takes into consideration not only the penalties contractually defined but also the economic consequences of terminating the contact for both the lessee and the lessor.

Interest included in lease payments, depreciation and impairment losses are recognized as expenses of the period they related to, on the Income Statement. Interest expenses are presented under financing activities, on the Statement of Cash Flows.

Payments of leases classified as low value or short term are recognized as expenses, on the Income Statement, on a straightline basis, and presented under operating activities, on the Statement of Cash Flows. The company classifies leases as low value when the purchase price of the underlying asset as new is equal or lower than EUR 1 000. The Group classifies a lease as short term when lease term is equal or under one year.

At 31 December 2020 and 31 December 2019, the company did not hold any position in which it acted as a lessor.

2.5. Impairment of non- current assets

Assets are assessed for impairment at the end of each year, 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 recorded on the income statement under provisions and impairment losses.

The recoverable amount is the higher of an asset's fair value net of costs incurred on sale and its value in use. Fair value less sale related costs 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 recognized in prior years is only recorded when it is concluded that the impairment losses recognized for the asset no longer exist or have decreased. This analysis is performed whenever there is an indication that the impairment loss previously recognized has been reversed. The reversal is recorded on the income statement as Other Operational income. However, the increased carrying amount of an asset due to a reversal of an impairment loss is recognized to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognized for that asset in prior years.

2.6. Borrowing costs

Borrowing costs are normally recognized 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 capitalized as part of the cost of the qualifying asset. Borrowing costs are capitalized 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 capitalization.

2.7. Provisions

Provisions are recognized when, and only when, the company 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.

Provisions are reviewed on the date of each report and are adjusted to reflect the best estimate at that date.

In situations where it is estimated to have a significant period of time between the onset of the obligation and the related expenditure, the provision is recorded at its present value.

The increase and use or reversal of provisions are recognized in the caption "Provisions and impairment losses" in the income statement.

2.8. Financial Assets and Financial Liabilities

Financial assets and financial liabilities are initially recognized at their fair value, except for Trade debtors which do not contain a significant financing component, which are initially measured at their transaction prices. Transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability are added to the fair value of an instrument which is not measured at fair value through profit or loss.

Financial assets can be subsequently classified into the following categories:

i) Financial assets measured at amortized cost;
ii) Financial assets measured at fair value through other comprehensive income;
iii) Financial assets measured at fair value through profit or loss

Classification of financial assets into these categories is done on the basis of the Group's business model for managing financial assets and on the contractual characteristics of the financial assets.

Financial liabilities can be subsequently classified into the following main categories:

i) Financial liabilities measured at amortized cost;
ii) Financial liabilities measured at fair value through profit or loss;

These financial assets and liabilities are stated on the Separate Statement of Financial Position under different classes of assets and liabilities, in accordance with the nature of each instrument.

The company holds the following financial instruments, which may be either financial assets or financial liabilities:

a) Accounts receivable

Receivables are stated at net realizable value corresponding to their nominal value less impairment losses (recorded under the caption Impairment losses in accounts receivable). The impairment losses are recognized in "Impairment loss in costumers".

The impairment losses are recorded when the company has objective evidence that part or the whole amount receivable will not be paid and as long as the loss can be reliably estimated.

To this end, the company takes into account market information that demonstrates that the customer is in breach of its responsibilities as well as historical information on overdue and unpaid balances.

Impairment losses are measured at an amount equal to the expected credit losses over the life of the asset, including situations where the credit risk did not increase during the accounting period. The expected credit losses are calculated collectively for accounts receivable recorded in the caption Customers, in the statement of financial position.

The amount of the impairment is the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the financial assets original effective interest rate.

The receivables are recorded as currents assets, except when its maturity is greater than twelve months from the balance sheet date, situation when they are classified as non-current assets.

b) Classification as equity or liability

Financial liabilities and equity instruments are classified and accounted for based on their contractual substance, independently from the legal form they assume.

c) Loans

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 2.13. 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.

d) Trade accounts payable

Debts to suppliers and other debts to third parties are initially recorded at fair value, which corresponds to their nominal value, since they do not bear interest and the effect of the financial discount is considered immaterial.

e) Derivative instruments

The company may use 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 hedging instruments may be used by the company mainly to hedge interest rate risks on loans obtained (Interest Rate Swap contracts) and exchange rate risks (Forward contracts). Conditions established for these cash flow hedging instruments are identical to those of the corresponding loans in terms of base rates, calculation rules, rate setting dates and repayment schedules of the loans and for these reasons they qualify as perfect hedges.

The inefficiencies, if any, are accounted under Financial Income or Financial Expenses on the Income statement.

The company's criteria for classifying a derivative instrument as a cash flow hedge instrument include:

The hedge transaction is expected to be highly effective in offsetting changes in cash flows attributable to the hedged risk;
The effectiveness of the hedge can be reliably measured;

There is adequate documentation of the hedging relationships at the inception of the hedge;
- The forecasted transaction that is being hedged is highly probable.

Cash flow hedge instruments that may be used by the company are initially accounted for at fair value. Changes in fair value of these cash flow hedge instruments are recorded in equity under the caption Hedging reserves, included in Reserves and retained earnings on the statement of financial position, and then recognized 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.

Derivative instruments are stated on the Statement of Financial Position under Other non- current assets, other current assets, other non-current liabilities and other current liabilities.

For the periods presented, the company has no financial instruments traded derivatives.

f) Equity Instruments

The equity instruments that represent a residual interest in assets after deduction of liabilities and are recorded at the amount received net of any costs of issuance.

g) Own shares

The own shares are recorded at acquisition cost as a deduction from equity. Gains or losses on the sale of own shares are recorded in other reserves included in other reserves and retained earnings.

h) Cash and Cash Equivalents

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 for which the risk of change in value is insignificant.

In the statement of cash flows, cash and equivalents also include bank overdrafts, which are included in the balance sheet item borrowings.

2.9 . Liability for medium and long term incentives plan

Each year the Company granted their employees that belong to a functional group classified as Executive or above a compensation which is related to the value added in the previous period for the shareholders, to be paid, after a 3-year period if the executive is in the company.

The liability is recorded in the Other Non Current and Current Liabilities item of the Statement of Financial Position, and Personnel Expenses, of the Income Statement by nature, linearly over the period of deferral of the payment.

2.10. Contingent assets and liabilities

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.

2.11. Income tax

Income tax for the year is determined based on the taxable income of the Company, considering the interim period profit and using the estimated effective average annual income tax rate.

The Special Group Tax Regime exist since 2006 and includes the following companies: Surforma, S.A., Maiequipa – Gestão Florestal, S.A., Movelpartes – Componentes para a Industria do Mobiliário, S.A., Frases e Frações – Imobiliária e Serviços, S.A., Sonae Indústria – Management Services, S.A. and Parcelas e Narrativas – Imobiliária, S.A..

Deferred taxes are calculated using the balance sheetliability 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 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 closing date a review is made of the deferred tax assets recognised, which are reduced whenever their future use is no longer probable.

Deferred tax liabilities are recognized on all taxable temporary differences, except for: i) the initial recognition of goodwill, or ii) the initial recognition of assets and liabilitiesthat do not result from a business combination and that do not affect the accounting or tax result at the date of transaction. However, regarding temporary taxable differences related to investments in subsidiaries, they should not be recognized in so far as: i) the parent company has the ability to control the period of the reversal of the temporary difference and ii) it is probable that the temporary difference will not reverse in the near future.

Deferred tax assets and liabilities are recorded in the Income statement, except if they relate to items directly recorded in other comprehensive income, in which case the corresponding deferred tax is recorded therein.

In situations where such positions may be questioned by the Tax Authorities within the scope of their competences, as their interpretation is different from that of the Company, this situation is subject to review. If such re-analysis reconfirms the position of the Company, concluding that the probability of losing a given tax proceeding is less than 50%, the Company treats the situation as a contingent liability, ie no tax amount is recognized given that the most likely decision is that there is no place for paying any tax. In situations where the probability of loss is greater than 50%, a provision is recognized, or if payment has been made, the associated cost is recognized.

2.12. Revenue recognition and accrual basis

Revenue is recognized in relation with contracts with customers: (i) that have been approved (orally or in writing) by all the parties; (ii) for which the company can identify each party's rights regarding the goods and services to be transferred; (iii) for which the company can identify the payment terms of goods and services to be transferred; (iv) that have commercial substance; and (v) for which it is probable that the company will collect the consideration to which it is entitled for the goods and services transferred to the customer.

Revenue is recognized for each performance obligation included in a contract with customers that have the characteristics set out above, when the customer is invoiced. There are no significant differences, if any, between the moment the invoice is issued and the moment the customer obtains control of the goods and services transferred, which typically occurs upon shipment or delivery. Performance obligations are generally satisfied at a point in time.

The revenue from services provided by the company, management services, is recorded in the section Services rendered.

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 are to be recognised in the income statement.

The dividends received from investments in subsidiaries, associates and joint ventures are recognized as income in the period they are assigned to the partners or shareholders.

Interests earned from loans are recorded in the period to which they relate, having regard to the period up to the end of each year.

2.13. Capital gains and losses

Capital gains and losses that result from the sale or write-off of tangible and intangible assets and of investments are presented on the Income statement as the difference between the sale price and the net book value at date of sale or writeoff, under the captions Other income and gains and Other expenses and losses.

2.14. Balances and transactions expressed in foreign currencies

Exchange gains and losses arising from differences between exchange rates on transaction date and those prevailing at the date of collection, payment or the date of the financial statements, are recorded as income or expenses of the period, in case of operating transactions, or as finance income and expenses, in case of financial transactions, on the Income Statement. Exchange differences related to non-monetary assets or liabilities whose change in fair value is directly recognized in equity are also recognized under equity.

2.15. Subsequent events

Events after the closing date that provide additional information about conditions that existed at the Statement of Financial Position date are reflected in the financial statements(adjusting events). Events after the closing date that are non-adjusting events are disclosed in the notes to the financial statements, when material.

2.16. Risk management

a) Credit Risk Management Policy

i) Receivables (Customers)

Sonae Indústria credit Risk derives mainly from account receivables items related with its operating activity.

The main objective of Sonae Indústria credit risk management is to guarantee the effective collection of its operating receivables, according to the most commercially adequate reduced payment terms, while maintaining the level of debtor´s impairments as low possible.

In order to mitigate credit Risk related with potential customers defaulting on payment of outstanding receivables, Sonae Indústria have:

established a Committee to analyse and monitor, on a quarterly basis, credit risks;
implemented common proactive and preventive credit management procedures and processes, supported by IT systems;
established appropriate risk coverage mechanisms (for example, credit insurance, letters of credit, bank guarantees).

To foster the sharing of experiences, the alignment of procedures and practices and to ensure the enforcement of sound controlling rules, Sonae Arauco (a joint venture – note 5) promotes the "Customer's Credit Risk Management Forum". At Sonae Indústria, SGPS, credit risk is small, since customers are only related entities.

ii) Other financial assets, other than receivables

In addition to its operating activities and the related trade debtor balances, the company has other financial assets, which are mainly associated with its cash management activities and with deposits in financial institutions. As a result of these bank movements and balances, credit risk arises from the potential counterparty default by the applicable financial institutions. This risk is, nevertheless, considered as low due to the limited duration and amounts typically involved in bank deposits and to the credit profile of the financial institutions used by Group companies.

In Sonae Indústria, SGPS, credits on related entities in the form of loans are more relevant, although credit risk is also small.

b) Market Risk Management Policy

i) Interest Rate Risk

Due to the significant proportion of floating rate debt, and of the consequent cash flowsrelated to interest payments, Sonae Indústria is exposed to interest rate risk, as a general rule, it does not cover its exposure to changes in interest rates by means of financial derivatives. This approach is based on the principle that there is a positive correlation between interest rate levels and "operating cash flow before net interest", which creates natural coverage at the level of "operating cash flow after net interest" for the Sonae Indústria.

As an exception to this general rule, Sonae Indústria may engage in certain interest rate derivatives solely aimed at hedging existing risks exposures and only to the extent that the risks and valuation of such derivatives can be accurately assessed by the company.

ii) Other Price Risks

As at 31st December 2020, Sonae Indústria did not hold material investments classified as "other financial investments".

c) Liquidity Risk Management Policy

At Sonae Indústria, liquidity risk management aims to ensure that the company obtains, in a timely basis, the financing required to properly carry on its business activities, implement its strategy and meet its payment obligations when due, under the most favorable terms and conditions. The liquidity risk is analyzed in note 18.1.

For this purpose, the company's liquidity management comprises:

consistent financial planning and cash flow forecasting at country and consolidated levels with different time horizons (weekly, monthly, annual and business plan);
diversification of financing sources;
diversification of debt maturities issued in order to avoid excessive concentration of debt repayments in short periods of time;
negotiation of (committed and uncommitted) credit facilities, commercial paper programmes and other facilities with relationship banks to ensure the right balance between satisfactory liquidity and adequate commitment fees;
active access and management of subsidiaries cash positions and cash flows taking into account the Group´s objectives on liquidity.

d) Capital Risk

The capital structure of Sonae Indústria, determined by the proportion of the company equity and net debt is managed in order to ensure the continuity and development of its operations considering also efficiency criteria in financing costs.

Sonae Indústria periodically monitors its capital structure, identifying risks, opportunities and the necessary measures for the achievement of those objectives.

Sonae Indústria (accounting) net gearing (Net Debt / Shareholders Funds – based consolidated accounts) at the end of 2020 was of 2,0x or 1,5x, depending on whether the Subordinated Bonds are, respectively, included or excluded in the Net Debt figure (vs.1,6 or 1,2x in 2019).

2.17 Judgments and estimations

The most significant estimations included in these financial statements refer to:

a) Impairment tests on investment in subsidiaries and joint ventures;
b) Impairment analysis of accounts receivable ;
c) Adjustments to assets and provisions;
d) Calculation of income tax .

These estimations were based on the best available information at the date these financial statements were prepared and were based on the knowledge and experience of present and past events. Notwithstanding, some situations may occur in future periods, which were not included in present estimations, as they were not foreseeable. Changes to estimations after these financial statements date will be, prospectively, corrected through Income Statement, in accordance with IAS 8.

Main estimations and assumptions relating to future events included in these financial statements are described in the correspondent notes.

2.18 Fair value of assets and liabilities

If an active market is available, market price is used for determining asset and liability fair value. This corresponds to level 1 of fair value hierarchy, as defined in IFRS 13 – Fair Value measurement.

When these techniques use mostly or exclusively unobservable information, the resulting fair value corresponds to level 3 or fair value hierarchy, as defined on the aforementioned standard.

2.19 Relevant Events

In the beginning of 2020, the new coronavirus SARS-COV-2, which is identified as the causing agent of COVID-19 disease, progressively spread around the world, originating a pandemic situation. This pandemic spread social and economic disruption, taking a heavy toll on people's lives in most countries. As the pandemic spread, Governments of many countries tried to control it using an array of measures, which included severe economic and social lockdown during specific periods of the year, which concentrated mostly in the beginning of Spring and, to a lesser extent, in the Autumn. As such, economic consequences were uneven throughout the year: most economies around the world were severely hit in the first half of the year and showed a significant recovery in the second half, although not enough strong to avoid a severe economic contraction in 2020.

Countries where Sonae Indústria and its joint venture Sonae Arauco conduct its activities and its main export markets were no exception.

At internal level, Sonae Indústria put in place the measures recommended by health authorities and by the World Health Organization to control the spread of SARS-COV-2 virus. The number of the Group's employees who got infected remained quite low across the year and never blocked the Group's ability to carry on its activity.

At the date of issue of these separated financial statements, there still was high level uncertainty on the evolution of the pandemic crisis itself including the implementation of vaccinations and treatments for an ever evolving virus, making it difficult to evaluate the impacts on Sonae Indústria operations, on the demand drivers of our business (namely residential and office segments), on the general economic conditions and on potential structural changes in customer behavior.

Due to these uncertainties Sonae Indústria is unable to estimate future impacts on the company's results with accuracy or assurance.

Despite the uncertainties created by Covid-19 crisis, the measures taken by management; the general government support measures; and the material recovery experienced by our businesses in the second half of 2020 and in the first two months of 2021, set out a framework for Sonae Indústria to overcome the important challenges raised by the pandemic.

3. Tangible Assets

During the periods ended 31 December 2020 and 2019, movements in tangible assets, accumulated depreciation and impairment losses were as follows:

	31.12.20
	Land and	Machinery and	Equipamento de	Office equipment	Total
Gross asset:	buildings	equipment	transporte
Opening balance	25.706		23.748		49.454
Acquisitions	225				225
Disposals			-23.748		-23.748
Closing Balance	25.931				25.931
Accumulated depreciation imp.losses
Opening balance	5.609		6.650		12.259
Depreciations for the period	5.671		11.399		17.070
Disposals			-18.049		-18.049
Closing Balance	11.280				11.280
Carrying amount	14.651				14.651
		31.12.19
	Land and buildings	Machinery and equipment		Office equipment	Total
Gross asset:
Opening balance		38.099		133.355	171.454
Inicial recognition	25.706		3.294		29.000
Acquisitions			23.748		23.748
Disposals		-38.099	-3.294	-133.355	-174.748
Closing Balance	25.706		23.748		49.454
Accumulated depreciation imp.losses
Opening balance		38.094		133.355	171.449
Depreciations for the period	5.609	5	9.944		15.558
Disposals		-38.099	-3.294	-133.355	-174.748
Closing Balance	5.609		6.650		12.259
Carrying amount	20.097		17.098		37.195

As of December 31, 2020 and 2019, Tangible Fixed Assets fully related to assets under right of use. The movement in the gross value of the assets under right of use, as well as in the respective accumulated depreciation and impairment losses, was as follows:

	31.12.20
	Land and buildings	Transport equipment	Total
Gross asset:
Opening balance	25.706	23.748	49.454
Acquisitions	225		225
Disposals		-23.748	-23.748
Closing Balance	25.931		25.931
Accumulated depreciation imp.losses
Opening balance	5.609	6.650	12.259
Depreciations for the period	5.671	11.399	17.070
Disposals		-18.049	-18.049
Closing Balance	11.280		11.280
Carrying amount	14.651		14.651
		31.12.19
	Land and buildings	Transport equipment	Total
Gross asset:
Inicial recognition	25.706	3.294	29.000
Acquisitions		23.748	23.748
Disposals		-3.294	-3.294
Closing Balance	25.706	23.748	49.454
Accumulated depreciation imp.losses
Depreciations for the period	5.609	9.944	15.553
Disposals		-3.294	-3.294
Closing Balance	5.609	6.650	12.259
Carrying amount	20.097	17.098	37.195

4. Financial Instruments

As of December 31, 2020 and 2019, the assets and liabilities recognized in the statement of financial position correspond to the following financial instruments:

		Assets ate	Assets out of scope
		amortized	of
	notes	Cost	IFRS 9	Total
31.12.20
Non current assets
Other financial investments	5	1.360		1.360
Other non current assets	6	12.285.405		12.285.405
Current assets
Customers	7	122.678		122.678
Other current debtors	7	1.835.137		1.835.137
Other current assets	8	44.434	289.133	333.568
Cash and cash equivalents	9	18.565		18.565
Total		14.307.579	289.133	14.596.712


		Assets ate	Assets out of scope
		amortized	of
		Cost	IFRS 9	Total
31.12.19
Non current assets
Other financial investments	5	1.360		1.360
Other non current assets	6	11.550.996		11.550.996
Current assets
Customers	7	50.854		50.854
Other current debtors	7	2.606.212		2.606.212
Other current assets	8	68.570	320.338	388.908
Cash and cash equivalents	9	781.754		781.754

		Liabilities
		Other	out of scope
		financial	of
	notes	Liabilities	IFRS 9	Total
31.12.20
Non current liabilities
Subordinated bonds	11	49.944.304		49.944.304
Unsubordinated bonds	11	15.452.929		15.452.929
Bank loans - long term - net of short current portion	11	97.447.468		97.447.468
Other non current liabilities	12	83.167		83.167
Lease creditors - long term - net of short current portion	16	9.637		9.637
Current liabilities
Current portion of long term bank loans	11	7.219.563		7.219.563
Trade creditors	13	118.278		118.278
Current portion of long term lease creditors	16	5.654		5.654
Other current creditors	14	4.075.472		4.075.472
Other current liabilities	15	676.220		676.220
Total		175.032.692		175.032.692

			Liabilities
		Other	out of scope
		financial	of
		Liabilities	IFRS 9	Total
31.12.19
Non current liabilities
Subordinated bonds	11	49.938.116		49.938.116
Unsubordinated bonds	11	7.951.240		7.951.240
Bank loans - long term - net of short current portion	11	94.578.686		94.578.686
Lease creditors - long term - net of short current portion	16	20.452		20.452
Current liabilities
Current portion of long term bank loans	11	4.550.000		4.550.000
Bank loans	13	175.229		175.229
Current portion of long term lease creditors	16	17.322		17.322

Other current creditors	14	3.909.032	118	3.909.150
Other current liabilities	15	510.048		510.048

5. Investments in subsidiaries, joint venture and other investments

At 31 December 2020 and 31 December 2019, details of investments were as follows:

	31.12.20		31.12.19
	Non current	Current	Non current	Current
Investment in subsidiaries
Opening balance at 1 January	252.440.195		248.501.537
Other increase	2.650.036		3.938.658
Closing balance for the period	255.090.232		252.440.195
Accumulated impairment losses (Note 17)	-36.850.916		-30.425.276
	218.239.315		222.014.919
Investment in join ventures
Opening balance at 1 January	1.087.764.828		1.087.764.828
Closing balance for the period	1.087.764.828		1.087.764.828
Accumulated impairment losses (Note 17)	-860.391.259		-860.391.259
	227.373.569		227.373.569
	445.612.884		449.388.488

5.1 Investments in subsidiaries

5.1.1 Movement of the period

During 2020, the following movements were recorded to cover the losses recorded in the subsidiaries in 2019:

Subsidiaries	Value
Increases	2.650.036
- Loss Cover	2.650.036
- Movelpartes - Componentes para a Indústria do Mobiliário,S.A.	1.051.734
- Surforma,S.A.	889.392
- Frases e Frações - Imobiliária e Serviços ,S.A.	505.357
- Sonae Indústria - Management Services, S.A.	203.553

As of December 31, 2020 and 2019, receipts and payments of financial investments may be detailed as follows:

Subsidiaries	31 december 2020		31 december 2019
	Receipts	Payments	Receipts	Payments
- Surforma,S.A.		889.392		1.440.468
- Frases e Frações - Imobiliária e Serviços ,S.A.		505.357		1.370.250
- Sonae Indústria - Management Services, S.A.		203.553		188.287
- Movelpartes - Componentes para a Indústria do Mobiliário,S.A.		1.051.734		939.653
		2.650.036		3.938.658

5.1.2 Valuation of financial investments

At 31 December 2020, Sonae Industria, SGPS had the following investments in subsidiaries companies:

						2020		2019
Subsidiaries	% Share	Acquisition Value	Accumulated	Net Value	Provisions	Shareholder´s	Net profit	Shareholder´s	Net profit
			Impairment Losses			Funds		Funds
M aiequipa - Gestão Florestal,S.A.	100,00%	3.438.885	918.171	2.520.713		2.520.743	-51.871	2.514.892	-166.211 a)
M ovelpartes - Componentes para Industria do Mobiliário,S.A. 100,00%		12.627.562	12.627.562	0	1.078.710	-1.078.710	-2.442.383	328.585	-1.051.734 a)-b)-d)
Surforma,S.A.	100,00%	20.882.689	13.431.777	7.450.912		6.781.914	-1.153.846	6.538.048	-889.392 a)-b)
Frases e Frações - Imobiliária e Serviços,S.A.	100,00%	7.115.301	7.115.301	0	986.688	-986.688	-1.986.688	494.643	-505.357 a)-d)
Parcelas e Narrativas - Imobiliária,S.A.	100,00%	3.092.796	2.125.107	967.689		967.689	-413.663	1.381.352	-731.903 a)
Sonae Indústria - M angement Services,S.A.	100,00%	632.999	632.999	0	201.160	-201.160	-233.444	-182.461	-203.553 a)-d)
Glunz UK	100,00%	1	0	1		268.368	0	-47.713	-18.338
M egantic BV	100,00%	207.300.000	0	207.300.000		69.285.804	9.035.353	69.187.614	7.519.515 c)
		2 55.0 9 0 .2 3 1	3 6 .8 50 .9 16	2 18 .2 3 9 .3 15	2 .2 6 6 .558

a) It is estimated that the amount by which the cost of acquisition of the financial interests is higher than its recoverable amount, and impairment losses were recognized in the year: 15.048 euros in Maiequipa – Gestão Florestal ,S.A., 3.817.053 euros in Movelpartes - Componentes para a Indústria do Mobiliário ,S.A.,955.157 in Surforma, 1.380.618 euros in Frases e Frações - Imobiliária e Serviços, S.A., 54.212 euros in Parcelas e Narrativas -Imobiliária,S.A. and 203.553 euros in Sonae Indústria - Management Services, S.A. (Note 17).

b) Impairment tests were performed on November 30, 2020, related to Surforma, S.A. which consisted of determining the value of use using the discounted cash flow method. For this purpose, operating cash flow projections were made for a period of 5 years, subsequently extrapolated through perpetuity and restated at the closing date of these financial statements. The discount rates used correspond to the weighted average cost of capital (WACC) rates, recalculated using the Capital Asset Pricing Model (CAPM) methodology for each reportable segment, after taxes. These rates consider market specificities by incorporating different risk factors as well as the 10-year risk-free interest rate of 10-year German Treasury Bonds plus a risk premium in Portugal. The use of a 5-year period for the projection of cash flows took into account the extent and intensity of the economic cycles to which the group activity is subject. The cash flows considered are based on the Group's Business Plan, which includes projections updated annually in order to incorporate the developments occurring in the markets in which the Group operates.

c) Impairment tests were performed on November 30, 2020, related to the company Tafisa Canada Inc., which consisted of determining the value in use using the discounted cash flow method. For this purpose, operating cash flow projections were made for a period of 5 years, subsequently extrapolated through perpetuity and restated at the closing date of these financial statements. The discount rates used correspond to the weighted average cost of capital (WACC) rates, recalculated using the Capital Asset Pricing Model (CAPM) methodology for each reportable segment, after taxes. These rates consider market specificities by incorporating different risk factors as well as the 10-year risk-free interest rate on Canada's Treasury Bonds. The use of a period of 5 years for the projection of cash flows took into account the extent and intensity of the business cycles to which the group activity is subject. The cash flows considered are based on the Group's Business Plan, which includes projections updated annually in order to incorporate the developments occurring in the markets in which the Group operates.

d) Provisions related to subsidiaries' loss coverage were recorded.

During the year, the Group made the decision to close the operations in is subsidiary Movlepartes – Componentes para a Indústria do Mobiliário, S.A.. In this way, and taking this decision into account, the Group proceeded during the year to carry out a set of specific procedures on the said subsidiary, namely by carrying out the valuation of its assets with a view to their realization.

Accordingly, the Group believes that the best approximation to the value of said participation is the equity of that Entity.

Regarding the remaining financial holdings, due to its nature, the Group carried out its analysis of impairment by comparison with its equity, adjusted for possible valuations of properties (in the case of the Group's real estate companies) and other specific themes, in the aforementioned holdings, as the Group understands that it will be the best approximation to its recovery value

The amounts referring to shareholders' equity and net income related to the subsidiary Megantic, BV, relate to Tafisa Canada, Inc, the only subsidiary and relevant asset of Megantic, BV.

Assumptions used:

2020
	Surf o rma	M o velp art es	Taf isa C anad á
Discount rate (after-tax)	6,71%		5,48%
Sales (CAGR)	4,13%		6,64%
Growth rate on Perpetuity	1,28%		1,00%
Period	5 anos		5 anos
Test Conclusions	Impairment		No impairment

2019
	Surf o rma	M o velp art es	Taf isa C anad á
Discount rate (after-tax)	6,69%	6,69%	6,34%
Sales (CAGR)	6,74%	16,44%	4,43%
Growth rate on Perpetuity	1,40%	1,40%	1,00%
Period	5 anos	5 anos	5 anos
Test Conclusions	Impairment	Impairment	No impairment

The Group also carried out a sensitivity analysis of the impairment tests carried out on Tafisa Canada and Surforma, on the assumptions that the Board of Directors considers most critical, and to which the models are more sensitive. The assumptions that have been identified as being the most significant are Ebit Margin and Sales (their growth rate). In the case of Surforma, and taking into account that during the year an impairment loss has already been recorded, any change in the variables generates an increase in impairment, the same not happening with Tafisa Canada.

Análise de sensibilidade
SURFORMA	DCF Surforma	Crescimento vendas CAGR de	EBIT % redução de vendas/ano do plano até
		2,00%	0,50 p.p.
Turnover CAGR (LTM 20 - Perpetuity)	4,13%	2,00%	4,13%
EBIT % Turnover Average (LTM 20 - Perpetuity)	-0,62%	-0,62%	-1,05%
ADJUSTED DCF	7.450.912	6.593.747	6.213.405
	Imparidade	Imparidade	Imparidade
VALUE GAP FINANCIAL INVESTMENT	-955.157	-1.812.322	-2.192.664

Following the tests carried out, it was necessary to record impairment losses, as per note 5.1.2.a).

Regarding the subsidiary Tafisa Canada, no sensitivity analysis is presented because it is understood that it has no relevance.

5.2 Investments in joint ventures

Joint control of Sonae Arauco, S. A. was established by contract entered into in 2016 by Sonae Indústria, SGPS, S.A. and Arauco Internacional Limited, a company of Arauco Group and is reflected on a joint decision making at the appropriate management levels of Sonae Arauco. Contractual provisions established that Sonae Indústria, SGPS, S.A. assumes certain legal and tax contingencies of Sonae Arauco and subsidiaries which relate to the period before the joint venture was set up. As a consequence, Sonae Arauco, S.A. has the right to be reimbursed by the total amount of payments done by the company or its subsidiaries with relation to the aforementioned contingencies, as well as relating to some businesses specifically referred to in the said agreement.The processes in progress understood to be relevant for the purposes of disclosure are referenced in Note 27, the note of the Board of Directors of Sonae Indústria SGPS, S.A., is in Note 17, for the said contingencies and payments to be made to the former subsidiary.

At December 31, 2020 the Company held the following investment in a joint venture, included in Investments in Subsidiaries and Joint Ventures:

					2020		2019
Joint Venture	% Share	Acquisition Value	Accumulated Impairment Losses	Net Value	Shareholder´s Funds	Net profit	Shareholder´s Funds	Net profit
Sonae Arauco, S.A.	50,00%	1.087.764.828,16	860.391.259,16	227.373.569	251.659.250	296.960	248.595.125	1.329.099

As of December 31, 2020 and December 31, 2019, receipts and payments of financial investments may be detailed as follows:

Joint Venture	31 december 2020		31 december 2019
	Receipts	Payments	Receipts	Payments
- Sonae Arauco,S.A. (Note 22)		6.897.624		6.714.262
		6.897.624		6.714.262

The amount of the payment made in December 2020, was already provisioned, in part, in 2019 and refers to the amounts paid, by that subsidiary, in relation to expenses assumed up to the date of payment, which are the responsibility of Sonae Indústria, SGPS, SA under the agreement referred to in the above point with the holder of the remaining participation in the Joint Venture.

As of December 31, 2020 and 2019, the recoverable value of the investment in Sonae Arauco, S.A., was estimated based on the following assumptions:

2020	Cash Generating Rules
	Portugal	Espanha	Alemanha	Africa do Sul
Discount rate (after tax) (a)	6,00%	5,89%	5,03%	12,82%
Growth rate on perpetuity (b)	1,28%	1,42%	1,52%	4,34%
Growth rate c):
Total net income	2,79%	4,43%	2,99%	9,71%
Cost of goods sold and materials consumed	1,39%	4,85%	3,67%	8,70%
Cash Flows projeted over	5 years	5 years	5 years	5 years

(a) weighted average cost of capital (WACC) rates calculated using the CAPM methodology (after tax values)

(b) Growth rate used to extrapolate cash flows in perpetuity (c) Composite average growth rate, including perpetuity

2019		Cash Generating Rules
	Portugal	Espanha	Alemanha	Africa do Sul
Discount rate (after tax) (a)	6,03%	5,98%	4,96%	12,59%
Growth rate on perpetuity (b)	1,42%	1,46%	1,88%	5,28%
Growth rate c):
Total net income	4,28%	3,33%	2,57%	8,30%
Cost of goods sold and materials consumed	3,64%	2,82%	3,47%	7,24%
Cash Flows projeted over	5 years	5 years	5 years	5 years

(a) weighted average cost of capital (WACC) rates calculated using the CAPM methodology (after tax values)

(b) Growth rate used to extrapolate cash flows in perpetuity

Following the tests carried out, it was not necessary to record impairment losses.

The Group also carried out a sensitivity analysis of the impairment tests carried out on Sonae Arauco, S.A. on the assumptions that the Board of Directors considers to be the most critical, and in relation to which the models are more sensitive, namely EBITDA margin and sales growth rate (-0.5 pp and -1p.p.), having not identified any impairment losses as a result of this analysis, in view of the gaps obtained from the assessments, which is why a sensitivity analysis is not presented because it is considered to be irrelevant.

5.3 Other Financial Investments

At December 31, 2020 and December 31, 2019, other financial investments is detailed as follows and refers to financial holdings that do not meet the criteria to be classified as subsidiaries or associates:

	31.12.20		31.12.19
	Non current	Current	Non current	Current
Ot her f inancial invest ment s
Opening balance at 1 January	1.360		122.625
Other increase			160
Accumulated impairment losses (Note 17)			-121.425
Closing balance for the period	1.360		1.360

Subsidiaries	% Share	Acquisition Value	Accumulated Impairment Losses	Net Value	Shareholder´s Funds	Net profit
Sonae RE, Societé Anonyme	0,04%	1.200	0	1.200	1.925.244	-75.149

As of December 31, 2020 and 2019, receipts and payments of financial investments may be detailed as follows:

	31 december 2020		31 december 2019
	Recebimentos	Pagamentos	Recebimentos	Pagamentos
- Sonae RE				160
				160

The units have the detailed as follow:

Entity	Acquisition Value	Accumulated Impairment Losses	Net Value
Shares INEGI	109.976	109 976
Shares CTIMM	5.986	5.986
Shares PIEP	5.000	5.000
Shares BIOMASSA	297	297
Shares Sonae RE, Societé Anonyme	1.360		1.360
Deposit guarantee	167	167
	122.785	121.425	1.360

6. Other Non-Current Assets

Details of Other Non-Current Assets at 31 December 2020 and 31 December 2019 were as follows:

	31.12.20	31.12.19
Loans granted to group companies (Note 2.2 e 19)	12.285.405	11.550.996
Accumulated Imparment Losses	12.285.405	11.550.996
	12.285.405	11.550.996

Decomposition of the loans granted and their variation in the period:

2020
Companies	Inicial balance	Increase	Decrease	Final balance
	2020	2020	2020	2020
Maiequipa - Gestão Florestal,S.A.	681.880	76.000	28.000	729.880
Movelpartes - Componentes para a Indústria do Mobiliário,S.A.	1.729.000	1.070.000	1.051.734	1.747.266
Glunz UK	208.500	160.000		368.500
Sonae Indústria - Management Services, S.A.		98.000		98.000
Frases e Frações - Imobiliária e Serviços,S.A.	4.044.267	778.000	505.357	4.316.910
Parcelas e Narrativas - Imobiliária,S.A.	4.887.349	152.000	14.500	5.024.849
Total (Note 19)	11.550.996	2.334.000	1.599.591	12.285.405
2019
	Inicial balance	Increase	Decrease	Final balance
Companies	2019	2019	2019	2019
Maiequipa - Gestão Florestal,S.A.	599.880	82.000		681.880
Movelpartes - Componentes para a Indústria do Mobiliário,S.A.	3.925.000		2.196.000	1.729.000
Glunz UK	359.000		150.500	208.500
Frases e Frações - Imobiliária e Serviços,S.A.	5.860.567	360.000	2.176.300	4.044.267
Parcelas e Narrativas - Imobiliária,S.A.	9.281.049	982.000	5.375.700	4.887.349
Total (Note 19)	20.025.496	1.424.000	9.898.500	11.550.996

In compliance with the article no 5, no. 4 of Decree-Law no. 495/88 of December 30, added by article no 1 of Decree-Law no. 318/94 of December 24, it is informed that loans contracts were entered into during the period ended December 31 of 2020 with the companies Maiequipa - Gestão Florestal, S.A., Frases e Frações – Imobiliária e Serviços,.S.A., Parcelas e Narrativas - Imobiliária, S.A. Movelpartes – Componentes para a Indústria de Mobiliário, S.A. and Sonae Indústria – Management Services, S.A..

Loans granted to Group companies have a medium and long term maturity and they yield interest at an average rate of 4,85 %.

The loans are subject to interest rate conditions but do not provide conditions for repayment, that is to say, repayment is made through the availabilities of each of the companies, and it is not possible at this moment to predict its date, nor is it expected that its reimbursement occurs next year.

7. Trade, Other Current Debtors and Current Tax Assets

7.1) At 31 December 2020 and 31 December 2019, details of Current Trade Debtors were as follows:

31.12.20	31.12.19
122.678	50.854
163	163
122.841	51.017
163	163
122.678	50.854

At 31 December 2020 and 31 December 2019, the detail of trade debtors' maturities was as follows:

		31.12.20	31.12.19
Not due Due and not impaired		118.282	28.140
Due and impaired	< 30 days	4.396	22.714
	> 360 days	163	163
		122.841	51.017

7.2) At 31 December 2020 and 31 December 2019, details of Other Current Trade Debtors were as follows:

	31.12.20	31.12.19
Group companies -interest (note 19)	604.716	591.182
Group companies -current Income Tax (note 19)	26.849	28.658
Group companies -loans (Note 7.2.1)	1.194.500	1.985.900
Others	546
	1.826.611	2.605.740
Other debtors (Note 7.2.2)	8.526	472
Total	1.835.137	2.606.212

7.2.1) Loans granted and their variation in the period:

2020
Companies	Inicial balance 2020	Increase 2020	Decrease 2020	Final balance 2020
Maiequipa - Gestão Florestal,S.A.	6.000	166.000	-170.000	2.000
Movelpartes - Componentes para a Indústria do Mobiliário,S.A.	1.182.200	2.732.000	-3.008.200	906.000
Glunz UK	40.000	290.000	-224.000	106.000
Frases e Frações - Imobiliária e Serviços,S.A.	757.700	351.500	-946.700	162.500
Parcelas e Narrativas - Imobiliária, S.A.		557.500	-539.500	18.000
Sonae Indústria - Management Services, S.A.		293.500	-293.500
Total (Note 19)	1.985.900	4.097.000	-4.888.400	1.194.500
2019
Companies	Inicial balance 2019	Increase 2019	Decrease 2019	Final balance 2019
Maiequipa - Gestão Florestal,S.A.	14.500	100.700	-109.200	6.000
Movelpartes - Componentes para a Indústria do Mobiliário,S.A.		3.941.800	-2.759.600	1.182.200
Glunz UK		40.000		40.000
Frases e Frações - Imobiliária e Serviços,S.A.	402.500	1.742.800	-1.387.600	757.700
Parcelas e Narrativas - Imobiliária, S.A.	70.300	1.387.200	-1.457.500
Sonae Indústria - Management Services, S.A.		162.200	-162.200
Total (Note 19)	487.300	7.374.700	-5.876.100	1.985.900

In compliance with the article no 5, no. 4 of Decree-Law no. 495/88 of December 30, added by article no 1 of Decree-Law no. 318/94 of December 24, it is informed thatfinancial transaction contracts were entered into during the period December 2018 with the companies Maiequipa – Gestão Florestal, S.A, Movelpartes – Componentes para a Indústria do Mobiliário, S.A.,Glunz UK, Frases e Frações – Imobiliária e Serviços, S.A., Parcelas e Narrativas – Imobiliária, S.A., Sonae Indústria – Management Services, S.A.. and Glunz Uk.

Financial transactions granted to Group companies have a short term maturity and they yield interest at an average rate of 4,85 %.

7.2.2) At 31 December 2020 and 31 December 2019, detail of Others Debtors maturities was as follows:

	TRADE CREDITORS (ASSET BALANCES)
	31.12.20	31.12.19
Due and not impaired
< 30 days	7.427	204
30 - 60 days	1.099
> 90 days		268
	8.526	472

7.3) At 31 December 2020 and 31 December 2019, Other Current Tax Assets were as follows:

	31.12.20	31.12.19
Current tax asset
Income Tax	569.679
	569 679	515 130

8. Other Current Assets

Details of Other Current Assets at 31 December 2020 and 31 December 2019 were the following:

	31.12.20	31.12.19
Accrued revenue	44.434	68.570
Deferred costs	289.133	320.338
Assets out of Scope of IFRS 9	289.133	320.338
	333.567	388.908

The item accrued revenue refers to interest receivable from loans granted to its subsidiaries.

The item deferred costs refers to the deferral of costs with guarantees and bank charges.

9. Cash and Cash equivalents

At 31 December 2020 and 31 December 2019 detail of Cash and cash equivalents was the following:

	31.12.20	31.12.19
Cash at Hand	500	500
Deposits	18.065	781.254
Cash & Cash Equivalent in balance sheet	18.565	781.754
Bank Overdrafts (1)	-419.563
	-400.998	781.754

(1) In Statement of Financial Position-Non Current bank loans (Note 11)

Cash & equivalents comprise cash at hand, deposits, treasury applications and short-term deposits with less than three months maturity, and for which the risk of value change is insignificant.

10. Shareholders' Funds

On December 31, 2020, the Company's capital, fully subscribed and paid up, amounted to Eur 253.319.797,26 isrepresented by 45.403.029 common shares, book-entry and nominative, with no par value.

The shares representing the share capital, on the dates of December 31, 2020 and 2019, do not confer the right to any fixed remuneration.

As of December 31, 2020 and 2019, the company and its subsidiaries did not hold any of their own shares.

The following entities had more than 20% of the subscribed capital on 31 December 2020:

Entity	%
Efanor Investimentos, SGPS, S. A.	60,38
Pareuro BV	25,84

Shareholder's Funds Detail:

	2020	2019
Share C ap it al	2 53 .3 19 .79 7	2 53 .3 19 .79 7
Legal R eserve	1.8 0 7.4 8 9	1.8 0 7.4 8 9
Ot her reservs and accumulat ed earning s 18 .154 .2 2 3		3 0 .572 .6 9 9
Free Reserve	30.572.699	33.898.338
Net Income	-12.418.476	-3.325.639
	273.281.510	285.699.986

Legal Reserve: Commercial legislation establishes that at least 5% of annual net profit has to be intended to strengthen the legal reserve until it represents at least 20% of the capital. This reserve is not distributable to not be in the event of the liquidation of the company, but can be used to absorb losses, after exhausted the other reserves, or incorporated into the capital.

Free Reserves: Relating to profits earned in previous years and are available for distribution, provided it is not necessary to cover losses.

11. Loans obtained

11.1) Loans

At 31 December 2020 and 31 December 2019 Sonae Indústria, SGPS, S.A had the following outstanding loans:

		31.12.20					31.12.19
		Amortised cost		Nominal Value		Amortised cost		Nominal Value
	NOTES	Current	Non Current	Current	Non Current	Current	Non Current	Current	Non Current
Loans - Commercial Paper	11	6.800.000	97.447.468	6.800.000	98.150.000	4.550.000	94.578.686	4.550.000	95.500.000
Subordinated bond	11		49.944.304		50.000.000		49.938.116		50.000.000
Unsubordinated bonds	11		15.452.929		15.500.000		7.951.240		8.000.000
Bank Overdrafts	11	419.563		419.563
Gross Debt		7.219.563	162.844.701	7.219.563	163.650.000	4.550.000	152.468.042	4.550.000	153.500.000
Cash & Cash Equivalent in balance sheet	9	18.565		18.565		781.754		781.754
Net Debt		7.200.998	162.844.701	7.200.998	163.650.000	3.768.246	152.468.042	3.768.246	153.500.000
Total Net Debt		170.045.699		170.850.998		156.236.288		157.268.246

The loans (nominal value) have the following repayment schedule:

	31.12.20	31.12.19
2020		4.550.000
2021	7.219.563	8.000.000
2022	29.125.000	30.500.000
2023	39.400.000	30.000.000
2024	43.625.000	35.000.000
2025	1.500.000
2029	50.000.000	50.000.000
	170.869.563	158.050.000

The average interest rates of each class of debt stated in the previous table were as follows:

	2020	2019
Loans - Commercial Paper	3,573%	4,504%
Unsubordinated bond loans	2,149%	2,365%
Subordinated Bond Loan	7,012%	7,012%

In the calculation of these average interest rates, bank overdrafts were not considered due to the immateriality of the amounts involved.

1.Subordinated Bond Loan

Company	Loan	Contract date	Maturity (with reference to 31.12.2020)	Currency	Outstanding principal at 31.12.2020 (Eur)	Outstanding principal at 31.12.2019 (Eur)
Sonae Indústria, SGPS, S.A.	Bond Loan 1)	december 2019	december 2029	EUR	€ 50.000.000	€ 50.000.000
Additional notes

1) The contract has a fixed interest rate.

As at 31 December 2020, Efanor Investimentos, SGPS, SA (the final controlling entity of Sonae Indústria, SGPS, SA) directly or indirectly held all subordinated bonds issued by the Company, with a nominal value of 50,000,000 euros

2. Unsubordinated Bond Loans 1)

Company	Loan	Contract date	Maturity (with reference to 31.12.2020)	Currency	Outstanding principal at 31.12.2020 (Eur)	Outstanding principal at 31.12.2019 (Eur)
Sonae Indústria, SGPS, S.A.	Bond Loan 2)	october 2019	october 2022	EUR	€ 8.000.000	€ 8.000.000
Sonae Indústria, SGPS, S.A.	Bond Loan 3)	march 2020	repaid between september 2022 and march 2024	EUR	€ 7.500.000	N/A

Additional notes

1) The contract has a variable interest rate.

2) In this contract, Sonae Industria, SGPS, S.A. is obliged to ensure a minimum level of Financial Autonomy ("" Total Equity / Total Assets ""). For this purpose, the total amount of Equity includes loans from shareholders and similar loans. This ratio is tested annually, from December 31, 2019 (inclusive) until the end of the financing, based on the Company's consolidated financial statements, and failure to do so may lead to the early maturity of the loan. "

3) In this agreement, Sonae Indústria,SGPS,S.A. is obliged to maintain a certain maximum level of financial debt calculated based on the Company´s separate financial statements,also commintting it self to a maximum "Net Debt/Ebitda" ratio for Tafisa Canadá Inc. calculated based on the separate financial statements of this subsidiary.Failure to comply with any of these rations may lead to the anticipated maturity of the loan.

3.Bank Loans 1)

Company	Loan	Contract date	Maturity (with reference to 31.12.2020)	Currency	Outstanding principal at 31.12.2020 (Eur)	Outstanding principal at 31.12.2019 (Eur)
Sonae Indústria, SGPS, S.A.	Commercial paper programme	june 2013	december 2020, by agreement between the parts Note: programme without subscription guarantee	EUR	N/A	€ 0
Sonae Indústria, SGPS, S.A.	Commercial paper programme	july 2014	repaid between july 2020 and january 2025	EUR	€ 9.000.000	€ 6.800.000
Sonae Indústria, SGPS, S.A.	Commercial paper programme 3)	may 2016	repaid between december 2020 and december 2024	EUR	€ 76.500.000	€ 79.500.000
Sonae Indústria, SGPS, S.A.	Commercial paper programme	july 2016	april 2021	EUR	€ 4.000.000	€ 2.000.000
Sonae Indústria, SGPS, S.A.	Commercial paper programme 4)	june 2018	repaid between december 2019 and june 2021	EUR	€ 1.050.000	€ 6.750.000
Sonae Indústria, SGPS, S.A.	Commercial paper programme	february 2019	february 2022	EUR	€ 5.000.000	€ 5.000.000
Sonae Indústria, SGPS, S.A.	Commercial paper programme	december 2019	repaid between january 2021 and january 2024	EUR	€ 5.000.000	N/A
Sonae Indústria, SGPS, S.A.	Commercial paper programme 5)	january 2020	repaid between july 2021 and january 2024	EUR	€ 5.000.000	N/A

Additional notes

1) The aforemenioned loans pay interest at variable rate

2) By agreement between the parties, in December 2020 this financing was revoked

3) The shares of subsidiaries Megantic B.V. e Tafisa Canada Inc.,shares held by Megantic BV, were pledged as collateral for this loan.In this agreement, Sonae Indústria,SGPS,S.A. is obliged to maintain a certain maximum level of financial debt calculated based on the Company´s separate financial statements,also commintting it self to a maximum "Net Debt/Ebitda" ratio for Tafisa Canadá Inc. calculated based on the separate financial statements of this subsidiary.Failure to comply with any of these rations may lead to the anticipated maturity of the loan

5) In this agreement, Sonae Indústria,SGPS,S.A. is obliged to maintain a certain maximum level of financial debt calculated based on the Company´s separate financial statements,also commintting it self to a maximum "Net Debt/Ebitda" ratio for Tafisa Canadá Inc. calculated based on the separate financial statements of this subsidiary.Failure to comply with any of these rations may lead to the anticipated maturity of the loan. 4) Under this financing,Sonae Indústria,SGPS,S.A. is obliged to maintain a racio of financial autonomy ("Total Equity/Total Assets").This ratio is tested annually from december 31, 2018 until the end of the financing based on the Company´s consolidated financial statements, and its failure may lead to the early maturity of this loan.

N/A - Loans that did not exist as of December 31, 2020 or December 31, 2019.

The amounts detailed in the previous tables correspond to the nominal value of the loans.

As of December 31, 2020, Sonae Indústria had mortgaged tangible fixed assets in the amount of EUR 3.872.000 as collateral for loans obtained that on that date amounted to EUR 12.000.000.

As of December 31, 2020, the ratios associated with the aforementioned loans complied with the contractually established limits.

11.2) Cash Flows

The financial liabilities (nominal value) derived from the financing activities disclosed in note 11.1 and note 19, were as follows:

Opening balance	Increase	Decrease	Others	Closing Balance

95.500.000			2.650.000	98.150.000
50.000.000				50.000.000
8.000.000	7.500.000			15.500.000

				6.800.000
	643.569.563	638.250.000	-4.900.000	419.563
3.406.000	15.863.945	15.747.945		3.522.000
161.456.000	666.933.508	653.997.945		174.391.563
	Cash receipts from	Cash payments to

	659.433.508	653.997.945
	659.433.508	653.997.945
	4.550.000		31.12.2020	2.250.000

Separate Statements of Financial Position	31.12.2019
	Opening balance	Increase	Decrease	Others	Closing Balance
Non-Current Liabilities:
Bank loans - net of current portion	152.100.000			-56.600.000	95.500.000
Subordinated bonds		50.000.000			50.000.000
Unsubordinated bonds		8.000.000			8.000.000
Current Liabilities:
Current portion of non-current bank loans	14.000.000			-9.450.000	4.550.000
Current bank loans	2.135.022	1.473.050.000	1.541.235.022	66.050.000
Current loans from subsidiaries	4.086.100	16.886.600	17.566.700		3.406.000
Total	172.321.122	1.547.936.600	1.558.801.722		161.456.000
Separate Statements of Cash Flows		Cash receipts from	Cash payments to
Financing activities
Loans obtained		1.539.936.600	1.558.801.722
Total		1.539.936.600	1.558.801.722

12. Other Current Liabilities

At 31 December 2020 and 31 December 2019 this item had the following detail:

	31.12.20	31.12.19
Non Current Liabilities
Personal expenses	83.167	0
	83.167	0

This item refers to the medium and long term incentive plan (note 2.9).

13. Trade Creditors

At 31 December 2020 and 31 December 2019 all amounts recorded under this item resulted from normal operations.

Trade creditor maturities were as follows:

	31.12.20	31.12.19
To be paid
< 90 days	118.267	151.335
90 - 180 days		23.894
> 180 days	11
	118.278	175.229

14. Other Creditors and Other taxes and contributions

14.1) At 31 December 2020 and 31 December 2019 details of Others Creditors were as follows:

	31.12.20	31.12.19
Other Creditors
Group companies -current Income Tax (Note 19)	181.161	131.102
Loans from group companies (Note 19)	3.522.000	3.406.000
Others	372.311	371.930
Financial Instrumets	4.075.472	3.909.032
Others Creditors		118
	4.075.472	3.909.150

Loans from Group companies is related with Surforma,S.A. , it has a short term maturity and an average interest rate of 2,7 % .

The maturity of other debts to third parties is as follows:

31.12.20	< 90 days	> 180 days	Total
Subsidiaries	181.161	3.522.000	3.703.161
Other Current Maturity of Creditors	528	371.783	372.311
	181.689	3.893.783	4.075.472
31.12.19	< 90 days	> 180 days	Total
Subsidiaries	131.102	3.406.000	3.537.102
Other Current Maturity of Creditors	120	371.810	371.930
	131.222	3.777.810	3.909.032

Loans obtained and their variation in the period:

2020
Companies	Inicial balance 2020	Increase 2020	Decrease 2020	Final balance 2020
Surforma,.S.A	3.406.000	15.194.392	-15.078.392	3.522.000
Sonae Indústria - Management Services, S.A.		669.553	-669.553
Total (Note 19)	3.406.000	15.863.945	-15.747.945	3.522.000
2019
Companies	Inicial balance 2019	Increase 2019	Decrease 2019	Final balance 2019
Surforma,.S.A	3.978.000	15.177.200	-15.749.200	3.406.000
Movelpartes - Componentes para a Indústria do Mobiliário,S.A.		767.000	-767.000
Glunz UK		355.000	-355.000
Sonae Indústria - Management Services, S.A.	108.100	587.400	-695.500
Total (Note 19)	4.086.100	16.886.600	-17.566.700	3.406.000

14.2) At 31 December 2020 and 31 December 2019, details of Current tax liability and Other taxes and contributions were as follows:

		31.12.20	31.12.19
Current tax liability		27 319	68 932
Tax retention		27.319	68.932
Other taxes and contributions		19.407	30.549
Value Added Tax		7.063	18.232
Social Security Contributions		12.301	12.301
Others		44	16
	Total	46.726	99.481

15. Other Current Liabilities

At 31 December 2020 and 31 December 2019 this item had the following detail:

	31.12.20	31.12.19
Accrued Costs
Personal expenses	192.076	134.625
Accrued financial expenses	351.134	215.966
External supllies & services	133.010 159.457
	676.220	510.048

16. Leasing

As of December 31, 2020 and 2019, the maturity of leasing creditors, according to IFRS16, has the following detail:

	31.12.20	31.12.19
Due in 2020		17.322
Due in 2021	5.654	10.978
Due in 2022	6.069	5.906
Due in 2023	3.568	3.568
	15.291	37.774
Lease Creditors - current portion	5.654	17.322
Lease Creditors - long term	9.637	20.452
	15.291	37.774

17. Provisions and Accumulated Impairment Losses

Changes in provisions and accumulated impairment losses during the period ended December, 31 2020 and December, 31 2019 were the following:

31.12.2020
Description	Opening Balance	Increase	Utilization	Reclassification	Closing Balance
Accumulated imparment losses on investments (Note 5)	890.816.535	6.243.179		182.461	897.242.175
Accumulated imparment losses on other investments (Note 5)	121.425				121.425
Trade debtors provision	163				163
Non current provisions	9.182.461		1.778.357	-1.168.241	6.235.863
Current provisions	8.688.727	3.732.574	7.209.946	985.780	6.197.135
	908.809.311	9.975.753	8.988.303		909.796.761
31.12.2019
Description	Opening Balance	Increase	Utilization	Reversion	Closing Balance
Accumulated imparment losses on investments (Note 5)	885.543.079	5.273.456			890.816.535
Accumulated imparment losses on other investments (Note 5 )		121.425			121.425
Trade debtors provision		163			163
Non current provisions	4.000.000	9.182.461		-4.000.000	9.182.461
Current provisions	7.566.845	3.836.144	6.714.262	4.000.000	8.688.727
	897.109.924	18.413.649	6.714.262		908.809.311

Impairment losses were recognized in the year 2020: 15.048 euros in Maiequipa – Gestão Florestal ,S.A., 2.281.090 euros, 3.817.053 euros in Movelpartes - Componentes para a Indústria do Mobiliário ,S.A.,955.157 euros in Surforma,.S.A 1.380.618 euros in Frases e Frações - Imobiliária e Serviços, S.A.,54.212 euros in Parcelas e Narrativas – Imobiliária, S.A. and 203.553 euros in Sonae Indústria - Management Services, S.A.(Note 5.1.2).

A provision created in 2019 for the participation of Sonae Indústria - Management Services, S.A., was transferred to impairment losses in the amount of 182.461 euros.

Provisions were created for other risks and charges in the year, in the amount of 3.732.574 euros recorded in Current Liabilities. The amount of provisions as of December 31, 2020 and 2019, is associated with contingencies assumed in the process of loss of control of the Group now designated by Sonae Arauco, associated with contingencies of alleged violation of competition laws and an estimate for other expenses with right of return by the said entity (Note 5.2).

		Current provision (Inicial	Current provision		Current provision (Final
		balance)	(M ovements)		balance)
		Correntes	Aumentos	Diminuições	Correntes
Cash compensation		2.188.727	1.466.016	2.188.727	1.466.016
GHP		5.500.000	985.780	4.455.377	2.030.403
South Africa		1.000.000		565.842	434.158
M ovelpartes, S.A.		0	1.078.710		1.078.710
Sims,S.A.		0	201.160		201.160
Frases e Frações,S.A.		0	986.688		986.688
	Total	8.688.727	4.718.354	7.209.946	6.197.135

The increase in GHP, from 985,780 euros, was a reclassification of non-current provision to current.

	Non current provision	Non current provision		Non current provision
	(Inicial balance)	(M ovements)		(Final balance)
	Correntes	Aumentos	Diminuições	Correntes
Alemanha	3.500.000			3.500.000
GHP	2.200.000		2.200.000	0
Darbo	1.500.000			1.500.000
South Africa	1.800.000		564.137	1.235.863
Sims,S.A.	182.461		182.461	0
Total	9.182.461	0	2.946.598	6.235.863

As described in Note 27, Sonae Indústria SGPS assumed the obligation to compensate Sonae Arauco for certain losses incurred by several companies of Sonae Arauco Group.

18. Financial Risks

18.1. Liquidity Risk

The liquidity risk described on note 2.16, c), related to gross debt referred to on note 11, can be analysed as follows:

		2020		2019
		Liquidity Risk			Liquidity Risk
	Maturity of gross debt	Interest	Total		Maturity of gross debt	Interest	Total
2020				2020	4.550.000	6.436.669	10.986.669
2021	7.219.563	6.594.070	13.813.633	2021	8.000.000	6.189.534	14.189.534
2022	29.125.000	6.254.517	35.379.517	2022	30.500.000	5.983.763	36.483.763
2023	39.400.000	5.588.544	44.988.544	2023	30.000.000	5.345.278	35.345.278
2024	43.625.000	4.521.421	48.146.421	2024	35.000.000	4.512.812	39.512.812
2025	1.500.000	3.500.417	5.000.417	2025		3.548.611	3.548.611
2026		3.500.000	3.500.000	2026		3.548.611	3.548.611
2027		3.500.000	3.500.000	2027		3.548.611	3.548.611
2028		3.500.000	3.500.000	2028		3.558.333	3.558.333
2029	50.000.000	3.500.000	53.500.000	2029	50.000.000	3.548.611	53.548.611
	170.869.563	40.458.969	211.328.532		158.050.000	46.220.833	204.270.833

The interest amounts indicated in the previous tables were calculated based on the interest rates in effect at December 31, 2020 and 2019 for each of the outstanding amounts. The amount indicated for 2021 (2020) in the gross debt maturity profile includes, in addition to the scheduled debt repayments, the amortization of the amounts considered in the end 2020 debt (2019) for which the debt commitment is less than one year.

The maturity profile of the remaining financial instruments is included in the respective explanatory notes.

Subordinated bonds are subject to a fixed interest rate and are measured at amortized cost. If they were measured at fair value, the Company estimates that the liability would have been increased in the amount of 2.084.402 euros, in the year ended December 31, 2020. Sonae Indústria estimates that at the same date there were no significant differences between the book value and the remaining debt items and their respective fair value.

The maturity of derivative instruments is as follows:

18.2. Market risk

18.2.1 Interest rate risk

In the interest rate risk analysis in Note 2.16 b), the effect that would have been produced in the results for 2020 and 2019 was calculated, in the event of a + 0.75% change in relation to the interest rates and of -0.75% in relation to the interest rates fixed during those years.

			Sensit ivit y A nalysis
	2 0 2 0			2 0 19
	" N o t io nal"	Ef f ect in Pro f it and Lo ss ( Euro s)		" N ot io nal"	Ef f ect in Pro f it and Lo ss ( Euro s)
		0,75%	-0,75%		0,75%	-0,75%
Gross D ebt
Gro up	-3.522.000	-25.655	25.655	-3.406.000	-30.966	30.966
Ext ernal	-170.869.563	-788.227	788.227	-158.050.000	-981.508	981.508
	-174.391.563	-813.882	813.882	-161.456.000	-1.012.474	1.012.474
Lo ans t o gro up co mp anies	13.479.905	102.782	-102.782	13.536.896	105.581	-105.581
	13.479.905	102.782	-102.782	13.536.896	105.581	-105.581
		- 711.10 0	711.10 0		- 9 0 6 .8 9 3	9 0 6 .8 9 3

Considering the Euribor 6M as a benchmark for the level of interest rates in the Euro, an increase of 0.75 percentage points corresponds to 6,1 times the standard deviation of that variable in 2020 (11,2 times in 2019).

The following loans are not considered in the calculation of sensitivity (but are considered in debt stock):

overdrafts (immateriality of the amounts involved);
zero interest rate loans;
fixed interest rate loans (not subject to interest rate changes), namely the bond loan subscribed by Efanor;
leases (since 2019 following IFRS 16).

19. Related Parties

19.1 Balances and transactions with related parties may be summarized as follows:

Balance		Accounts Receivable		Accounts Payable		Other Creditors		Other non Currents Assets		Other debtors
	31.12.20	31.12.19	31.12.20	31.12.19	31.12.20	31.12.19	31.12.20	31.12.19	31.12.20	31.12.19
	122.678	50.854	102.762	118.918	3.678.515	3.512.237	12.285.405	11.550.996	1.194.500	1.985.900
- ZYEvolution				14.403
- Sonae Arauco Portugal	1.439	1.439	18.703	12.639			729.880
- Maiequipa			4.666	5.558	8.696	7.608	1.747.266	681.880	2.000	6.000
- Movelpartes	892	1.814			43.655	28.974		1.729.000	906.000	1.182.200
- Surforma - Sonae MC - Serviços Partilhados	785	2.173	10.934 19.322	10.877 25.743	3.623.278	3.472.796
- Sonae ,sgps			49.000	49.000
- Sind - Management services							98.000
- Solinca investimentos Turisticos			94	494
- Nos			43	149
- Imosede				55
- Tafisa Canadá	29.432	45.428
- Glunz UK							368.500	208.500	106.000	40.000
- Frases e Frações					1.718	1.718	4.316.910	4.044.267	162.500	757.700
- Parcelas e Narrativas					1.168	1.141	5.024.849	4.887.349	18.000

Transactions		Sales &			Purchases &		Interest Income		Interest Expenses
		Services Rendered			Acquired Services
		31.12.20	31.12.19	31.12.20	31.12.19		31.12.20	31.12.19	31.12.20	31.12.19
		309.057	302.855	322.136		293.855	667.409	684.044	94.105	279.344
- ZYEvolution				35.358		35.402
- Sonae Arauco Portugal				163.352		122.703
- Maiequipa							35.156	32.149

- Movelpartes		7.508	9.086				128.602	140.520
- Efanor,SGPS - Sonae RP						1.120				173.333

- Surforma		21.760	21.200	8.736		8.648			90.150	105.834
- Sonae MC - Serviços Partilhados				62.837		63.236
- Sonae ,sgps				50.000		50.000
- Sind - Management services							4.455	274	3.955	177
- Sonae Arauco Deustchland						504
- Solinca investimentos Turisticos				365		2.636
- Nos				948		8.644
- Imosede				540		540
- Tafisa Canadá		279.790	272.569
- Glunz UK
							17.082	15.781

Revenues and expenses recorded as a result of transactions with related parties refer to the operating activity and were carried out under conditions comparable to transactions carried out in the market between independent parties.

Parcelas e Narrativas 250.647 243.181

19.2 The expenses with remuneration of the Board of Directors of the Company are detailed as follows:

	2020	2019
Short term benefit	670.627	617.020
M edium term benefit	83.167	0
	753.794	617.020

20. Remuneration Supervisory Board

Remuneration of the Supervisory Board, General Assembley and Remuneration Committee is detailed as follow:

	2020	2019
Supervisory Board	25.700	25.700
General Assembley	7.000	7.000
Remuneration Committee	10.000	5.000
Total remuneration	42.700	37.700

Fees of Audit company, Deloitte & Associados, SROC, S.A. is detailed as follows:

Total Fees related to audit and legal certification of the accounts 29.636

The remuneration policy of the members of the board of directors and supervisory board, as well as the annual amount earned by their members in an individual are presented in the report of government in society .

21. Services Provided

Services provided are as follows:

	2020	2019
Management Service	309.057	302.854
TOTAL	309.057	302.854

22. Other Operational Income and Losses

Other operating income are detailed as follows:

Other Operation Income	31.12.20	31.12.19
Reversal of provision for other charges	8.988.303	6.714.262
Others	106.897	4.675
	9.095.200	6.718.937

Other operating losses are detailed as follows:

Other Operation Losses	31.12.20	31.12.19
Taxes	159.542	129.245
Indemnity paid (Note 5.2)	6.897.624	6.714.262
Others	142.612	157
	7.199.778	6.843.664

In 2020, provisions created in previous years were reversed for other risks and charges to cover contingencies as described in note 27.

23. Financial Results

	31.12.20	31.12.19
Financial expenses:
Interest expenses (Note 18 e 19)	6.621.384	6.414.253
Others	1.056.433	1.411.202
Financial expenses	7.677.817	7.825.455
Financial results	-7.001.123	-7.132.171
	676.694	693.284
Financial income
Interest income (Note 19)	667.409	684.044
Others	9.284	9.240
	676.694	693.284

24. Income or losses related on investments in subsidiaries and join ventures

In 2020 and 2019 the company had the following investment results:

	2020	2019
D ividends	3 .9 57.0 0 0	2 3 .6 3 6 .72 9
Sonae Arauco,S.A.		5.986.729
M egantic, B.V.	3.957.000	17.650.000
Gains related with investments	3.957.000	23.636.729
R eg ist rat io n o f impairment	- 6 .2 4 3 .179	- 5.3 9 4 .8 8 1
Registration of impairment of participation of M ovelpartes,S.A.(Note 5)	-3.817.053	-2.016.444
Registration of impairment of participation of M aiequipa,S.A.(Note 5)	-15.048	-203.064
Registration of impairment of participation of Surforma,S.A.(Note 5)	-955.157	-2.281.090
Registration of impairment of participation of Sims,S.A.(Note 5)	-21.092	-277.869
Registration of impairment of participation of Frases e Frações,S.A.(Note 5)	-1.380.618	-494.989
Registration of impairment of participation of Parcelas e Narrativas,S.A.(Note 5)	-54.212
Registration of impairment of participation of others investments (Note 5)		-121.425
Losses related with investments	-6.243.179	-5.394.881
Profit/(loss) on other investments	-2.286.179	18.241.848

25. Taxes

The income and deferred taxation recorded at 31 December 2020 and 31 December 2019 were:

	31.12.20	31.12.19
Current tax	-2.753	-5.434
	-2.753	-5.434
Current tax -Prior Year adjustment	-53	-66
	-2.806	-5.500
Current tax	-2.806	-5.500

Reconciliation of earnings before taxes with taxes for the year may be detailed as follows:

	2020	2019
Net income/(loss) before tax	-12.415.670	-3.320.139
Tax rate	21%	21%
Expectable tax	-2.607.291	-697.229
Impairment loss of financial assets	1.311.068	1.132.925
Reversal impairment loss of financial assets	-1.887.544	-1.409.995
Non-deductible payment	1.448.501
Provisions	783.840	2.733.941
Dividends	-830.970	-4.963.713
Current tax at special rate	2.753	5.434
Non-deductible financial charges	1.249.345	1.275.622
Deferred tax asset unrecognize	532.610	1.929.590
Others	440	-1.141
	2.753	5.434
Effective tax rate	-0,022%	-0,164%

For 2020, there are the following deductible fiscal benefits:

Benefit tax	Year of Production	Value ( euros)	Year of Expiry
Sifide	2014	48.332	2022
Sifide	2015	21.349	2023
Sifide	2016	60.567	2024
Sifide	2017	105.260	2025
Sifide	2018	176.498	2026
Sifide	2019	135.313	2027
Rfai	2017	692.968	2027
Rfai	2018	193.790	2028
Rfai	2019	147.048	2029

In 2020, no deferred tax asset was recorded on the tax losses generated by the Special Tax Group of Companies (about 2.536.238 euros) because there is no prospect of recoverability.

For 2019, there are the following deductible tax losses of SISGPS and its subsidiaries:

Year of		Deadline for
Production	Value ( euros)	deduction
2015	33.325	2029
2016	5.528.711	2030
2017	4.434.206	2024
2018	3.520.592	2025
2019	6.262.402	2026

Of the total reportable tax losses, 903 thousand euros refer to tax losses of the subsidiaries and approximately 18,876 thousand euros to tax losses of the tax group.

26. Earnings Per Share

Earnings per share were calculated as follows:

	31.12.20	31.12.19
N et Pro f it ( lo ss)
Net Profit / (loss) considered to calculate base earnings per share (Periodic Net Profit/(loss))	- 12 418 476	- 3 325 639
Net Profit/(loss) considered diluted earnings per share	- 12 418 476	- 3 325 639
N umber o f Shares
Weighted average number of shares used to calculate basic earning per share	45 403 029	45 403 029
Weighted average number of shares used to calculate diluted earnings per share	45 403 029	45 403 029
Basic and diluted earnings per share	-0,27352	-0,07325

During 2020, no effect from discontinued operations was recorded.

27. Contingencies

In October 2010, Sonae Indústria, SGPS, S.A. received a notice of assessment from tax authorities according to which the loss resulting from the dissolution of its subsidiary Socelpac, SGPS, S.A. in 2006, amounting to 74 million euros, should be considered at 50% for tax calculation purposes. The company filed a lawsuit challenging this interpretation.

The subsidiary Surforma, S.A. provided a warranty of 2.271.000 euros in favor of tax authorities for suspension of tax enforcement procedures initiated against Sonae Indústria, SGPS, S.A., having been brought court challenges against the respective settlement.

The subsidiary Maiequipa – Gestão Florestal, S.A. provided a warranty of 1.242.746 euros in favor of tax authorities for suspension of tax enforcement procedures initiated against Sonae Indústria, SGPS, S.A., having been brought court challenges against the respective settlement. One of the warranty, in the amount of 611,652 euros, was already returned in february 2021, since the conclusion of the process was in favor of the company.

Sonae Indústria, SGPS, S.A. presented bank guarantees of 9.286.997 euros to suspend tax enforcement procedures initiated by tax authorities, having been brought court challenges against the respective settlement, with the exception of the process IRC 2015, which to date only a graceful complaint has been filed

According to the information available on this date, the Board of Directors considers that the probability of a negative outcome is low, thus no adjustment was done to current tax and deferred tax asset recognized in these separate financial statements.

The guarantee of Sonae Indústria, SGPS, S.A. provided to the Social Security Institute in the amount of 321.858 euros to guarantee the contingency that Sonae Arauco Portugal, S.A. has with this entity still.

Former subsidiary Sonae Arauco Deutschland GmbH (formerly Glunz AG) and other German producers of wood-based panels are involved in certain litigation procedures filed by some customers for damages resulting from alleged breaches of competition law, after which former subsidiaries Sonae Arauco Deutschland GmbH (formerly Glunz AG) and GHP GmbH received, in March 2010, a statement of objections from the German Competition Authority. Some of these processes were resolved from 2015 to 2018 and their respective effects were recognized on the individual financial statements of each company and on the consolidated financial statements of the joint venture Sonae Arauco, S. A. (in which perimeter of consolidation these former subsidiaries are included) for the respective periods. As of the end of 2020, there were two processes still outstanding. One of which the complaint was submitted specifically to the former subsidiaries Sonae Arauco Deutschland GmbH e GHP GmbH with a maximum contingency (based on claimed values) of EUR 31.5 million. In the other pending case, these subsidiaries are jointly involved with other German producers and the maximum contingency (based on claimed values) amounted to EUR 26 million as at 31 December 2020. According to the opinion of these former subsidiaries' lawyers, at the closing date of these consolidated financial statements, it is not possible to reliably estimate the outcome of the proceedings in progress or the amount of any payments that may be established. Under the terms of the agreement for the subscription of Sonae Arauco, S. A. shares, entered into in 2015 by Sonae Arauco, S. A., Sonae Indústria SGPS S. A. and the Arauco Group, Sonae Indústria, SGPS, S. A. assumes the obligation to compensate Sonae Arauco, S. A. for any losses resulting from these proceedings.

Darbo SAS, a former subsidiary of Sonae Indústria, SGPS, S.A located in France, was sold on 3 July 2015 to a subsidiary of Gramax Capital and was excluded from the Group's consolidated financial statements on that date. This company's insolvency was requested at the Trade Court of Dax, in France, in September 2016, and was declared by that court to be liquidated, in October of that year.

Following that case, one hundred and ten former employees of Darbo filed various lawsuits with the Labour Court of Dax, in France, against, among others, Sonae Indústria, SGPS, SA and Gramax Capital, through which they claim compensation for alleged dismissal without fair reason, for a total amount of EUR 13 653 917.28. The same former employees also filed a lawsuit at the Civil Court of Dax against the seller and buyer companies and against Sonae Indústria, SGPS, SA, through which they claim annulment of the sale of Darbo SAS and the payment of compensation for alleged damages suffered, in the same amount claimed before the Labour Court of Dax (EUR 13 653 917.28).

In relation to one hundred and five former employees of Darbo, in July 2019 the Labour Court of Dax judged that Sonae Indústria SGPS and two Gramax Capital companies have the joint and several obligation to pay compensation to those employees in a total amount of c. 3.6 million euros on the grounds of the existence of 'co-employment'. The court also ordered Sonae Indústria SGPS and two Gramax Capital companies to reimburse the French "Pôle Emploi" (unemployment insurance organisation) any amounts of compensations it could have paid to those employees. Sonae Indústria SGPS appealed such decisions considering there are no grounds for the co-employment thesis. In January 2020, the court, in relation to the lawsuit of five former employees of Darbo, handed down a sentence in the same direction and on the same grounds, with the amount of the sentence being around 950 thousand euros. Sonae Indústria appealed this decision

28. Subsequent events

On 28 January 2021, the Board of Directors approved a capital increase of up to 55 million euros, with a subscription price for each new share of 1.14 euros. The decision to approve the capital increase took into account the need to reinforce the company's equity, in order to improve the capital structure of Sonae Indústria, reducing the overall cost of its debt and allowing the company to seek to achieve its objectives strategic plans in an environment of very high uncertainty due to the pandemic.

The Offer and the admission of shares to be traded on the regulated market depend on the approval and publication of the respective prospectus by the Securities Market Commission, as well as the publication of the notice for the exercise of subscription rights, under the legal terms.

The capital increase process is ongoing and is expected to be completed in the second quarter of 2021.

29. Financial Statements Approval

These financial statements were approved by the Board of Directors and authorised for issuance 26 of march 2021.

Consolidated Financial Statements

Consolidated Statement of Financial Position Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Shareholders' Funds Consolidated Statement of Cash Flows Notes to the Consolidated Financial statements

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2020 AND 31 DECEMBER 2019

(Amounts expressed in Euros)

ASSETS	Notes	31.12.2020	31.12.2019
NON-CURRENT ASSETS Tangible fixed assets Goodwill Intangible assets Investment properties Biological assets Investment in joint ventures Other investments Other non-current assets Total non-current assets	9 13 10 11 12 5, 8 6, 7, 8 6, 7, 15	145 334 440 118 090 26 386 5 248 334 91 938 210 129 915 26 299 1 236 641 362 212 043	153 648 978 347 082 68 755 5 499 237 238 894 209 128 627 19 829 1 095 969 370 047 371
CURRENT ASSETS Inventories Trade debtors Other current debtors Current tax asset Other taxes and contributions Other current assets Cash and cash equivalents Total current assets Non-current assets held for sale TOTAL ASSETS	17 6, 7, 18 6, 7, 19 21 6, 7, 20, 25 6, 7, 22 9, 12, 16	21 406 761 13 951 124 1 053 789 1 628 985 1 199 216 2 022 046 2 990 784 44 252 705 1 638 273 408 103 021	21 961 930 14 079 419 1 054 515 2 345 193 1 783 339 2 281 415 7 059 662 50 565 473 131 070 420 743 914
SHAREHOLDERS`FUNDS AND LIABILITIES
SHAREHOLDERS`FUNDS<br>Share capital<br>Legal reserve<br>Other reserves and accumulated earnings<br>Accumulated other comprehensive income<br>Total shareholders' funds attributabble to equity holders of Sonae Indústria<br>TOTAL SHAREHOLDERS`FUNDS LIABILITIES	23 23 23 23	253 319 797 1 807 489 (192 550 073) 50 000 081 112 577 294 112 577 294	253 319 797 1 807 489 (186 140 089) 58 331 221 127 318 418 127 318 418
NON-CURRENT LIABILITIES Subordinated bonds Unsubordinated bonds Bank loans - net of current portion Lease creditors - net of current portion Post-retirement liabilities Other non-current liabilities Deferred tax liability Provisions Total non-current liabilities	6, 7, 24, 26 6, 7, 24, 26 6, 7, 24, 26 6, 7, 24, 26, 33 28 6, 7, 27 14 32	49 944 304 15 452 929 146 329 963 2 419 817 762 010 5 836 251 21 333 120 6 530 642 248 609 036	49 938 116 7 951 240 146 393 538 3 335 541 904 548 6 654 222 20 957 005 7 137 752 243 271 962
CURRENT LIABILITIES Current portion of non-current bank loans Current bank loans Current portion of non-current lease creditors Trade creditors Current tax liability Other taxes and contributions Other current liabilities Provisions Total current liabilities	6, 7, 24, 26 6, 7, 24, 26 6, 7, 24, 26, 33 6, 7, 29 30 6, 7, 25, 31 32	7 503 834 815 572 1 598 359 22 318 656 25 310 561 103 12 899 846 1 194 011 46 916 691	5 755 509 830 938 1 790 941 26 026 430 29 812 580 396 11 823 152 3 316 356 50 153 534
TOTAL SHAREHOLDERS' FUNDS AND LIABILITIES		408 103 021	420 743 914

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

The Board of Directors

CONSOLIDATED INCOME STATEMENT

FOR THE PERIODS ENDED 31 DECEMBER 2020 AND 31 DECEMBER 2019

(Amounts expressed in Euros)

Sales 2, 38, 42 200 337 064 228 500 563 Services rendered 2, 38, 42 1 485 298 1 486 041 Change in value of biological assets 12, 38 ( 164 644) ( 145 199) Other income and gains 35, 38 8 980 101 4 240 249 Cost of sales 17, 38 (109 879 424) (127 189 314) Increase / (decrease) in production 38 ( 165 783) 1 997 447 External supplies and services 3, 38 (42 739 343) (52 211 400) Staff expenses 38 (26 951 455) (27 148 274) Depreciation and amortisation 9, 10, 11 (15 744 994) (15 930 215) Provisions and impairment losses (increase / reduction) 32, 38 23 503 (5 719 226) Other expenses and losses 36, 38 (4 224 662) (3 451 748) Operating profit / (loss) 38 10 955 661 4 428 924 Financial income 39 1 036 742 695 759 Financial expenses 39 (11 839 954) (12 175 674) Gains and losses in joint ventures 5 (3 057 658) (2 864 147) Gains and losses in investments 31 ( 121 425) Net profit/(loss) before taxation (2 905 209) (10 036 563) Taxation 14, 40 (3 063 824) (3 332 786) Consolidated net profit / (loss) for the period (5 969 033) (13 369 349) Attributable to: Equity holders of Sonae Industria (5 969 033) (13 369 349) Consolidated net profit/(loss) per share: Basic 41 (0.1315) (0.2945) Diluted 41 (0.1315) (0.2945)	Notes	31.12.2020	31.12.2019

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

The Board of Directors

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIODS ENDED 31 DECEMBER 2020 AND 31 DECEMBER 2019

(Amounts expressed in Euros)

	Notes	31.12.2020	31.12.2019
Consolidated net profit / (loss) for the period (a)		(5 969 033)	(13 369 349)
Consolidated other comprehensive income
Items that may be subsequently transferred to profit or loss
Change in currency translation reserve	23	(4 316 644)	4 310 299
Amounts reclassified to profit or loss in the period	23	( 1 680)
Group share of other comprehensive income of joint ventures	5, 23	(2 923 011)	828 064
Items that may not be subsequently transferred to profit or loss
Revaluation of tangible fixed assets	9, 23	(1 162 996)	3 019 692
Remeasurements of defined benefit plans	23, 28	94 186	( 53 999)
Group share of other comprehensive income of joint ventures	5, 23	( 20 995)	(2 112 145)
Income tax relating to items that will not be reclassified	14, 23		( 800 218)
Consolidated other comprehensive income for the period, net of tax (b)		(8 331 140)	5 191 693
Total consolidated comprehensive income for the period (a) + (b)		(14 300 173)	(8 177 656)
Total consolidated comprehensive income attributable to:
Equity holders of Sonae Industria		(14 300 173)	(8 177 656)

The notes are an integral part of the consolidated financial statements

The board of directors

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS` FUNDS AT 31 DECEMBER 2020 AND 31 DECEMBER 2019

(Amounts expressed in Euros)

Notes	Share capital	Legal reserve	Other Reserves and accumulated earnings	Accumulated other comprehensive income 23	Total shareholders` funds attributable to the equity holders of Sonae Indústria	Total shareholders' funds

Balance as at 1 January 2020	253 319 797	1 807 489	(186 140 089)	58 331 221	127 318 418	127 318 418
Total consolidated comprehensive income for the period Consolidated net profit/(loss) for the period			(5 969 033)		(5 969 033)	(5 969 033)
Consolidated other comprehensive income for the period				(8 331 140)	(8 331 140)	(8 331 140)
Total			(5 969 033)	(8 331 140)	(14 300 173)	(14 300 173)
Others			( 440 951)		( 440 951)	( 440 951)
Balance as at 31 December 2020	253 319 797	1 807 489	(192 550 073)	50 000 081	112 577 294	112 577 294

	Share capital	Legal reserve	Other Reserves and accumulated earnings	Accumulated other comprehensive income	Total shareholders` funds attributable to the equity holders of Sonae Indústria	Total shareholders' funds
Notes				23
Balance as at 1 January 2019	253 319 797	1 807 489	(172 733 307)	53 139 528	135 533 507	135 533 507
Total consolidated comprehensive income for the period Consolidated net profit/(loss) for the period Consolidated other comprehensive income for the period			(13 369 349)	5 191 693	(13 369 349) 5 191 693	(13 369 349) 5 191 693
Total			(13 369 349)	5 191 693	(8 177 656)	(8 177 656)
Others			( 37 433)		( 37 433)	( 37 433)
Balance as at 31 December 2019	253 319 797	1 807 489	(186 140 089)	58 331 221	127 318 418	127 318 418

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

The board of directors

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE PERIODS ENDED 31 DECEMBER 2020 AND 31 DECEMBER 2019

(Amounts expressed in Euros)

OPERATING ACTIVITIES Receipts from trade debtors 199 846 384 226 921 492 Payments to trade creditors ( 154 558 165) ( 176 824 819) Payments to staff ( 26 326 113) ( 27 390 662) Net cash flow from operations 18 962 106 22 706 011 Payment / (receipt) of corporate income tax ( 407 650) ( 2 759 581) Other receipts / (payments) relating to operating activities 4 043 551 ( 569 270) Net cash flow from operating activities (1) 22 598 007 19 377 160 INVESTMENT ACTIVITIES Cash receipts arising from: Tangible fixed assets and intangible assets 187 290 1 408 941 Investment subventions 2 066 791 915 280 Dividends 5 986 729 2 254 081 8 310 950 Cash Payments arising from: Investments ( 6 471) ( 7 302) Tangible fixed assets and intangible assets ( 23 475 100) ( 14 803 818) Others 5.3 ( 6 897 624) ( 6 714 262) ( 30 379 195) ( 21 525 382) Net cash used in investment activities (2) ( 28 125 114) ( 13 214 432) FINANCING ACTIVITIES Cash receipts arising from: Interest and similar income 24 825 28 247 Subordinated bonds 24 50 000 000 Unsubordinated bonds 24 7 500 000 8 000 000 Bank loans 24 662 866 479 1 489 546 585 670 391 304 1 547 574 832 Cash Payments arising from: Interest and similar charges ( 9 063 566) ( 9 988 748) Loans obtained 24 (1 545 129 985) ( 657 568 850) Leases - repayment of principal 24 ( 1 945 259) ( 2 632 912) ( 668 577 675) (1 557 751 645) Net cash used in financing activities (3) 1 813 629 ( 10 176 813) Net increase/(decrease) in cash and cash equivalents resulting from cash flows (4) = (1) + (2) + (3) ( 3 713 478) ( 4 014 085) Cash and cash equivalents at the beginning of the period (a) 22 6 228 724 10 487 918 Cash and cash equivalents at the end of the period (b) 22 2 175 211 6 228 724 Net increase/(decrease) in cash and cash equivalents (b) - (a) ( 4 053 513) ( 4 259 194) Effect of foreign exchange rate in cash and cash equivalents (c) ( 340 035) ( 245 109) Net increase/(decrease) in cash and cash equivalents resulting from cash flows (b) - (a) - (c) ( 3 713 478) ( 4 014 085)	Notes	31.12.2020	31.12.2019

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

The board of directors

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020 (Amounts expressed in Euros)

1. INTRODUCTION

SONAE INDÚSTRIA, SGPS, S.A., whose head-office is at Lugar do Espido, Via Norte, 4470-177 Maia, Portugal, is the parent company of a group of companies as detailed in note 4 ("Group").

Sonae Indústria, SGPS, S.A. is included in the perimeter of consolidation of Efanor Investimentos, SGPS, S.A., which is both its immediate and ultimate parent company.

The shares of the company are listed on NYSE Euronext Lisbon.

The main activity of the Group is the production and commercialization of woodbased panels and derivative products, through industrial plants and commercial facilities located in Portugal, Canada and South Africa (note 42).

2. RELEVANT EVENTS

a lesser extent, in the Autumn. As such, economic consequences were uneven throughout the year: most economies around the world were severely hit in the first half of the year and showed a significant recovery in the second half, although not enough strong to avoid a severe economic contraction in 2020. Countries where Sonae Indústria and its joint venture Sonae Arauco conduct its activities and its main export markets were no exception.

Turnover and the results of Sonae Indústria and Sonae Arauco were significantly affected in the first half of 2020, especially in April and May and in countries where economic effects of lockdown measure were stronger, such as Portugal, Spain and South Africa (countries where Sonae Indústria and Sonae Arauco conduct activities), but showed a strong recovery in the second half of the year. By the end of 2020, the activity of Sonae Indústria and Sonae Arauco was showing a significant resilience to the second wave of lockdown measures.

Turnover (as % of comparative period)	March 2020 /	April 2020 /	May 2020 /	June 2020 /	1st half 2020 /	2nd half 2020 /	Year 2020 /
	March 2019	April 2019	May 2019	June 2019	1st half 2019	2nd half 2019	Year 2019
Sonae Indústria (consolidated entities)	81%	56%	66%	84%	82%	94%	88%
Tafisa Canada	79%	57%	63%	84%	79%	100%	89%
Laminates and components	110%	52%	100%	92%	94%	95%	95%
Sonae Arauco (joint venture - equity method)	88%	55%	53%	85%	77%	102%	89%

This pandemic context and its economic consequences led the Group to look carefully into the following specific aspects, when preparing its consolidated financial statements:

Assessment of the Group's ability to continue as a going concern (note 3.1.2);
Main judgements and assumptions used for preparing these consolidated financial statements (note 3.24).

As explained on the respective notes, the Sonae Indústria and Sonae Arauco requested, with reference to 31 December 2020, independent appraisals on most of its land and buildings, which only revealed isolated impairment situations (note 9). Furthermore, the Group carefully assessed the value in use of its cash generating units of tangible fixed assets and no relevant impairment situations were identified. Payments from customers have not shown significant disruption across the year and there were no increase in impairment losses of accounts

receivable as expected credit losses on these assets remained stable (notes 3.14, 18 and 32). Prices of the products sold by Sonae Indústria and Sonae Arauco have not suffered significant adverse effects throughout the year, which reflect stable net realizable values of inventories (note 32).

At internal level, Sonae Indústria and Sonae Arauco put in place the measures recommended by health authorities and by the World Health Organization to control the spread of SARS-COV-2 virus. The number of the Group's employees who got infected remained quite low across the year and never blocked the Group's ability to carry on its activity.

At the date of issue of these consolidated financial statements, there still was high uncertainty on the evolution of the pandemic crisis itself including the implementation of vaccinations and treatments for an ever evolving virus, making it difficult to evaluate the impacts on Sonae Indústria operations, on the demand drivers of our business (namely residential and office segments), on the general economic conditions and on potential structural changes in customer behaviour.

Due to these uncertainties Sonae Indústria is unable to estimate future impacts on the company's results with accuracy or assurance.

The risk that the economies fail to recover significantly and swiftly from the adverse economic consequences already caused by the pandemic, namely on employment, available income and consumer and investor confidence levels, all with impact on the demand for durable goods, which are important drivers of market demand for our products, may also cause a material impact in Sonae Indústria businesses.

Despite the uncertainties created by Covid-19 crisis, the measures taken by management, the general government support measures, and the material recovery experienced by our businesses in the second half of 2020, set out a framework for Sonae Indústria to overcome the important challenges raised by the pandemic.

3. MAIN ACCOUNTING POLICIES

The main accounting policies adopted in preparing the accompanying consolidated financial statements in a consistent way for all disclosed periods are as follows:

3.1. Basis of Preparation

These consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and with Interpretations issued by the IFRS Interpretations Committee (IFRS IC), applicable to the period beginning 1 January 2020 and endorsed by the European Union.

3.1.1. Changes to International Financial Reporting Standards

3.1.1.1. In the year ended 31 December 2020, the following standards and interpretations, which have been endorsed by European Union, became effective:

IFRS 9, IAS 39 and IFRS 7 (amendments), Interest rate benchmark reform – phase 1 (effective for annual periods beginning on or after 1 January 2020);

IFRS 16 (amendment), Leases – Covid 19–related rent concessions (effective for annual periods beginning on or after 1 June 2020. Early

application is allowed.). This amendment exempts lessees who have been granted lease payment concessions as a direct consequence of Covid-19 pandemic from assessing whether these concessions are lease modifications. If lessees apply this exemption, the aforementioned lease payment concessions shall be accounted for as if they were not lease modifications. This exemption can only be applied if the aforementioned lease payment concessions are reflected in a reduction of lease payment to take place before 30 June 2021;

Amendments to References to the Conceptual Framework in IFRS Standards (effective for annual periods beginning on or after 1 January 2020). This amendment contains changes to several standards, whose references to the Conceptual Framework have been updated.

The application of these amendments to accounting standards from 1 January 2020 did not have significant effects on these consolidated financial statements.

3.1.1.2. At 31 December 2020, the following standards and interpretations had been issued by IASB and had been endorsed by the European Union, but had not been applied as they only become effective in later periods:

The Group does not expect any significant effect on its future consolidated financial statements from the application of this amendment to IFRS.

3.1.1.3. At 31 December 2020, the following standards, effective 1 January 2021 or later, had been issued by IASB but still had not been endorsed by the European Union:

IAS 1 (amendment), Presentation of Financial Statements (effective for annual periods beginning on or after 1 January 2023). This amendment is

still subject to endorsement by the European Union. This amendment clarifies certain aspects of classification of liabilities as current or noncurrent, namely, that this classification should be based on rights that are in existence at the end of the reporting period, that it should not be affected by expectations about whether an entity will exercise its rights to defer settlement of a liability and it makes clear that settlement refers to the transfer to the counterparty of cash, equity instruments and other assets or services;

investment contracts with discretionary participation characteristics. IFRS 17 is based on the current measurement of technical liabilities at each reporting date. The current measurement can be based on a complete "building block approach" or "premium allocation approach". The recognition of the technical margin is different depending on whether it is positive or negative. IFRS 17 is of retrospective application;

Annual improvements 2018 – 2020 (effective for annual periods beginning on or after 1 January 2022). These improvements are still subject to endorsement by the European Union. These improvements affect IFRS 1, IFRS 9, IFRS 16 (illustrative examples) and IAS 41.

The Group does not expect any significant effect on its future consolidated financial statements from the application of these changes to IFRS.

The accompanying consolidated financial statements have been prepared from the books and accounting records of the companies included in the consolidation (note 4) and the joint ventures held by the Group (note 5), adjusted in the consolidation process whenever necessary, on a going concern basis and under the historical cost convention, except for biological assets and financial instruments, which are recognized in accordance with the criteria set out on notes 3.7 and 3.14, respectively, and land and buildings, which are stated for their revalued amounts, as described on note 3.3.

3.1.2. Going concern basis of accounting

Management assessed the Group's capacity to keep on as a going concern using all relevant financial, commercial and other information, facts and circumstances, including subsequent events which were available at the date of issue of these consolidated financial statements. In particular, Management took into consideration the social and economic consequences so far caused by the ongoing Covid-19 pandemic, including the way it has affected the activity, the results and the financial position of Sonae Arauco Group and including the uncertainty about the future course of the pandemic. As a result of this assessment, Management came to the conclusion that the Group has adequate resources to keep its activities and that there is no intention to cease activities at short term, therefore considering adequate the preparation of these consolidated financial statements under a going concern basis.

3.2. Consolidation Principles

The consolidation methods adopted by the Group are as follows:

a) Investments in Group companies

Investments in companies in which the Group holds control, directly or indirectly, were included in these consolidated financial statements using the full consolidation method.

The Group holds control of entities when it fulfils all the following conditions: (i) power over the entity; (ii) exposure, or rights, to returns from its involvement with the entity; and (iii) the ability to use its power over the entity to affect the amount of its own returns.

Equity and comprehensible income attributable to minority shareholders are shown separately, under the caption Non-controlling Interests, in the Consolidated Statement of Financial Position and in the Consolidated Income Statement, respectively.

Comprehensive income and the remaining items of net shareholders' funds are attributed to the holders of non-controlling interests, according to their interest, even if this caption turns negative.

Assets and liabilities of each Group company are measured at their fair value at the date of acquisition. Any excess of the acquisition cost plus the noncontrolling holders' share in the fair value of acquired assets and liabilities or, alternatively, plus the fair value of non-controlling holders' investment in the acquired subsidiary, over the Group's interest in the fair value of the identifiable net assets acquired is recognized as goodwill (note 3.2.c and 13). If the difference between the acquisition cost plus the non-controlling holders' share in the fair value of acquired assets and liabilities or, alternatively, plus the fair value of non-controlling holders' investment in the acquired subsidiary and the fair value of the identifiable net assets acquired is negative, this difference is recognized as income in profit or loss for the period of acquisition, after reassessment of the estimated fair value of identified net assets. Noncontrolling interests include their proportion of the fair value of net identifiable assets and liabilities or, alternatively, the fair value of their investment in the subsidiary acquired.

The results of Group companies acquired or disposed of during the period are included in the Consolidated Income Statement from the effective date control is gained or up to the effective date control is lost, 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.

Entities included in these consolidated financial statements are listed on note 4.

b) Financial Investments in joint ventures and in associates

Financial investments in joint ventures (companies that the Group holds together with third parties and in which joint control is established in a shareholders' agreement, which reflects on the governance structure of these

entities) and in associates (companies where the Group exercises significant influence through the participation on financial and operational decisions but does not hold its control or joint-control – usually corresponding to holdings between 20% and 50% in a company's share capital) are accounted for on these consolidated financial statements in accordance with the equity method.

Under the equity method, investments are recorded at acquisition cost, under Investments in joint ventures or Investments in associates, on the Consolidated Statement of Financial Position, then adjusted by the amount corresponding to the Group's share of changes in equity (including net profit or loss) of the entity, against losses or profits in the period or against other comprehensive income for the period and against dividends received.

The excess value resulting from the difference between the acquisition cost and the fair value of the assets and liabilities of the entity, at the time of acquisition, is recorded under Investments in joint ventures or Investments in associates, on the Consolidated Statement of Financial Position. If the difference between the acquisition cost and the fair value of the assets at the time of acquisition is negative, it is recognized as income in the period.

Adjustments to the financial statements of the entity are performed, whenever necessary, in order to adapt accounting policies to those used by the Group.

The Group conducts an annual assessment of its investment in Sonae Arauco joint venture, using external experts, in situations where justified, and any impairment losses that are shown to exist are recorded. When impairment losses recorded in previous years cease to exist, they are reversed (note 8).

When the Group's share of losses exceeds the carrying amount of the investment, the investment is reported at nil value, unless the Group is committed beyond the value of its investment.

Gains on transactions with joint ventures or associates are eliminated proportionately to the Group's interest in these entities, against the carrying amount of investment. Losses are also eliminated, as long as it does not reflect an impairment situation.

Investments in joint-venture companies are detailed on note 5. At 31 December 2020, there were no investments in associates.

c) Goodwill

The excess of the acquisition cost plus the non-controlling holders' share in the fair value of acquired assets and liabilities or, alternatively, plus the fair value of non-controlling holders' investment in the acquired subsidiary, over the Group's interest in the fair value of the identifiable net assets acquired is recognized as goodwill (note 13).

Goodwill arising on the consolidation of subsidiaries located in foreign countries is accounted for on the functional currency of these subsidiaries and is then translated into the Group's reporting currency (euro) at the exchange rate of the closing date of these consolidated financial statements. Exchange rate differences arising from this translation are stated as Translation Reserve in Other accumulated comprehensive income.

Goodwill is not amortized, but it is subject to impairment tests on an annual basis. Impairment losses identified in the period are disclosed on the Consolidated Income Statement under Provisions and Impairment Losses, and cannot be reversed.

If the difference between the acquisition cost plus the non-controlling holders' share in the fair value of acquired assets and liabilities or, alternatively, plus the fair value of non-controlling holders' investment in the acquired subsidiary, and the fair value of the identifiable net assets acquired over cost is negative, this difference is recognized as income in profit or loss for the period of acquisition, after reassessment of the estimated fair value.

d) Translation of financial statements of foreign companies

Assets and liabilities in the individual financial statements of subsidiaries with a functional currency other than euro are translated to euro using exchange rates at the closing date of these consolidated financial statements. 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 Other accumulated

comprehensive income. Exchange rate differences that originated prior to 1 January 2004 (date of transition to IFRS) were written-off through Other reserves and accumulated 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 closing date of these consolidated financial statements.

Whenever a subsidiary with a functional currency other than euro is sold or liquidated, the respective accumulated exchange rate differences are reclassified on the Consolidated Income Statement as a gain or loss on the disposal.

Exchange rates used on translation to euro of foreign subsidiaries are listed below:

		31.12.2019
Closing Average		Closing	Average
rate	rate	rate	rate

0.8990	0.8889	0.8508	0.8768
18.0213	18.6637	15.7778	16.1551
1.5633	1.5291	1.4598	1.4852
1.2271	1.1402	1.1234	1.1193
		31.12.2020

Source: Bloomberg

3.3. Tangible fixed assets

Tangible fixed assets acquired up to 1 January 2004 (transition date to IFRS) are recorded at acquisition cost or revaluated acquisition cost, in accordance with generally accepted accounting principles in Portugal until that date, net of depreciation and accumulated impairment losses.

Tangible assets, except land and buildings, acquired after that date, are recorded at acquisition cost, net of accumulated depreciation and impairment losses.

Land and buildings acquired after that date are recognized for their revalued amounts, net of accumulated depreciation, in case of buildings, and impairment losses.

Increase in tangible fixed assets arising from revaluation is recognized through Other comprehensive income for the period revaluation occurs, on the Consolidated Statement of Comprehensive Income.

Further revaluation will be carried out and determined by independent appraisal whenever revalued amounts significantly differ from the carrying amount of revalued assets, never exceeding a five-year period between two successive revaluations.

The Group separately recognizes and depreciates the components of tangible fixed assets whose useful lives are significantly different from the related main asset's ones and the components that can only be used in connection with a specific asset. These components are depreciated separately on the basis of their useful lives.

Repair and maintenance expenses are recognized in profit or loss in the period they occur.

Depreciation is calculated on a straight line basis, from the date the asset is available for use, ie, in the location and conditions necessary for it to be operated in the manner intended by the Board of Directors, over the expected useful life for each class of assets.

Depreciation rates used correspond to the following estimated useful lives of underlying assets:

	Years
Buildings	20 - 40
Plant & Machinery	2 - 25
Vehicles	5
Tools	5
Fixtures and Fittings	4 - 10
Other Tangible Assets	5

Tangible assets in progress represent fixed assets still under construction/development and are stated at acquisition cost net of impairment losses. These assets are transferred to the captions of tangible fixed assets, according to their nature, and are depreciated from the date they are available for

use, in the location and conditions necessary for it to be operated in the manner intended by the Board of Directors.

Residual values, useful lives and the depreciation method are assessed annually.

The carrying amount of a tangible fixed asset is derecognized on disposal. The gain or loss from the derecognition is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the asset and is recognized under Other income and gains (note 35) or Other expenses and losses (note 36), on the Consolidated Income Statement, when the asset is derecognized.

3.4. Intangible assets

Intangible assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses. Intangible assets are only recognized 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 recognized as an expense recorded on the Consolidated Income Statement when it is incurred (note 37).

Expenditure on development is recognized 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 from the date the asset is available for use, over the expected useful life, which ranges from three to six years.

The carrying amount of an intangible fixed assets is derecognized on disposal. The gain or loss from the derecognition is determined as the difference between the

net disposal proceeds, if any, and the carrying amount of the asset and is recognized under Other income and gains (note 35) or Other expenses and losses (note 36), on the Consolidated Income Statement, when the asset is derecognized.

3.5. Accounting for leases

The Group recognizes on the Consolidated Statement of Financial Position those tangible assets used by the Group under lease contracts (right-of-use assets) in which the Group acts as a lessee, except for leases classified as low value leases or short-term leases, whose lease payments are recognized as an expense on the Consolidated Income Statement on a straight-line basis over the lease term.

Right-of-use assets are recognized for their cost under Tangible fixed assets, on the Consolidated Statement of Financial Position, when the assets becomes available for use by the Group. At the same time, lease liabilities are recognized under Lease creditors, on the Consolidated Statement of Financial Position, for the present value of lease payments set to be paid over the lease term.

The Group uses incremental borrowing rates to calculate the present value of lease payments. These incremental borrowing rates were calculated using the yield curves of each functional currency of subsidiaries included in the consolidation added up by a spread (including commissions) implicit in the debt of Group companies.

Depreciation and impairment losses of right-of-use assets are calculated and recognized as set out on note 3.3 for tangible fixed assets, taking into consideration the nature of the underlying asset. Whenever there is no reasonable certainty as to the acquisition of leased assets upon end of contract, the right-ofuse asset is depreciated from the commencement date to the earlier of the end of the asset's useful life or the end of the lease term .

The lease term is the period over which the contract is non-cancellable. To determine this period, the Group takes into consideration not only the penalties contractually defined but also the economic consequences of terminating the contact for both the lessee and the lessor.

Interest included in lease payments, depreciation and impairment losses are recognized as expenses of the period they related to, on the Consolidated Income

Statement. Interest expenses are presented under financing activities, on the Consolidated Statement of Cash Flows.

Payments of leases classified as low value or short term are recognized as expenses, on the Consolidated Income Statement, on a straight-line basis, and presented under operating activities, on the Consolidated Statement of Cash Flows. The Group classifies leases as low value when the purchase price of the underlying asset as new is equal or lower than EUR 1 000. The Group classifies a lease as short term when lease term is equal or under one year.

At 31 December 2020 and 31 December 2019, the Group did not hold any position in which it acted as a lessor, except for intragroup leases, which were eliminated in these consolidated financial statements.

3.6. Investment Properties

Investment properties are recorded at acquisition cost net of depreciation and of accumulated impairment losses. They comprise mostly land and buildings of operations which were discontinued and for which the Group has established lease contracts with third parties.

Useful lives and the depreciation method are the ones set out in note 3.3. for tangible fixed assets.

3.7. Biological assets

The Group recognizes as biological assets tree plantations during their process of biological transformation, which takes place from planting or acquisition to the date of harvest or disposal. These assets are measured at fair value less estimated costs to sell. There are, however, situations in which the Group may use the cost as an approximation to fair value, namely when:

An irrelevant biological transformation has occurred since the moment of initial recognition;

The effect of biological transformation on fair value is considered to be irrelevant.

Changes in fair value less estimated costs to sell are recognized under Change in value of biological assets, on the Consolidated Income Statement.

When the biological assets are intended for use by the Group, on harvest date they are transferred to Inventories, on the Consolidated Statement of Financial Position.

In situations where biological assets are intended to be sold and a transaction is expected to take place within less than twelve months from the reporting date, these assets are stated under Non-current assets held for sale, on the Consolidated Statement of Financial position.

3.8. Non-current assets held for sale

Non-current assets are stated under Non-current assets held for sale, on the Consolidated Statement of Financial Position, if their carrying amounts will be recovered mainly through a sale transaction rather than through continuing use.

Carrying amount will be recovered through sale when non-current assets are available for immediate sale in their present conditions and the probability of concluding a sale transaction in the following twelve months is high.

Non-current assets held for sale may be either an individual asset or a disposal group when a group of assets is included in the same sale transaction. Disposal groups may include current assets and liabilities as long as they are included in the same sale transaction. Current and non-current assets and liabilities are stated on the Consolidated Statement of Financial Position under Non-current assets held for sale and Liabilities directly associated with non-current assets held for sale, respectively.

Non-current assets held for sale and disposals groups are measured at the lower of cost and fair value less estimated costs to sell.

Depreciation of depreciable assets ceases after classification as Non-current assets held for sale.

3.9. Government and other public entities grants

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 recognized on the Consolidated Income Statement in accordance with the relevant expense.

Grants related to depreciable assets are disclosed as Other non-current liabilities on the Consolidated Statement of Financial Position and are recognized on a straight line basis on the Consolidated Income Statement over the expected useful lives of those assets.

3.10. Impairment of non-current assets, except for deferred taxes

Assets are assessed for impairment at each closing date, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Assets are assessed for impairment individually. In case of tangible fixed assets that cannot autonomously produce cash flows, impairment is assessed for the cash-generating unit to which the asset is assigned. Whenever a cash-generating unit includes intangibles assets without defined useful life, impairment is assessed, irrespective of events that may indicate that the carrying amount of the cashgenerating unit may not be recoverable.

Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognized on the Consolidated Income Statement under Provisions and impairment losses. For tangible fixed assets that were revalued, occurring impairment losses are recognized under Revaluation of tangible fixed assets, on the Consolidated Statement of Comprehensive Income, until the revaluation effect is offset. Any additional impairment is recognized on the Consolidated 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.

the recoverable amount of an asset may have increased, therefore originating a total or partial reversal of an impairment loss previously recognized. Reversal of impairment losses is recognized under the caption where the corresponding impairment loss was previously recognized: Provisions and impairment losses, on the Consolidated Income Statement, or Revaluation of tangible fixed assets, on the Consolidated Statement of Comprehensible income, when a revaluation reserve was previously recognized. However, the increase in the carrying amount of an asset due to a reversal of an impairment loss is recognized to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognized for that asset in prior years. Impairment losses on goodwill are not reversible.

3.11. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying tangible and intangible assets are capitalized as part of the cost of the qualifying asset. Borrowing costs are capitalized 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.

The remaining borrowing costs are recognized as an expense in the period in which they are incurred.

3.12. Inventories

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 and intermediate products 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 and intermediate products and work in progress, respectively.

3.13. Provisions

Provisions are recognized 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.

When a significant time delay occurs between the onset of the obligation and the related expenditure, related provision is recognized for its present value.

Provisions are reviewed and adjusted at the reporting 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.

Increase and utilization or reversal of provisions are recognized under Provisions and Impairment losses on the Consolidated Income Statement.

3.14. Financial assets, financial liabilities and equity instruments

Financial assets can be subsequently classified into the following categories:

i) Financial assets measured at amortized cost

A financial asset is measure at amortized cost if both of the following conditions are met:

a) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
ii) Financial assets measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

a) The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
iii) Financial assets measured at fair value through profit or loss

A financial asset is measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through other comprehensive income. However an entity may make and irrevocable election at initial recognition for particular investments in equity instruments that would otherwise be measure at fair value through profit or loss to present subsequent changes in fair value in other comprehensive income.

Financial liabilities can be subsequently classified into the following main categories:

i) Financial liabilities measured at amortized cost;
ii) Financial liabilities measured at fair value through profit or loss.

These financial assets and liabilities are stated on the Consolidated Statement of Financial Position under different classes of assets and liabilities, in accordance with the nature of each instrument.

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.

The Group holds the following financial instruments, which may be either financial assets, financial liabilities or equity instruments:

a) Accounts receivable

Receivables are initially recognized at the transaction price, unless they contain a significant financing component, in which case they are initially recognized at fair value. Receivables are subsequently recognized at amortized cost and stated on the Consolidated Statement of Financial Position stated net of accumulated impairment losses.

Impairment losses are measured for an amount equal to the asset's lifetime expected credit loss even if credit risk has not increased in the period. Expected credit losses are calculated collectively for receivables stated under Trade debtors, on the Consolidated statement of Financial Position.

Credit risk of Trade debtors is considered low until a credit becomes overdue by 90 days. When a receivable meets this threshold, its lifetime's expected credit losses are calculated on an individual basis and any additional impairment loss is recognized if the asset's lifetime expected credit loss increased.

Trade debtors are considered as defaulted when amounts receivable are aged 180 days or more.

Receivables stated under Trade debtors are written-off when the Group has no expectation of being paid the amounts due. This may happen after internal judgement or when debtors are judicially ruled as bankrupted and no recovery is expected.

Lifetime expected credit losses are calculated for the parent company and for each of the Group's subsidiaries by dividing the amount of impairment losses recognized at the end of the last four years or otherwise the annual fixed amount of the credit insurance deductible, if higher, by the aggregated net amount of the invoices, debit notes and credit notes issued over the last four years. This represented an weighted average credit loss rate of 0.068% at 31 December 2020 (0.089% at 31 December 2019).

Increases and reversions of impairment losses of accounts receivable are stated under Provisions and impairment losses, on the Consolidated Income Statement.

Accounts receivable are stated on the Consolidated Statement of Financial Position as current assets unless they mature after twelve months from the balance sheet date, in which case they will be stated as non-current assets.

b) Loans

Loans are initially recorded as liabilities at their fair value, which generally corresponds to nominal value, net of up-front fees and commissions (transaction costs) related to the issuance of those instruments. They are subsequently measured at amortized cost using the effective interest method, which uses the effective interest rate to calculate interest expenses, recorded on the Consolidated Income Statement on an accruals basis, in accordance with the accounting policy defined on note 3.11.

c) Derivatives

The Group may use 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 hedging instruments may be used by the Group mainly to hedge interest rate risks on loans obtained (Interest Rate Swap contracts) and exchange rate risks (Forward contracts). Conditions established for these cash flow hedging instruments are identical to those of the corresponding loans in terms of base rates, calculation rules, rate setting dates and repayment schedules of the loans and for these reasons they qualify as perfect hedges. The inefficiencies, if any, are accounted under Financial income or Financial expenses, on the Consolidated Income Statement.

The Group's criteria for classifying a derivative instrument as a cash flow hedge instrument include:

The hedge transaction is expected to be highly effective in offsetting changes in cash flows attributable to the hedged risk;
The effectiveness of the hedge can be reliably measured;

There is adequate documentation of the hedging relationships at the inception of the hedge;
The transaction being hedged is highly probable.

Cash flow hedge instruments that may be used by the Group to hedge the exposure to changes in interest and exchange rates are initially accounted for at cost, if any, which corresponds to its fair value, and subsequently adjusted to their corresponding fair value. Changes in fair value of these cash flow hedge instruments are recorded under Other Comprehensive Income, on the Consolidated Statement of Comprehensive Income, and under Accumulated other comprehensive income, on the Consolidated Statement of Financial Position, and then recognized in the Consolidated Income Statement over the same period in which the hedged instrument affects profit or loss.

The accounting of hedging derivative instruments is discontinued when the instrument matures or is sold. Whenever a derivative instrument can no longer be qualified as a hedging instrument, the fair value differences recorded in Accumulated other comprehensive income are transferred to profit or loss of the period or added to the carrying amount of the asset that resulted from the hedged forecast transaction. Subsequent changes in the revaluations are recorded in the Consolidated Income Statement.

The Group may also use financial instruments with the purpose of cash flow hedging, that essentially refer to exchange rate hedging (Forwards contracts) of loans and commercial operations. These forwards do not qualify for hedge accounting due to uncertainty on the effective date of its underlying transactions. Notwithstanding, they significantly mitigate the effect on loans and accounts receivable denominated in foreign currencies of changes in exchange rates which the Group intends to hedge.

In some derivative transactions the Group does not apply hedge accounting, although they intend to hedge cash-flows. They are initially accounted for at cost, and subsequently adjusted to the corresponding fair value, determined by specialized software (under the terms described on note 25). Changes in fair value of these instruments are recognized in the Consolidated Income Statement.

Derivative instruments are stated on the Consolidated Statement of Financial Position under Other current assets and Other current liabilities (note 25).

d) Trade creditors

Trade creditors and other accounts payable are initially recorded at fair value, which corresponds to its nominal value, as no interest is paid and financial discount is deemed to be not relevant.

e) Cash and Cash Equivalents

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 Current bank loans on the Consolidated Statement of Financial Position.

f) Own shares

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, under Other reserves and accumulated earnings.

3.15. Post-employment benefits

As referred to in note 28, some of the Group companies are committed to provide benefits to their employees when they get retired. These commitments are considered as defined benefit plans, and autonomous pension funds have been established to this effect.

In order to estimate its obligations, the Group obtains, annually, actuarial valuations according to the "Projected Unit Credit Method".

Remeasurements include (i) actuarial gains or losses arising from experience adjustments and from changes in demographic and financial assumptions; (ii) the return on plan assets, excluding amounts which are included in net interest on the net defined benefit liability; and (iii) any change in the effect of the asset ceiling, excluding amounts which are included in the net interest on the net defined benefit

liability; and are recognized through Other comprehensive income, on the Consolidated Statement of Comprehensive Income.

Net interest, included on the net defined benefit liability, is the change in this liability during the period that arises from the passage of time.

Past service costs are recorded immediately through profit or loss for the period.

Defined benefit liabilities recorded at the closing balance sheet date reflect the present value of obligations for defined benefit plans net of the fair value of net assets of the pension fund.

3.16. Contingent assets and liabilities

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 in the notes to the financial statements when future economic benefits are probable.

3.17. Income tax

Income tax for the period is calculated 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, considering the period net profit and using the estimated effective average annual income tax rate.

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 recognized 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 recognized and expected to reverse in the same period. At each closing date a review is made of the deferred tax assets recognized, which are reduced whenever their future use is no longer probable.

Deferred tax liabilities are recognized on all taxable temporary differences, except for: i) the initial recognition of goodwill; or ii) the initial recognition of assets and liabilities that do not result from a business combination and that do not affect the accounting or tax result at the date of transaction. However, regarding temporary taxable differences relating to investments in subsidiaries, they should not be recognized in so far as: (i) the parent company has the ability to control the period of reversal of the temporary difference; and (ii) it is likely that the temporary difference will not reverse in the near future.

Deferred tax assets and liabilities are recorded on the Consolidated Income Statement, except if they relate to items directly recorded in Other comprehensive income, in which case the corresponding deferred tax is recorded therein.

The amount of taxes recognized in the consolidated financial statements corresponds to the Group's understanding of the tax treatment applicable to specific transactions, with liabilities related to income taxes or other types of taxes being recognized based on the interpretation that is made and that is understood to be the most appropriate.

In situations where such positions may be challenged by the Tax Authorities, within the scope of their competences, as they have different interpretations from those of the Group, such situations are subject to review. If such a reanalysis reconfirms the Group's position, if it is concluded that the probability of losing a particular tax proceeding is less than 50%, the Group treats the situation as a contingent liability - no tax amount is recorded given that the most probable decision is that no tax will be paid. In situations where it is concluded that the probability of loss is greater than 50%, a provision is recognized, or if payment has been made, the associated cost is recorded.

3.18. Revenue recognition and accrual basis

Revenue is recognized in relation with contracts with customers: (i) that have been approved (orally or in writing) by all the parties; (ii) for which the Group can identify each party's rights regarding the goods and services to be transferred; (iii) for which the Group can identify the payment terms of goods and services to be transferred; (iv) that have commercial substance; and (v) for which it is probable that the Group will collect the consideration to which it is entitled for the goods and services transferred to the customer.

Revenue from sale of goods and products arising from the Group's main activity are recognized under Sales, on the Consolidated Income Statement. Sales of all remaining products are recognized under Other income and gains (Supplementary revenue). Revenue from services rendered by the Group are recognized under Services rendered.

Other current assets and Other current liabilities include income and expenses of the reporting year which will only be invoiced and settled 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 recognized in the Consolidated Income Statement.

Goods and products sold by the Group result mostly from its main activity, which is the production of wood based panels and derivatives. Group's products have technical specifications which are defined in accordance with existing law, internal and external standards. These technical specifications may be accessed by the customers on the Group's website or upon request. If products sold do not meet the technical specifications assumed by the Group or if they have any damage, the customer can claim a refund or a product replacement. The Group does not assume any time-limited warranty for its products (warranties against production defects that are extended over a specific period of time).

The Group has not recognized as an asset any costs incurred in fulfilling contracts with customers.

Contracts with customers entered into by the Group do not contain a significant financing component.

3.19. Capital gains and losses

Capital gains and losses that result from the sale or write-off of tangible and intangible assets and of investments are presented on the Consolidated Income Statement as the difference between the sale price and the net book value at date of sale or write-off, under the captions Other income and gains and Other expenses and losses.

3.20. Balances and transactions expressed in foreign currencies

Transactions are recorded on individual financial statements of subsidiaries on their functional currency, using applicable exchange rates on transaction date.

At each closing 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 exchange rates on transaction date and those prevailing at the date of collection, payment or the date of the financial statements, are recorded as operating income or expenses of the period, in case of operating transactions, or as finance income and expenses, in case of financial transactions, on the Consolidated Income Statement. Exchange differences related to non-monetary assets or liabilities whose change in fair value is directly recognized in equity are also recognized under equity.

When the Group wants to reduce currency exposure, it negotiates hedging currency derivatives (note 3.14.c).

3.21. Liability for medium term incentive plan

Each year, the Company and its subsidiaries grant their employees that belong to a functional group classified as Executive or above a compensation which is related to the value added in the previous year for the shareholders, to be paid after a 3 year period in case the executive is still in the company.

This compensation, which consists in a monetary obligation, is stated under Other non-current liabilities and Other current liabilities, on the Consolidated Statement of Financial Position.

3.22. Subsequent events

Events after the closing date that provide additional information about conditions that existed at the Consolidated Statement of Financial Position date are reflected in the consolidated financial statements (adjusting events). Events after the closing date that are non-adjusting events are disclosed in the notes to the consolidated financial statements, when material.

3.23. Segment information

At the reporting date, reportable segments are assessed on the basis of the internal reporting system of financial information (note 42).

3.24. Judgments and estimations

The most significant estimations included or disclosed in these consolidated financial statements refer to:

a) Useful lives of tangible, intangible assets, right-of-use assets and investment properties (notes 3.3, 3.4, 3.5, 3.6, 9, 10 and 11);

b) Impairment tests on individual items of tangible fixed assets (note 9) and on cash-generating units to which goodwill was allocated (notes 9 and 13);

c) Impairment analysis of accounts receivable (notes 18 and 19);

d) Adjustments to assets, namely fair value adjustments and, relating to inventories, write-down to net realizable value (notes 7, 12, 17 and 32);

e) Calculation of post-employment liabilities (note 28);

f) Calculation of provisions and impairment losses on intangible assets and tangible fixed assets (note 32);

g) Calculation of income tax (note 40);

h) Calculation of incremental borrowing rates used for calculating right-of-use assets and liabilities arising from lease contracts (note 3.5);

i) Quantification of contingencies (note 43).

These estimations were based on the best available information at the date these consolidated financial statements were prepared, taking into consideration the knowledge and experience of present and past events and the increased uncertainty brought about by Covid-19 pandemic for the near future. Notwithstanding, some situations may occur in future periods, which were not included in present estimations, as they were not foreseeable. Changes to estimations after these financial statements date will be prospectively corrected through the Consolidated Income Statement, in accordance with IAS 8.

Main estimations and assumptions relating to future events included in these consolidated financial statements are described in the correspondent notes.

3.25. Disclosure of non-recurring items

The Group discloses non-recurring items included under operating captions, except under amortization, depreciation, provisions and impairment losses, but including impairment losses on trade debtors, aiming to assist the readers of its consolidated financial statements to better assess the trend of future results.

Non-recurring items include those events that are infrequent, unusual, exceptional, unique or residual, therefore not expected to occur regularly in the context of the Group's normal activity. In particular, the Group classifies as nonrecurring items reimbursements from insurance, expenditure related to fines and penalties and income or expenses related to or following the discontinuing of assets, including:

Gains or losses on sale or write-off of tangible fixed assets or intangible assets;
Restructuring expenses;
Termination expenses;

Income and expenses of an entity or part of an entity that was internally classified as inactive.

All items that are not classified as non-recurring are therefore classified as recurring.

3.26. Fair value of assets and liabilities

If an active market is not available, valuation techniques generally used in the market are utilized, based on market assumptions. The resulting fair value corresponds to level 2 of fair value hierarchy, as defined in IFRS 13. When these techniques use mostly or exclusively unobservable information, the resulting fair value corresponds to level 3 or fair value hierarchy, as defined on the aforementioned standard.

3.27. Risk management

a) Credit Risk

i) Receivables (Customers)

Sonae Indústria credit risk derives mainly from account receivables items associated with its operating activity.

In order to mitigate credit risk related with potential customers defaulting on payment of outstanding receivables, Group companies have:

established a Committee to analyse and monitor, on a quarterly basis, credit risks;
implemented common proactive and preventive credit management procedures and processes, supported by IT systems;

established appropriate risk coverage mechanisms (for example, credit insurance, letters of credit, bank guarantees).

ii) Other financial assets, other than receivables

In addition to its operating activities and the related trade debtor balances, Group companies have other financial assets, which are mainly associated with its cash management activities and with deposits in financial institutions. As a result of these bank movements and balances, credit risk arises from the potential counterparty default by the applicable financial institutions. This risk is, nevertheless, considered as low due to the limited duration and amounts typically involved in bank deposits and to the credit profile of the financial institutions used by Group companies.

b) Market Risk

i) Interest Rate Risk

Due to the significant proportion of floating rate debt and the consequent cash flows related to interest payments, the company is exposed to interest rate risk.

ii) Foreign Exchange Risk

exchange translation risk and Sonae Indústria subsidiaries are exposed to foreign exchange risk of both translation and transaction type.

As a Group rule, whenever possible and economically viable, subsidiaries aim to offset assets and liabilities denominated in the same foreign currency, thus mitigating exchange risks.

iii) Liquidity Risk

For this purpose, liquidity management at the Group comprises:

consistent financial planning and cash flow forecasting at country and consolidated levels with different time horizons (weekly, monthly, annual and business plan);
diversification of financing sources;
diversification of debt maturities issued in order to avoid excessive concentration of debt repayments in short periods of time;
negotiation of (committed and uncommitted) credit facilities, commercial paper programmes and other facilities with relationship

banks to ensure the right balance between satisfactory liquidity and adequate commitment fees;

active access and management of subsidiaries cash positions and cash flows taking into account the Group's objectives on liquidity.

Liquidity risk is analysed in note 26.

c) Capital risk

Sonae Indústria periodically monitors its capital structure, identifying risks, opportunities and the necessary measures for the achievement of those objectives.

Sonae Indústria (accounting) net gearing (Net Debt / Shareholders Funds) at the end of 2020 was of 2.0 or 1.5, depending on whether the Subordinated Bonds issued are, respectively, included or excluded in the Net Debt figure (1.6 and 1.2. respectively, in 2019).

d) Management of credit risk and market risks in Sonae Arauco joint venture

Joint venture Sonae Arauco, SA and its subsidiaries develop an activity with characteristics similar to those of Sonae Indústria, which is why its exposure to credit and market risks, as well as the respective management models, have characteristics very similar to the ones occurring at Sonae Indústria, which are described in the previous paragraphs.

4. GROUP COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS

Group companies included in the consolidated financial statements, their head offices and percentage of capital held by the Group as at 31 December 2020 and 31 December 2019 are as follows:

	HEAD OFFICE	PERCENTAGE OF CAPITAL HELD
COMPANY		31.12.2020		31.12.2019		TERMS FOR INCLUSION
		Direct	Total	Direct	Total
Frases e Frações - Imobiliária e Serviços, S.A.	Maia (Portugal)	100.00%	100.00%	100.00%	100.00%	a)
Glunz UK Holdings , Ltd.	Liverpool (United Kingdom)	100.00%	100.00%	100.00%	100.00%	a)
Glunz UkA GmbH	Meppen (Germany)	100.00%	100.00%	100.00%	100.00%	a)
Isoroy, S.A.S.	La Garenne-Colombes (France)	100.00%	100.00%	100.00%	100.00%	a)
Maiequipa - Gestão Flores tal, S.A.	Maia (Portugal)	100.00%	100.00%	100.00%	100.00%	a)
Megantic B.V.	Amsterdam (The Netherlands)	100.00%	100.00%	100.00%	100.00%	a)
Movelpartes - Comp. para a Indús tria do Mobiliário, S.A.	Paredes (Portugal)	100.00%	100.00%	100.00%	100.00%	a)
Novodecor (Pty) Ltd.	Woodmead (South Africa)	100.00%	100.00%	100.00%	100.00%	a)
Parcelas e Narrativas - Imobiliária, S.A.	Maia (Portugal)	100.00%	100.00%	100.00%	100.00%	a)
1) Poliface North America	Lac-Mégantic (Canada)	100.00%	100.00%	100.00%	100.00%	a)
Sonae Indús tria - Management Services, S. A.	Maia (Portugal)	100.00%	100.00%	100.00%	100.00%	a)
Sonae Indús tria - Soc. Gestora de Participações Sociais, S.A.	Maia (Portugal)	Parent	Parent	Parent	Parent	Parent
2) Surforma, S.A.	Maia (Portugal)	100.00%	100.00%	100.00%	100.00%	a)
Tafisa Canada Inc	Lac-Mégantic (Canada)	100.00%	100.00%	100.00%	100.00%	a)
Tafisa France S.A.S.	La Garenne-Colombes (France)	100.00%	100.00%	100.00%	100.00%	a)

a) Majority of voting rights;
1) Company liquidated in January 2020;
2) Former Sonae Indústria de Revestimentos, S.A.

Subsidiary Movelpartes – Componentes para a Indústria do Mobiliário, S.A. ceased its activity in the period ended 31 December 2020. The decision to close down this subsidiary's activity was based on the lack of perspectives to reverse the long historic of negative profitability of this industrial plant.

The direct percentage of capital held refers to the direct investment of a group company in the subsidiary.

The total percentage of capital held relates to the direct and indirect ownership percentage held by the parent.

5. JOINT VENTURES

The joint ventures, their head offices, percentage of share capital held on 31 December 2020 and 31 December 2019 are as follows:

	HEAD OFFICE	PERCENTAGE OF CAPITAL HELD				TERMS FOR
COMPANY		31.12.2020		31.12.2019		INCLUSION
		Direct	Total	Dire ct	Total
Sonae Arauco, S.A.	Madrid (Spain)	50.00%	50.00%	50.00%	50.00%
Agepan Eiw eiler Management, GmbH	Eiw eiler (Germany)	100.00%	50.00%	100.00%	50.00%	a)
Agloma Investimentos, SGPS, S. A.	Maia (Portugal)	100.00%	50.00%	100.00%	50.00%	a)
Aserrade ros de Cuellar, S.A.	Madrid (Spain)	100.00%	50.00%	100.00%	50.00%	a)
Ecociclo , Energia e Ambiente, S. A.	Maia (Portugal)	100.00%	50.00%	100.00%	50.00%	a)
Euroresinas - Indústrias Quimicas, S.A.	Maia (Portugal)	100.00%	50.00%	100.00%	50.00%	a)
GHP Glunz Holzwe rkstoffproduktions GmbH	Meppen (Germany)	100.00%	50.00%	100.00%	50.00%	a)
Imoplamac – Gestão de Imóveis, S. A.	Maia (Portugal)	100.00%	50.00%	100.00%	50.00%	a)
Impape r Europe GmbH	Meppen (Germany)	100.00%	50.00%	100.00%	50.00%	a)
Laminate Park GmbH & Co. KG	Eiw eiler (Germany)	50.00%	25.00%	50.00%	25.00%	b)
Somit – Imobiliária, S.A.	Mangualde (Portugal)	100.00%	50.00%	100.00%	50.00%	a)
Sonae Arauco Bee skow GmbH	Meppen (Germany)	100.00%	50.00%	100.00%	50.00%	a)
Sonae Arauco Deutschland GmbH	Meppen (Germany)	100.00%	50.00%	100.00%	50.00%	a)
Sonae Arauco Espana - Soluciones de Made ra , S. L.	Madrid (Spain)	100.00%	50.00%	100.00%	50.00%	a)
Sonae Arauco France SAS	La Garenne-Colombes (France)	100.00%	50.00%	100.00%	50.00%	a)
Sonae Arauco Maroc SARL	Casablanca (Morocco)	100.00%	50.00%	100.00%	50.00%	a)
Sonae Arauco Netherlands B. V.	Woerden (The Netherlands)	100.00%	50.00%	100.00%	50.00%	a)
Sonae Arauco Portugal, S.A.	Mangualde (Portugal)	100.00%	50.00%	100.00%	50.00%	a)
Sonae Arauco South Africa (Pty) Ltd.	Woodmead (South Africa)	100.00%	50.00%	100.00%	50.00%	a)
Sonae Arauco Suisse, S.A.	Tavannes (Switzerland)	100.00%	50.00%	100.00%	50.00%	a)
Sonae Arauco (UK), Ltd.	Liverpool (United Kingdom)	100.00%	50.00%	100.00%	50.00%	a)
Taiber, Tableros Aglome rados Ibéricos, S.L.	Madrid (Spain)	100.00%	50.00%	100.00%	50.00%	a)
Tecnologias del Medio Ambiente, S.A.	Madrid (Spain)	100.00%	50.00%	100.00%	50.00%	a)
Tecmasa. Re ciclados de Andalucia, S. L.	Madrid (Spain)	50.00%	25.00%	50.00%	25.00%	b)
Tool, GmbH	Meppen (Germany)	100.00%	50.00%	100.00%	50.00%	a)

a) Company included in the consolidation perimeter of Sonae Arauco, S.A.;

b) Company whose investment is recognized on the consolidated financial statements of Sonae

Arauco, S.A. using the equity method, as it is classified as a joint venture of this company.

Horn industrial plant, held by GHP Glunz Holzwerkstoffproduktions GmbH (Germany), ceased its activity in 2020.

The direct percentage of capital held refers to the direct investment of a group company in the subsidiary.

The total percentage of capital held relates to the direct and indirect ownership percentage held by the parent.

Level one fair value of investment in these companies is not available as shares representing their share capital are not listed.

5.1. Information about the joint control of joint ventures

Joint control of Sonae Arauco, S. A. was established by contract entered into in 2015 by Sonae Indústria, SGPS, S. A. and Arauco Internacional Limitada, a company of Arauco Group (Chile) and is reflected on a joint decision making at the appropriate management levels of Sonae Arauco.

Contractual provisions established that Sonae Indústria, SGPS, S. A. assumes certain legal and tax contingencies of Sonae Arauco and subsidiaries which relate to the period before the joint venture was set up. As a consequence, Sonae Arauco, S. A. has the right to be reimbursed by the total amount of payments done by the company or its subsidiaries with relation to the aforementioned contingencies, as well as relating to some businesses specifically referred to in the said agreement. Provisions, on the Consolidated Statement of Financial Position, included, at 31 December 2020, an estimation of the obligations already transferred to Sonae Indústria, S. A. (note 32). The ongoing contingencies regarded as relevant for disclosure purposes are described on note 43.

5.2. Information about the financial statements of joint ventures

Net assets and net profit/loss for these jointly-controlled companies, whose share was recognized on these consolidated financial statements under equity method, as stated on note 3.2.b), are detailed as follows:

	Sonae Arauco - Consolidated
ASSETS	31.12.2020	31.12.2019
NON-CURRENT ASSETS:
Tangible fixed assets	522 396 366	525 840 178
Goodwill	6 588 837	7 232 769
Intangible assets	5 388 476	4 271 105
Investment in joint ventures	253 782	245 601
Other investments	1 108 462	1 148 923

Deferred tax asset	33 696 282	28 340 938
Other non-current assets	720 578	1 378 571
Total non-current assets	570 152 783	568 458 085
CURRENT ASSETS:
Inventories	84 643 777	92 089 685
Trade debtors	68 534 639	68 345 339
Other current debtors	4 904 692	2 920 848
Current tax asset	1 927 731	4 096 737
Other taxes and contributions	2 350 302	7 697 942
Other current assets	3 242 592	4 696 823
Cash and cash equivalents	44 085 552	12 232 705
Total current assets	209 689 285	192 080 079
Non-current assets held for sale	5 355 224
TOTAL ASSETS	785 197 292	760 538 164
SHAREHOLDERS`FUNDS AND LIABILITIES<br>SHAREHOLDERS`FUNDS:
Share capital	20 118 630	20 118 630
Share premium	127 440 685	127 440 685
Legal reserve	4 023 726	4 023 726
Other reserves and accumulated earnings	120 139 094	112 733 854
Accumulated other comprehensive income	(20 062 885)	(15 721 770)
Total shareholders' funds attributabble to equity holders of Sonae Arauco	251 659 250	248 595 125
TOTAL SHAREHOLDERS`FUNDS	251 659 250	248 595 125
LIABILITIES:
NON-CURRENT LIABILITIES:
Bank loans - net of current portion	221 425 654	228 740 236
Lease creditors - net of current portion	11 389 298	12 431 358
Other loans	7 460 410	6 154 607

Post-retirement liabilities	25 912 671	28 966 339
Other non-current liabilities	7 241 971	8 840 222
Deferred tax liability	28 681 008	31 953 713
Provisions	6 582 630	8 884 565
Total non-current liabilities	308 693 642	325 971 040
CURRENT LIABILITIES:
Current portion of non-current bank loans	45 154 447	5 889 539
Current bank loans	10 008 641	2 533 833
Current portion of non-current lease creditors	4 077 640	3 932 220
Other loans	585 336	635 291
Trade creditors	93 301 012	100 255 316
Current tax liability	6 146 921	6 961 825
Taxes and other contributions payable	8 144 815	4 981 670
Other current liabilities	55 565 100	55 282 305
Provisions	1 860 488	5 500 000
Total current liabilities	224 844 400	185 971 999
TOTAL SHAREHOLDERS`FUNDS AND LIABILITIES	785 197 292	760 538 164

	Sonae Arauco - Consolidated
	31.12.2020	31.12.2019
Sales	677 807 303	758 730 482
Services rendered	7 033 956	8 693 769
Other income and gains	22 505 832	28 034 790
Cost of sales	(313 308 274)	(361 980 731)
Increase / (decrease) in production	(4 938 879)	(1 568 628)
External supplies and services	(189 149 279)	(218 881 700)
Staff expenses	(128 473 962)	(133 097 053)
Depreciation and amortisation	(49 537 318)	(49 084 805)
Provisions and impairment losses (increase / reduction)	2 932 732	(3 535 087)
Other expenses and losses	(6 595 932)	(8 648 068)
Operating profit / (loss)	18 276 179	18 662 969

Financial expenses	(20 008 660)	(18 397 181)
Financial income	2 686 411	2 068 350
Gains and losses in associates		246 903
Gains and losses in joint ventures	(1 991 819)	24 391
Gains and losses in other investment	9 125	13 655
Gains and losses in derecognized financial assets	( 748)
Net profit/(loss) from continuing operations, before taxation	(1 029 512)	2 619 087
Taxation	1 326 472	(1 289 988)
Consolidated net profit / (loss) from continuing operations, afer taxation (a)	296 960	1 329 099
Adjustments to the Group's accounting policies (b)	485 348	( 343 130)
Net profit/(loss) from continuing operations - adjusted (a) + (b)	782 308	985 969
Group's share in net profit/(loss) [(a) + (b)] x 0.5	391 154	492 984
Items that may be subsequently transferred to profit or loss
Change in currency translation reserve	(6 019 637)	2 099 829
Change in fair value of cash flow hedge derivatives	173 615	( 443 696)

Items that may not be subsequently transferred to profit or loss
Remeasurements of defined benefit plans	1 868 834	(5 441 418)
Income tax relating to items that will not be reclassified	( 363 927)	1 217 123

Other comprehensive income (c)	(4 341 115)	(2 568 162)
Adjustments to the Group's accounting policies (d)	(1 546 897)
Other comprehensive income - adjusted (c) + (d)	(5 888 012)	(2 568 162)
Group's share in other comprehensive Income (c) x 0.5	(2 944 006)	(1 284 081)

5.2.1. Elements from the consolidated financial statements of Sonae Arauco, S.A.

As mentioned earlier on this note, the Horn industrial plant, which is held by Glunz Holzwerkstoffproduktions GmbH, a subsidiary of Sonae Arauco, S.A. located in Germany, ceased its activity in the period ended 31 December 2020. As a consequence, an impairment loss was recognized on its land and buildings for EUR 2 200 838, which were reclassified as Non-current assets held for sale, on the Consolidated Statement of Financial Position, for its fair value less costs to sell, which was estimated to amount to EUR 5 355 224.

Sonae Arauco looked carefully into the recoverable amount of its tangible fixed assets. As such it requested external appraisals for most of its land and buildings. As a consequence, impairment losses of EUR 798 002 were recognized on land

and buildings located in Portugal, and EUR 229 626 were recognized on land and buildings located in Spain.

Additionally, Sonae Arauco carried out an analysis on the recoverable amount which corresponds to value in use of its cash generating units, which did not show any impairment on its intangible assets and on its tangible fixed assets.

Gains and losses in joint ventures, on the Consolidated Income Statement of Sonae Arauco, S.A., comprises an impairment on a loan to its joint venture Laminate Park GmbH & Co KG for EUR 2 000 000, following the discontinuation of the joint venture's activity in the period ended 31 December 2019.

In the periods ended 31 December 2020 and 31 December 2019, quarterly consolidated turnover of Sonae Arauco was as follows:

Turnover	2020	2019
1st Quarter	187 988 130	208 436 115
2nd Quarter	128 622 955	199 614 618
3rd Quarter	170 852 960	178 892 534
4th Quarter	197 377 214	180 480 984
Total	684 841 259	767 424 251

The consolidated net profit of Sonae Arauco Group is recognized using the equity method in the Consolidated Income Statement of Sonae Indústria for 50% of its amount, under Gains and losses in joint ventures, which therefore include 50% of the abovementioned effects.

Contingencies related to Sonae Arauco joint venture are detailed on note 43.

5.2.2. Adjustments to comply with the Group's accounting policies

As indicated in note 3.3, Sonae Indústria records land and buildings at their revalued value. On the contrary, Sonae Arauco joint venture recognizes this class of tangible fixed assets at cost. For this reason, Sonae Indústria periodically carries out revaluations of Sonae Arauco's land and buildings for the purposes of its consolidated accounts, which are adjustments to harmonize Sonae Arauco's accounting policies with those of Sonae Indústria. These harmonization adjustments change the consolidated net result of Sonae Arauco, through

adjustments to depreciation for the year of the buildings and to gains and losses on disposal of land and buildings.

5.3. Gains and losses in joint ventures, on the Consolidated Income Statement is detailed as follows:

	31.12.2020	31.12.2019
Group's share in net profit/(loss)	391 154	492 984
Other effects in joint ventures	(3 448 812)	(3 357 131)
	(3 057 658)	(2 864 147)

In the periods ended 31 December 2020 and 31 December 2019, Other gains and losses in joint ventures include 50% of certain expenses incurred by the joint venture Sonae Arauco, S.A. which, under the partnership agreement entered into with the Arauco Group, are contractually transferred to Sonae Indústria, SGPS, SA. The effect on net profit of the amount corresponding to the remaining 50% of these expenses were recognized through equity method.

The aforementioned expenses that Sonae Indústria SGPS, SA incurred and paid amounted to approximately EUR 6 897 624, in the year ended 31 December 2020 (around EUR 6 714 262, in the year ended 31 December 2019) and were presented as Other payments related to investment activities, in the Consolidated Statement of Cash Flows.

5.4. Reconciliation of the carrying amount of investment in Sonae Arauco, S. A.

At 31 December 2020 and 31 December 2019, the carrying amount of the investment of Sonae Indústria, SGPS, S. A. in Sonae Arauco, S. A. is detailed as follows:

	31.12.2020	31.12.2019
Consolidated shareholders' funds of Sonae Arauco	251 659 250	248 595 125
Ownership interest	50%	50%
Group's share of shareholders' funds	125 829 625	124 297 563
Goodwill included in the investment	80 975 627	80 975 627
Effect of revaluation of tangible fixed assets (net of deferred tax)	3 324 663	3 855 437

	210 129 915	209 128 627

6. FINANCIAL INSTRUMENTS

In the Consolidated Statements of Financial Position at 31 December 2020 and 31 December 2019, the following financial instruments are included:

	Assets at amortized	Assets at fair value through		Assets out of scope of
31.12.2020	cost	profit or loss	Subtotal	IFRS 9	Total
Non-current assets
Other investments	26 299		26 299		26 299
Other non current assets	1 236 641		1 236 641		1 236 641
Current assets
Trade debtors	13 951 124		13 951 124		13 951 124
Other current debtors	1 053 789		1 053 789		1 053 789
Other current assets	189 901	21 180	211 081	1 810 965	2 022 046
Cash and cash equivalents	2 990 784		2 990 784		2 990 784
Total	19 448 538	21 180	19 469 718	1 810 965	21 280 683
	Assets at amortized	Assets at fair value through		Assets out of scope of
31.12.2019	cost	profit or loss	Subtotal	IFRS 9	Total
Non-current assets
Other investments	19 829		19 829		19 829
Other non current assets	1 095 969		1 095 969		1 095 969
Current assets
Trade debtors	14 079 419		14 079 419		14 079 419
Other current debtors	1 054 515		1 054 515		1 054 515
Other current assets	384 181		384 181	1 897 234	2 281 415
Cash and cash equivalents	7 059 662		7 059 662		7 059 662

Total 23 693 575 23 693 575 1 897 234 25 590 809

31.12.2020	Liabilities at amortized cost	Liabilities at fair value through profit or loss	Subtotal	Liabilities out of scope of IFRS 9	Total

Non-current liabilities
Subordinated bonds	49 944 304		49 944 304		49 944 304
Unsubordinated bonds	15 452 929		15 452 929		15 452 929
Bank loans - net of current portion	146 329 963		146 329 963		146 329 963
Other non-current liabilities	350 783		350 783	5 485 468	5 836 251
Current liabilities
Current portion of non-current bank loans	7 503 834		7 503 834		7 503 834
Current bank loans	815 572		815 572		815 572
Trade creditors	22 318 656		22 318 656		22 318 656
Other current liabilities	12 330 801	26 684	12 357 485	542 361	12 899 846
Total	255 046 842	26 684	255 073 526	6 027 829	261 101 355

	Liabilities	Liabilities at fair value		Liabilities out of scope
31.12.2019	at amortized cost	through profit or loss	Subtotal	of IFRS 9	Total
Non-current liabilities
Subordinated bonds	49 938 116		49 938 116		49 938 116
Unsubordinated bonds	7 951 240		7 951 240		7 951 240
Bank loans - net of current portion	146 393 538		146 393 538		146 393 538
Other non-current liabilities				3 404 222	3 404 222
Current liabilities
Current portion of non-current bank loans	5 755 509		5 755 509		5 755 509
Current bank loans	830 938		830 938		830 938
Trade creditors	26 026 430		26 026 430		26 026 430
Other current liabilities	14 321 399	143 493	14 464 892	608 260	15 073 152
Total	251 217 170	143 493	251 360 663	4 012 482	255 373 145

Assets and liabilities out of the scope of IFRS 9 consist essentially of accounts receivable from and payable to the State and items of deferrals.

There are no financial assets offset against financial liabilities.

7. FAIR VALUE

Use of fair value in the preparation of these consolidated financial statements may be summarized as follows:

7.1. Financial assets and liabilities

		Financial assets
		Measured at fair value Not measured at fair value
	Level of fair value	Amount	Fair value quantified	Fair value not quantified*	Total	Description of used valuation techniques
31.12.2020
Non-current assets
Other investments	-			26 299	26 299	-
Other non-current assets	-			1 236 641	1 236 641	-
Current assets
Trade debtors	-			13 951 124	13 951 124	-
Other current debtors	-			1 053 789	1 053 789	-
Other current assets Cash and cash equivalents	2 -	21 180		189 901 2 990 784	211 081 2 990 784	note 20, 25 -

Total		21 180		19 448 538	19 469 718
31.12.2019
Non-current assets
Other investments	-			19 829	19 829	-
Other non current assets	-			1 095 969	1 095 969	-
Current assets
Trade debtors	-			14 079 419	14 079 419	-
Other current debtors	-			1 054 515	1 054 515	-
Other current assets	-			384 181	384 181	note 20, 25
Cash and cash equivalents	-			7 059 662	7 059 662	-
Total				23 693 575	23 693 575

			Financial liabilities
	Measured at fair value		Not measured at fair value			Description of
	Level of fair value	Amount	Fair value quantified	Fair value not quantified*	Total	used valuation techniques
31.12.2020
Non-current liabilities
Subordinated bonds	2		49 944 304		49 944 304	note 24
Unsubordinated bonds Bank loans - net of current portion	- -			15 452 929 146 329 963	15 452 929 146 329 963	- -
Other non-current liabilities	-			350 783	350 783	-

Current liabilities
Current portion of non-current bank loans Current bank loans	-			7 503 834 815 572	7 503 834 815 572	- -
Trade creditors	-			22 318 656	22 318 656	-
Other current liabilities	2	26 684		12 330 801	12 357 485	note 25,31
Total		26 684	49 944 304	205 102 538	255 073 526
31.12.2019
Non-current liabilities
Subordinated bonds	-			49 938 116	49 938 116	-
Unsubordinated bonds	-			7 951 240	7 951 240	-
Bank loans - net of current portion	-			146 393 538	146 393 538	-
Current liabilities
Current portion of non-current bank loans	-			5 755 509	5 755 509	-
Current bank loans				830 938	830 938	-
Trade creditors	-			26 026 430	26 026 430	-
Other current liabilities	2	143 493		14 321 399	14 464 892	note 25,31
Total		143 493		251 217 170	251 360 663

* As it is estimated to not materially differ from carrying amounts.

7.2. Investment properties

Investment properties are recognized at cost as referred to on note 3.6. Their fair value is disclosed on note 11 and corresponds to the level three of fair value hierarchy.

7.3. Tangible fixed assets

Land and buildings are recognized for their revalued amounts, which was determined as at 31.12.2020. The accounting policy regarding the periodicity of revaluation of these assets is disclosed on note 3.3.

The revalued amount of land and buildings is disclosed on note 9 and corresponds to level three of fair value hierarchy.

7.4. Biological assets

Biological assets, including the component stated under Non-current assets held for sale, on the Consolidated Statement of Financial position, are recognized at fair value less estimated costs to sell, which is disclosed on note 12. This fair value corresponds to level two of the fair value hierarchy.

Fair value hierarchy is described on note 3.26.

8. INVESTMENTS

At 31 December 2020 and 31 December 2019 details of Investments are as follows:

	31.12.2020	31.12.2019
Investment in joint ventures
Opening balance	209 128 627	212 459 264
Effect of equity method
Group's share in adjusted net profit/(loss) of joint ventures	391 154	492 984
Group's share in adjusted other comprehensive income of joint ventures	(2 944 006)	(1 284 081)
Group's share in other changes in equity of joint ventures	105 328	90 058
Group's share on capital contribution to joint ventures (note 5.3)	3 448 812	3 357 131
Dividends		(5 986 729)
Closing balance	210 129 915	209 128 627

	31.12.2020	31.12.2019
Other investments
Opening balance	145 244	137 941
Acquisition	7 257	7 303
Disposal	( 787)
Closing balance	151 714	145 244
Accumulated impairment losses	125 415	125 415
Net other investments	26 299	19 829

Investment in joint ventures is comprised of the investment in Sonae Arauco, S.A., which is measured suing the equity method.

Other investments consist of equity instruments of external entities and contributions to a social security fund. They are recognized at cost, less impairment losses, which is estimated to not materially differ from their fair value.

Impairment analysis of joint venture Sonae Arauco, S.A.

The Group carried out and impairment analysis of its investment in Sonae Arauco joint venture with reference to 31 December 2020 and 31 December 2019, which used independent appraisals of assets located in Germany (2020) and in Portugal, Spain and South Africa (2019). This analysis did not show any impairment loss to be recognized on the financial statements for the period ended 31 December 2020 and 31 December 2019.

Additionally, at 31 December 2020 and 31 December 2019, Sonae Indústria carried out an analysis of the recoverable value of the investment in the joint venture Sonae Arauco, S.A. corresponding to its value in use, based on the following assumptions:

2020	Cash Generating Rules
	Portugal	Espanha	Alemanha	Africa do Sul
Discount rate (after tax) (a)	6.00%	5.89%	5.03%	12.82%
Growth rate on perpetuity (b)	1.28%	1.42%	1.52%	4.34%
Growth rate c):
Total net income	2.79%	4.43%	2.99%	9.71%
Cost of goods sold and materials consumed	1.39%	4.85%	3.67%	8.70%
Cash Flows projeted over	5 years	5 years	5 years	5 years

(a) weighted average cost of capital (WACC) rates calculated using the CAPM methodology (after tax values)

(b) Growth rate used to extrapolate cash flows in perpetuity

2019	Cash Generating Rules
	Portugal	Espanha	Alemanha	Africa do Sul
Discount rate (after tax) (a)	6.03%	5.98%	4.96%	12.59%
Growth rate on perpetuity (b)	1.42%	1.46%	1.88%	5.28%
Growth rate c):
Total net income	4.28%	3.33%	2.57%	8.30%
Cost of goods sold and materials consumed	3.64%	2.82%	3.47%	7.24%
Cash Flows projeted over	5 years	5 years	5 years	5 years

(a) weighted average cost of capital (WACC) rates calculated using the CAPM methodology (after tax values)

(b) Growth rate used to extrapolate cash flows in perpetuity (c) Composite average growth rate, including perpetuity

As a result of this analysis, no impairment losses to be recorded in the financial statements for the years ended 31 December 2020 and 31 December 2019 were identified.

The Group also carried out a sensitivity analysis of the recoverable value of the investment in Sonae Arauco, SA, which focused on the assumptions that the Board of Directors considers most critical, and in relation to which the models are more sensitive, namely EBITDA margin and sales growth rate (-0.5 pp and -1 pp), with no impairment losses identified as a result of this analysis. In view of the headroom resulting from this analysis, it was understood that the presentation of a sensitivity analysis is not relevant.

9. TANGIBLE FIXED ASSETS

In the periods ended 31 December 2020 and 31 December 2019, movements in tangible fixed assets, accumulated depreciation and impairment losses were as follows:

	31.12.2020
	Land and Buildings	Plant and Machinery	Vehicles	Tools	Fixtures and Fittings	Other Tangible Fixed Assets	Tangible Fixed Assets under construction	Total tangible fixed assets
Gross cost
Opening balance	101 766 684	282 270 491	6 403 793	66 147	3 387 104	346 373	14 762 093	409 002 685
Capital expenditure Disposals	256 485 ( 438 693)	75 960 (11 377 150)	690 564 ( 330 449)	( 25 891)	1 178 ( 26 955)	( 23 505)	21 641 597	22 665 784 (12 222 643)
Transfers and reclassifications	( 388 073)	16 315 425	315 399		151 300	27 682	(23 017 718)	(6 595 985)
Exchange rate effect	(5 518 920)	(17 250 846)	( 412 141)		( 136 697)	( 134)	( 929 202)	(24 247 940)
Closing balance	95 677 483	270 033 880	6 667 166	40 256	3 375 930	350 416	12 456 770	388 601 901

Accumulated depreciation and impairment losses
Opening balance Depreciations for the period	43 435 125 2 901 323	205 603 594 10 946 973	3 084 807 1 402 165	65 819 327	2 920 536 168 668	243 826 35 558		255 353 707 15 455 014
Impairment losses for the period - through P/L	967 352	1 332 207	1 764		3 663	3 751	166 770	2 475 507
Impairment losses for the period - through OCI	1 162 996							1 162 996
Disposals	( 299 873)	(10 658 004)	( 300 350)	( 25 890)	( 25 255)	( 23 505)		(11 332 877)
Transfers and reclassifications	(4 990 728)	269 907						(4 720 821)
Exchange rate effect	(2 414 500)	(12 392 501)	( 205 724)		( 109 534)	( 152)	( 3 654)	(15 126 065)
Closing balance	40 761 695	195 102 176	3 982 662	40 256	2 958 078	259 478	163 116	243 267 461
Carrying amount	54 915 788	74 931 704	2 684 504		417 852	90 938	12 293 654	145 334 440
	31.12.2019 Other Tangible Fixed
	Land and Buildings	Plant and Machinery	Vehicles	Tools	Fixtures and Fittings	Tangible Fixed Assets	Assets under construction	Total tangible fixed assets
Gross cost
Opening balance	89 748 157	261 542 564	2 679 485	96 237	3 452 656	344 407	5 583 497	363 447 003
Capital expenditure	3 154 026		3 553 373		4 921		17 178 962	23 891 282
Disposals	(2 729 000)	(2 778 907)	( 143 994)	( 30 090)	( 323 927)	( 7 759)		(6 013 677)
Revaluation	5 398 224							5 398 224
Transfers and reclassifications Exchange rate effect	1 273 785 4 921 492	7 025 424 16 481 410	94 126 220 803		126 040 127 414	9 655 70	(8 529 030) 528 664	22 279 853
Closing balance	101 766 684	282 270 491	6 403 793	66 147	3 387 104	346 373	14 762 093	409 002 685

Accumulated depreciation and impairment losses
Opening balance	37 580 404	185 363 671	1 483 939	95 255	2 998 318	220 772		227 742 359
Depreciations for the period	2 855 770	10 999 347	1 597 969	654	144 931	30 760		15 629 431
Impairment losses for the period - through P/L		5 389						5 389
Disposals	(1 482 063)	(2 425 929)	( 102 133)	( 30 090)	( 322 994)	( 7 759)		(4 370 968)
Revaluation	2 378 532							2 378 532
Exchange rate effect	2 102 482	11 661 116	105 032		100 281	53		13 968 964
Closing balance	43 435 125	205 603 594	3 084 807	65 819	2 920 536	243 826		255 353 707
Carrying amount	58 331 559	76 666 897	3 318 986	328	466 568	102 547	14 762 093	153 648 978

The amount disclosed under Investment, in the period ended 31 December 2020, refers mostly to the projects of a new high gloss and perfect matt lacquering line and of the refurbishment of a particleboard production line, amounting to a total EUR 17 million, carried out at subsidiary Tafisa Canada.

Amounts disclosed under Transfer and reclassifications, in the period ended 31 December 2020, refers mostly to Tangible fixed assets which were reclassified as Non-current assets held for sale, which are detailed on note 16.

Impairment analysis

a) Recoverable amount of land and buildings

As referred to on note 2, in the period ended 31 December 2020, the Group looked carefully into the recoverable amount of its tangible fixed assets, having for that requested independent appraisals on most of its land and buildings and on the equipment of subsidiary Movelpartes – Componentes para a Indústria do Mobiliário, S.A., which ceased activity in the period ended 31 December 2020

(note 4). As a consequence, the Group recognized impairment losses on tangible fixed assets for a total amount of EUR 3 638 503, which mostly relate to the land, the building and the equipment of the aforementioned discontinued industrial plant. As described on note 3.10, impairment losses are recognized under Provisions and impairment losses, on the Consolidated Income Statement, except for situations which refer to revalued tangible fixed assets, whose impairment losses are recognized as a deduction from Revaluation reserves, on the Consolidated Statement of Comprehensive Income, until the amount of these reserves are fully used up.

For evaluating the land, the building and the equipment of the industrial plant held by Movelpartes – Componentes para a Indústria do Mobiliário, S.A., which ceased activity in 2020, the liquidation value of these assets was identified. The liquidation value of the land and the building was calculated on the basis of its fair value, identified under a continued use, which was thereafter reduced by a market demand factor. The liquidation value of the equipment was determined under a cost approach, which took into consideration these assets' historical cost, which was updated applying an update index, and the wear and tear and obsolescence of these assets.

For evaluation the remaining land and buildings, located in Portugal and in Canada, the market fair value was determined using a market approach or a cost approach, which were applied under the assumption that these assets will keep being used as they are currently. Market approach consists in comparing subject assets with similar assets recently sold or which are up for sale, taking into consideration differences that may affect value. Cost approach consists in using the replacement cost of an asset as an indicator of its market value. The approach used for evaluating each asset depended on available information which would be relevant in the context of each approach. The value resulting from this valuation corresponds to level three of fair value hierarchy.

b) Recoverable amount of cash generating units

During the periods ended 31 December 2020 and 31 December 2019, the Group carried out an impairment analysis on its cash-generating units, which essentially related to the subsidiaries Tafisa Canada Inc. and Surforma, SA.. Cash generating units comprise all classes of tangible fixed assets.

On those dates, the recoverable value of the cash-generating units was estimated based on the following assumptions:

2020
	Surforma	Movelpartes	Tafisa Canadá
Di scount rate (after-tax)	6.71%		5.48%
Sa les (CAGR)	4.13%		6.64%
Growth ra te on Perpetuity	1.28%		1.00%
Period	5 a nos		5 a nos
Test Conclusions	Impairment		No i mpairment
2019	Surforma	Movelpartes	Tafisa Canadá

Di scount rate (after-tax)	6.69%	6.69%	6.34%
Sa les (CAGR)	6.74%	16.44%	4.43%
Growth ra te on Perpetuity	1.40%	1.40%	1.00%
Period	5 a nos	5 a nos	5 a nos
Test Conclusions	Impairment	Impairment	No i mpairment

As a result of this analysis to the recoverable amount of cash generating units, at 31 December 2020, an impairment loss was recorded on the tangible fixed assets of Surforma, S.A. for EUR 72 166.

The Group also carried out a sensitivity analysis to the recoverable amount of the cash generating units Tafisa Canada and Surforma, which focused on the assumptions that the Board of Directors considers most critical, and in relation to which the models are more sensitive. The assumptions that have been identified as being the most significant are the EBIT Margin and the sales growth rate.

Sensitivity analysis
SURFORMA	DCF Surforma	Turnover growth CAGR	EBIT % reduction on turnover/year by 0.50 p.p.
		2.00%
Turnover CAGR (LTM 20 - Perpetuity)	4.13%	2.00%	4.13%
EBIT % Turnover Average (LTM 20 - Perpetuity)	-0.62%	-0.62%	-1.05%
ADJUSTED DCF	7 450 912	6 593 747	6 213 405
	Impairment	Impairment	Impairment
Shortfall of recoverable amount	-721 695	-1 578 860	-1 959 201

CAGR – Compound average growth rate;

LTM 20 – last twelve months 2020.

The results of these sensitivity analysis are as follows:

i) Impairment on Surforma, S.A. increases, as there was a previous situation of impairment;
ii) No potential impairment in Tafisa Canada Inc. was identified. As such, the disclosure of a sensitivity analysis on this cash generating unit was considered as irrelevant.

Exchange rate effect results mainly from the translation into euro of tangible fixed assets of subsidiaries whose functional currency is the Canadian Dollar (CAD).

During 2020 and 2019 no interest paid or any other financial charges were capitalized, in accordance with conditions defined on note 3.11.

At 31 December 2020, mortgaged tangible fixed assets amounted to EUR 135 032 214 (EUR 138 121 229 at 31 December 2019) as collateral for loans amounting to EUR 59 507 008 (EUR 60 291 056 at 31 December 2019).

On the same date, there were no commitments to the acquisition of tangible fixed assets.

At 31 December 2020, gross cost of totally depreciated or impaired tangible fixed assets amounted to EUR 110 685 608 (EUR 95 065 665 at 31 December 2019). In addition, tangible fixed assets which were inactive at 31 December 2020 amounted to EUR 4 212 606 (2 510 402 at 31 December 2019). These assets were not stated as Non-current assets held for sale as the required conditions for such a classification were not met.

Right-of-use assets relating to assets used under leases, recognized under Tangible fixed assets, on the Consolidated Statement of Financial Position as at 31 December 2020 and 31 December 2019, were detailed as follows:

	31.12.2020
	Land and Buildings	Plant and Machinery	Vehicles	Fixtures and Fittings	Total tangible fixed assets
Gross cost
Opening balance	3 157 654		3 869 760	164 379	7 191 793
Capital expenditure	256 485	75 960	662 604		995 049
Disposals			( 65 715)		( 65 715)
Exchange rate effect	( 19 081)	( 1 664)	( 262 242)	( 10 791)	( 293 778)
Closing balance	3 395 058	74 296	4 204 407	153 588	7 827 349
Accumulated depreciation and impairment losses
Opening balance	701 087		1 336 497	46 065	2 083 649
Depreciations for the period	713 014	858	1 125 151	39 451	1 878 474
Disposals			( 52 597)		( 52 597)
Transfers and reclassifications			( 9 826)		( 9 826)
Exchange rate effect	( 9 396)	( 18)	( 108 472)	( 3 822)	( 121 708)
Closing balance	1 404 705	840	2 290 753	81 694	3 777 992
Carrying amount	1 990 353	73 456	1 913 654	71 894	4 049 357

	31.12.2019
	Land and Buildings	Plant and Machinery	Vehicles	Fixtures and Fittings	Total tangible fixed assets
Gross cost
Opening balance	5 121 453	194 104	575 053	183 245	6 073 855
Capital expenditure	3 154 026		3 553 373	4 921	6 712 320
Disposals			( 31 580)		( 31 580)
Transfers and reclassifications	(5 121 453)	( 203 951)	( 320 318)	( 35 868)	(5 681 590)
Exchange rate effect	3 628	9 847	93 232	12 081	118 788
Closing balance	3 157 654		3 869 760	164 379	7 191 793
Accumulated depreciation and
impairment losses Opening balance	768 601	65 850	363 395	37 242	1 235 088
Depreciations for the period	806 090		1 272 597	42 038	2 120 725
Disposals			( 19 603)		( 19 603)
Transfers and reclassifications	( 875 550)	( 69 191)	( 320 318)	( 35 868)	(1 300 927)
Exchange rate effect	1 946	3 341	40 426	2 653	48 366
Closing balance	701 087		1 336 497	46 065	2 083 649
Carrying amount	2 456 567		2 533 263	118 314	5 108 144

Amounts disclosed under Transfer and reclassifications refer to leased assets which were acquired by the Group, therefore ceasing to be classified as leases.

In the period ended 31 December 2020, the Group was not granted any Covid-19 related rent concessions.

10. INTANGIBLE ASSETS

During 2020 and 2019, movements in intangible assets, accumulated amortization and impairment losses were as follows:

	31.12.2020
	Development Costs	Patents, Royalties And Software Other Rights		Total intangible assets	Total
	Non-internally generated	Non-internally generated	Internally generated	Non-internally generated	Internally generated	Non-internally generated
Gross cost: Opening balance Exchange rate effect	40 493	89 514	1 945 892 (101 135)	119 273	1 945 892 (101 135)	249 280	2 195 172 (101 135)
Closing balance	40 493	89 514	1 844 757	119 273	1 844 757	249 280	2 094 037
Accumulated depreciation and impairment losses
Opening balance Amortization for the period Exchange rate effect	40 493	81 261 6 504	1 885 390 32 573 (97 843)	119 273	1 885 390 32 573 (97 843)	241 027 6 504	2 126 417 39 077 (97 843)
Closing balance	40 493	87 765	1 820 120	119 273	1 820 120	247 531	2 067 651
Carrying amount		1 749	24 637		24 637	1 749	26 386

	31.12.2019
	Development Costs	Patents, Royalties And Other Rights	Software		Assets Under Development	Total intangible assets		Total
	Non-internally generated	Non-internally generated	Internally generated	Non-internally generated	Non-internally generated	Internally generated	Non-internally generated
Gross cost: Opening balance Capital expenditure	40 493	89 514	1 808 679	119 823	12 477 27 494	1 808 679	262 307 27 494	2 070 986 27 494
Disposals Transfers and reclassifications Exchange rate effect			40 603 96 610	( 550)	( 40 603) 632	40 603 96 610	( 550) ( 40 603) 632	( 550) 97 242
Closing balance	40 493	89 514	1 945 892	119 273		1 945 892	249 280	2 195 172
Accumulated depreciation and impairment losses
Opening balance Amortization for the period	40 493	75 187 6 074	1 749 034 43 807	119 823		1 749 034 43 807	235 503 6 074	1 984 537 49 881
Disposals				( 550)			( 550)	( 550)
Exchange rate effect Closing balance	40 493	81 261	92 549 1 885 390	119 273		92 549 1 885 390	241 027	92 549 2 126 417
Carrying amount		8 253	60 502			60 502	8 253	68 755

At 31 December 2020, gross cost of totally amortized or impaired intangible assets amounted to EUR 2 023 253 (EUR 1 997 986 at 31 December 2019).

11. INVESTMENT PROPERTIES

During 2020 and 2019 movements in investment properties, accumulated depreciation and impairment losses were as follows:

	31.12.2020		31.12.2019
	Cost	Total	Cost	Total
Gross cost: Opening balance	37 254 929	37 254 929	37 254 929	37 254 929
Closing balance	37 254 929	37 254 929	37 254 929	37 254 929
Accumulated depreciations and impairment losses:
Opening balance Charge for the period	31 755 692 250 903	31 755 692 250 903	31 504 789 250 903	31 504 789 250 903
Closing balance	32 006 595	32 006 595	31 755 692	31 755 692
Carrying amount	5 248 334	5 248 334	5 499 237	5 499 237

		31.12.2020	31.12.2019

Rents from investment properties	384 832	388 550
Direct operating costs	251 965	291 755

At the closing date of these consolidated financial statements, Investment properties included the land and the buildings of Betanzos industrial plant, in Spain, which have been leased to third parts. These assets are recognized at historical cost. Fair value was calculated through independent appraisal with

reference to 31 December 2018 and amounted to EUR 6.9 million . Valuation methods then used included the market method and the cost method. This fair value corresponds to a level three of fair value hierarchy. At 31 December 2020 and 31 December 2019, the Group estimated that these assets' fair value was not significantly different from the valuation carried out at the aforementioned date.

Revenue from investment properties is recognized under Services rendered on the Consolidated Income Statement.

12. BIOLOGICAL ASSETS

At 31 December 2020 and 31 December 2019, biological assets had the following detail:

	31.12.2020		31.12.2019
	Biological assets	Non-current assets held for sale	Biological assets	Non-current assets held for sale
Opening balance	238 894	131 070	515 163
Change in value	( 146 956)	( 17 688)	( 145 199)
Decrease for the harvest		( 70 849)
Reclassifications			( 131 070)	131 070
Closing balance	91 938	42 533	238 894	131 070

Biological assets are recognized at fair value less estimated costs to sell, which is calculated using market prices and takes into consideration the growth stage of the trees. It corresponds to level two of fair value hierarchy.

Biological assets are stated under non-current assets, on the Consolidated Statement of Financial Position, except for those which the Group expects to sell over a twelve-month period after the closing date of the consolidated financial statements, which are presented under Non-current assets held for sale, on the Consolidated Statement of Financial Position. In the period ended 31 December 2020, the Group did not sale all biological assets which were classified as held for sale as a consequence of operating difficulties resulting from the pandemic situation described on note 2.

13. GOODWILL ARISING ON CONSOLIDATION

During 2020 and 2019, movements in goodwill arising on consolidation were as follows:

	31.12.2020	31.12.2019
Gross value: Opening balance Closing balance	347 082 347 082	347 082 347 082
Accumulated impairment losses: Increases Closing balance	228 992 228 992
Carrying amount	118 090	347 082

Goodwill stated on the Consolidated Statement of Financial Position refers to subsidiaries disclosed on note 4.

In the period ended 31 December 2020, the Group recognized an impairment loss on goodwill arising on the consolidation of subsidiary Movelpartes – Componentes para a Indústria do Mobiliários, S.A., which ceased activity in this period (note 4).

The remaining amount of goodwill relates almost entirely to assets located in Portugal which were subject to independent appraisals, which have not revealed any impairment (note 9).

14. DEFERRED TAXES

At 31 December 2020 and 31 December 2019, deferred tax liabilities were detailed according to underlying temporary differences as follows:

		Deferred Tax Liabilities
	31.12.2020	31.12.2019
Harmonisation Adjustments	18 570 384	17 874 830
Revaluation of Tangible Fixed Assets	2 729 894	2 998 499
Other Temporary Differences	32 842	83 676
	21 333 120	20 957 005

	Deferred tax liabilities
	31.12.2020	31.12.2019
Opening balance	20 957 005	18 883 485
Effect on profit or loss of continuing operation
Changes in temporary differences affecting profit or loss
Harmonisation adjusments	1 921 415	137 042
Revaluation of tangible assets	( 107 482)	( 218 506)
Other temporary differences	( 50 856)	83 381
Subtotal (note 40)	1 763 077	1 917
Effect on other comprehensive income
Changes in temporary differences affecting other comprehensive income
Revaluation of tangible fixed assets		800 218
Subtotal		800 218
Effect of currency translation	(1 386 962)	1 271 385
Closing balance	21 333 120	20 957 005

Harmonization adjustments refer to the difference between amortization and depreciation for accounting and for tax purposes.

Movements in deferred tax liability on revaluation of tangible fixed assets refers to the temporary differences arising from the recognition of impairment losses under Revaluation reserve, on the Consolidated Statement of Comprehensive Income (note 9).

At 31 December 2020 and 31 December 2019, tax losses carried forward for which no deferred tax asset was recognized are detailed as follows:

	31.12.2020		31.12.2019
To be used until	Tax loss carried forward	Tax credit	Tax loss carried forward	Tax credit
2020			125 939	25 188
2021	123 549	24 710	123 549	24 710
2022	1 287 230	257 446	5 721 436	1 188 629
2023 2024 2025 2026 2027	456 536 4 505 585 3 520 592 6 384 519 43 886	91 307 945 459 739 324 1 339 527 8 777	3 977 128 12 488 658 122 117 77 211	830 631 2 621 905 24 423 15 775
2028 2029 2030	61 859 85 733 5 528 711	12 372 17 480 1 161 029	5 590 570	1 173 401
	21 998 200	4 597 431	28 226 608	5 904 662
Without time limit	761 365 462	203 552 543	767 290 349	202 404 808
Total	783 363 662	208 149 974	795 516 957	208 309 470

The amounts presented as a tax credit refer to the deferred tax asset that was not recorded in these consolidated financial statements, as the conditions required by

International Financial Reporting Standards for that were not met. In the future, this deferred tax asset may be recorded, in part or by the total above quantified amount, if conditions required by International Financial Reporting Standards are fulfilled.

With regard to tax losses carried forward without time limit to be used, at 31 December 2020 there were EUR 653 732 564 related to subsidiaries located in France (EUR 653 600 825 at 31 December 2019). These subsidiaries' activity is of little significance, so the Group considers the probability of using these tax losses to be remote.

15. OTHER NON-CURRENT ASSETS

At 31 December 2020 and 31 December 2019, details of Other non-current assets on the Consolidated Statements of Financial Position were as follows:

	31.12.2020		31.12.2019
	Gross Value	Net Value	Gross Value	Net Value
Other debtors	1 236 641	1 236 641	1 095 969	1 095 969
Financial Instruments	1 236 641	1 236 641	1 095 969	1 095 969
Total	1 236 641	1 236 641	1 095 969	1 095 969

The amount stated under Other debtors relates mostly to an investment subvention which was granted to the Group's subsidiary in Canada, but still not received.

16. NON-CURRENT ASSETS HELD FOR SALE

At 31 December 2020 and 31 December 2019, details of Non-current assets held for sale on the Consolidated Statements of Financial Position were as follows:

	31.12.2020	31.12.2019
Tangible fixed assets Biological assets	1 595 740 42 533	131 070
Non-current assets classified as held for sale	1 638 273	131 070

Non-current assets classified as held for sale comprised, at 31 December 2020, the tangible fixed assets of the former industrial plants of Alcanede (Portugal) and Pontecaldelas (Spain), which are inactive, as there was, on this date, the

expectation of carrying out a sale transaction of these assets within a twelvemonth period. This heading also comprises biological assets which meet the conditions described on note 12.

In February 2021, the tangible fixed assets of the former industrial plant of Alcanede were sold.

17. INVENTORIES

At 31 December 2020 and 31 December 2019, details of Inventories on the Consolidated Statements of Financial Position were as follows:

	31.12.2020	31.12.2019
Merchandise	83 362	7 054
Finished and intermediate products	11 381 587	11 787 290
Products and working in progress	81 704	104 671
Raw Materials and Consumables	11 018 785	10 858 204
	22 565 438	22 757 219
Accumulated write-down to net realizable value of inventories (note 32)	(1 158 677)	( 795 289)
	21 406 761	21 961 930

	31.12.2020		31.12.2019
	Merchandise	Raw Materials and Consumables	Merchandise	Raw Materials and Consumables
Opening balance	7 054	10 858 204	321 312	8 937 726
Exchange rate effect	( 2 162)	( 592 411)	16 239	494 291
Purchases	9 279 921	101 585 876	11 031 798	117 352 084
Other changes	390 651		( 3 402)
Closing balance	83 362	11 018 785	7 054	10 858 204
Change in inventories	8 810 800	100 832 884	11 358 893	115 925 897
Write-down to net realizable value of inventories		235 740		( 95 476)
Total	8 810 800	101 068 624	11 358 893	115 830 421
Cost of sales - Consolidated Income Statement	109 879 424		127 189 314

Inventories consist mainly of wood, raw boards, faced boards and chemical products.

18. TRADE DEBTORS

At 31 December 2020 and 31 December 2019, details of Trade debtors on the Consolidated Statements of Financial Position were as follows:

	31.12.2020			31.12.2019
	Gross Value	Impairment	Net Value	Gross Value	Impairment	Net Value
Trade Debtors	14 066 672	115 548	13 951 124	14 194 785	115 366	14 079 419
			31.12.2020	31.12.2019
		Not overdue	11 539 748	11 643 854
		Overdue
		0 - 30 days	1 534 618	1 945 284
		30 - 60 days	518 429	161 473
		60 - 90 days	17 126	19 503
		90 - 180 days	6 016	37 033
		180 - 360 days	7 011	253
		+ 360 days	443 724	387 385
			2 526 924	2 550 931
		Total	14 066 672	14 194 785

19. OTHER CURRENT DEBTORS

At 31 December 2020 and 31 December 2019, details of Other current debtors on the Consolidated Statements of Financial Position were as follows:

		31.12.2020		31.12.2019
		Gross Value	Net Value	Gross Value	Net Value
Other debtors		926 843	926 843	924 199	924 199
	Subtotal	926 843	926 843	924 199	924 199
Other debtors		126 946	126 946	130 316	130 316
	Subtotal	126 946	126 946	130 316	130 316
	Financial Instruments	1 053 789	1 053 789	1 054 515	1 054 515
	Total	1 053 789	1 053 789	1 054 515	1 054 515

	AGEING OF OTHER DEBTORS AND RELATED PARTIES
	31.12.2020	31.12.2019
Not overdue	831 571	895 740
Overdue
0 - 30 days	16 921	11 206
30 - 60 days	8 188	1 247
60 - 90 days	58 676	14 854
90 - 180 days	8 259	103
180 - 360 days	2 881	269
+ 360 days	347	780
	95 272	28 459

Total	926 843	924 199

20. OTHER CURRENT ASSETS

At 31 December 2020 and 31 December 2019, details of Other current assets on the Consolidated Statements of Financial Position were as follows:

	31.12.2020		31.12.2019
	Gross Value	Net Value	Gross Value	Net Value

Derivatives instruments	21 180	21 180
Subtotal	21 180	21 180
Debtors from income accruals	189 901	189 901	384 181	384 181
Subtotal	189 901	189 901	384 181	384 181
Financial Instruments	211 081	211 081	384 181	384 181
Deferred expenses	1 810 965	1 810 965	1 897 234	1 897 234
Assets out of scope of IFRS 9	1 810 965	1 810 965	1 897 234	1 897 234
Total	2 022 046	2 022 046	2 281 415	2 281 415

The amount included in the previous table under Derivative instruments relates to derivative financial instruments recognized at fair value through profit or loss (note 25).

Deferred expenses include EUR 1 060 230 related to insurance expenses (EUR 957 474 at 31 December 2019) and EUR 328 216 related to expenses with financial instruments (EUR 418 349 at 31 December 2019).

21. OTHER TAXES AND CONTRIBUTIONS (CURRENT ASSETS)

At 31 December 2020 and 31 December 2019, details of Other taxes and contributions on the Consolidated Statements of Financial Position were as follows:

	31.12.2020	31.12.2019
Other taxes and contributions
Value Added Tax	431 068	508 595
Others	768 148	1 274 744
	1 199 216	1 783 339

22. CASH AND CASH EQUIVALENTS

At 31 December 2020 and 31 December 2019, the detail of Cash and Cash Equivalents on the Consolidated Statements of Financial Position and on the Consolidated Statements of Cash Flows was as follows:

	31.12.2020	31.12.2019
Cash at Hand Bank Deposits and Other Treasury Applications	6 160 2 984 624	6 439 7 053 223
Cash and Cash Equivalents on the Consolidated Statement of Financial Position	2 990 784	7 059 662
Bank Overdrafts	815 573	830 938
Cash and Cash Equivalents on the Consolidated Statement of Cash Flows	2 175 211	6 228 724

At 31 December 2020, cash and cash equivalents held in a currency other than the Group's functional currency amounted to EUR 2 743 477 (EUR 5 721 029 at 31 December 2019).

At 31 December 2020, bank deposits and other treasury applications amounted to EUR 2 984 624 (EUR 7 053 223 at 31 December 2019). On that date, there was one sort-term bank deposit of more than EUR 1 000 000, made in a financial institution with a rating level of P-1 (Moodys).

23. SHAREHOLDERS' FUNDS

Consolidated shareholders' funds consist of the following items:

23.1. SHARE CAPITAL

At 31 December 2020 and 31 December 2019, the Company's share capital, which was fully underwritten and paid, amounted to EUR 253 319 797.26 and was represented by 45 403 029 ordinary, registered and nominative shares, without nominal value.

The following entities hold more than 20% of share capital:

Entity	31.12.2020	31.12.2019
Efanor Investimentos, SGPS, S. A.	60.39%	42.66%
Pareuro BV (*)	25.84%	25.84%

(*) Entity controlled by Efanor Investimentos, SGPS, S.A..

At 31 December 2020 and 31 December 2019, shares are not entitled to any fixed income.

23.2. LEGAL RESERVE

The caption Legal reserve includes the parent company's reserve set up in accordance with articles 295 and 296 of the Portuguese Company Law. In accordance with these legal provisions, at least 5% of the annual net profit (of the parent company) must be used to increase the legal reserve until it represents no less than 20% of share capital (of the parent company). This reserve cannot be distributed, unless the Company is dissolved, but it can be used to offset accumulated losses after all other reserves were fully used, and to increase share capital.

In the period ended 31 December 2020, legal reserve was not increased.

23.3. OTHER RESERVES AND ACCUMULATED EARNINGS

This caption includes:

Reserves set up by the parent company and the Group's share of reserves set up by subsidiaries included in consolidation in accordance with statutory rules or by proposition of the respective Board of Directors, approved in the General Shareholders' Meeting;
The parent company's net profits or losses of previous years and the subsidiaries' share thereon whose application was not carried out;
The parent company's net profit or loss of the current period and the subsidiaries' share thereon;
Consolidation adjustments to any of the aforementioned components.

23.4. OTHER ACCUMULATED COMPREHENSIVE INCOME

This caption includes:

Currency translation reserves resulting from the conversion to Euros of subsidiaries' financial statements which are expressed in a different functional currency;
Hedging derivative instruments (note 25);
Remeasurement of defined benefit obligations (note 28);
Revaluation of tangible fixed assets (notes 3.3, 3.10 and 9);
Group's share in accumulated other comprehensive income of joint ventures;
Consolidation adjustments to any of the aforementioned components.

	Accumulated other comprehensive income Atributable to the parent's shareholders
			Remeasurements on defined benefit plans	Share of Other Comprehensive Income of Joint Ventures		Income tax related to
	Currency translation	Revaluation Reserve		Which may be subsequently transferred to profit or loss	Which may not be subsequently transferred to profit or loss	components of other comprehensive income	Total
Balance as at 1 January 2020	8 470 258	14 977 091	( 60 632)	1 895 996	36 418 273	(3 369 765)	58 331 221
Consolidated other comprehensive income for the period	(4 318 324)	(1 162 996)	94 186	(2 923 011)	( 20 995)		(8 331 140)
Balance as at 31 December 2020	4 151 934	13 814 095	33 554	(1 027 015)	36 397 278	(3 369 765)	50 000 081

	Accumulated other comprehensive income Atributable to the parent's shareholders
		Revaluation Reserve	Remeasurements on defined benefit plans	Share of Other Comprehensive Income of Joint Ventures		Income tax related to
	Currency translation			Which may be subsequently transferred to profit or loss	Which may not be subsequently transferred to profit or loss	components of other comprehensive income	Total
Balance as at 1 January 2019	4 159 959	11 957 399	( 6 633)	1 067 932	38 530 418	(2 569 547)	53 139 528
Consolidated other comprehensive income for the period	4 310 299	3 019 692	( 53 999)	828 064	(2 112 145)	( 800 218)	5 191 693
Balance as at 31 December 2019	8 470 258	14 977 091	( 60 632)	1 895 996	36 418 273	(3 369 765)	58 331 221

At 31 December 2020 and 31 December 2019, Currency translation reserve refers mostly to the subsidiary Tafisa Canada Inc..

Income tax related to components of other comprehensive income relates to items that will not subsequently be transferred to profit or loss.

24. LOANS

As at 31 December 2020 and 31 December 2019 Sonae Indústria had the following outstanding loans:

	31.12.2020
	Amortized cost			Nominal value
	Current	Non-current	Current	Non-current	adjustment - 2020
Subordinated bonds		49 944 304		50 000 000	2 084 402
Unsubordinated bonds		15 452 929		15 500 000
Current portion of non-current bank loans	7 503 834		7 503 834
Bank loans	815 572	146 329 963	815 572	147 320 420
Obligations under leases	1 598 359	2 419 817	1 598 359	2 419 817
Gross debt	9 917 765	214 147 013	9 917 765	215 240 237	2 084 402

	31.12.2019
	Amortized cost		Nominal value
	Current	Non-current	Current	Non-current
Subordinated bonds		49 938 116		50 000 000
Unsubordinated bonds		7 951 240		8 000 000
Current portion of non-current bank loans	5 755 509		5 755 509
Bank loans	830 938	146 393 538	830 938	147 559 519
Obligations under leases	1 790 941	3 335 541	1 790 941	3 335 541
Gross debt	8 377 388	207 618 435	8 377 388	208 895 060

The maturity schedule of these loans is detailed on note 26.

The average interest rates of each class of debt stated in the previous table were as follows:

2020	2019
7.01%	7.01%
2.15%	2.37%
3.32%	4.32%

Bank overdrafts were not included in the calculation of average interest rates as they amounted to irrelevant values.

Subordinated bonds are subject to fixed interest rate and are measured at amortized cost. If they were measured at fair value, the Company estimates that this liability would have been increased by EUR 2 084 402, in the period ended 31 December 2020 (level two of fair value hierarchy). On the same date, Sonae Indústria estimates that there were no significant differences between the carrying amount of the remaining headings of debts and the respective fair value.

At 31 December 2020, the total amount of outstanding debt in respect of which the creditors have the possibility to consider as due, in the event of a shareholder change, was approximately EUR 160 million, which corresponded to 73% of the carrying amount of net consolidated debt on that date ( EUR 146 million at 31 December 2019, corresponding to 70% of the net consolidated debt's carrying amount on the date).

24.1. BONDS

At 31 December 2020 and 31 December 2019, details of issued bonds were as follows:

Company(ies)	December	Contract date	Maturity (with reference to 31.12.2020)	Currency	Outstanding principal at 31.12.2020 (EUR)	Outstanding principal at 31.12.2019 (EUR)
Sonae Indústria, SGPS, S.A.	1) Subordinated bonds	December 2019	December 2029	EUR	50 000 000	50 000 000
Sonae Indústria, SGPS, S.A.	2) Unsubordinated bonds	October 2019	October 2022	EUR	8 000 000	8 000 000
Sonae Indústria, SGPS, S.A.	3) Unsubordinated bonds	March 2020	to be repaid from September 2022 to March 2024	EUR	7 500 000
Total				EUR	65 500 000	58 000 000

1) These subordinated bonds are subject to fixed interest rate;
2) These unsubordinated bonds are subject to variable interest rates. Under this agreement, Sonae Indústria, SGPS, S. A. is obliged to maintain a minimum level of Financial Autonomy (Total Net Equity / Total Assets). For this purpose, total Net Equity includes loans from shareholders and similar loans. This ratio is tested annually from 31 December 2019 until the end of the loan, based on the Company's consolidated financial statements, and its failure may lead to early maturity of this loan;
3) These unsubordinated bonds are subject to variable interest rates. Under this agreement, Sonae Indústria, SGPS, S. A. is obliged to maintain a maximum level of Financial Debt, calculated based on the Company's individual financial statements and excluding subordinated loans held and subscribed by shareholders. Sonae Indústria, SGPS, S.A. is also committed to a maximum level of the "Net Debt / EBITDA" ratio for Tafisa Canada Inc., calculated based on the individual financial statements of this company. Failure to comply with any of these restrictions can lead to early maturity of the loan.

Figures on the previous table correspond to the nominal value of bonds disclosed on note 24.

24.2. BANK LOANS

Bank loans presented in the table in note 24 include "Non-current Bank Loans – net of the current portion", "Current portion of Non-current Bank Loans" and "Current Bank Loans" on the Consolidated Statement of Financial Position and their composition as at 31 December 2020 and 31 December 2019 is detailed in the following table:

			31.12.2020
	Non current		Current
Company		Short term portion	Bank overdrafts	Total
Sonae Indústria-SGPS,SA	98 150 000	6 800 000	419 563	105 369 563
Tafisa Canada Inc.	47 152 453	191 901	396 009	47 740 363
SURFORMA, SA	2 017 967	511 933		2 529 900
	147 320 420	7 503 834	815 572	155 639 826

			31.12.2019
	Non current		Current
Company		Short term portion	Bank overdrafts	Total
Sonae Indústria-SGPS,SA	95 500 000	4 550 000		100 050 000
Tafisa Canada Inc.	50 059 519	205 509	830 938	51 095 966
SURFORMA, SA	2 000 000	1 000 000		3 000 000
	147 559 519	5 755 509	830 938	154 145 966

Figures on the previous table correspond to the nominal values of bank loans disclosed on note 24.

Non-current bank loans, the related short term portion and current bank loans are detailed as follows:

Company(ies)	Loan	Contract date	Maturity (with reference to 31.12.2020)	Currency	Outstanding principal at 31.12.2020 (EUR)	Outstanding principal at 31.12.2019 (EUR)
Tafisa Canada Inc.	Bank loan (Revolving ) 1)	July 2011	October 2023	CAD	43 894 458	50 291 056
Sonae Indústria, SGPS, S.A.	Commercial paper programme	July 2014	to be repaid from July 2020 to January 2025	EUR	9 000 000	6 800 000
Sonae Indústria, SGPS, S.A.	Commercial paper 2) programme	May 2016	to be repaid from December 2020 to December 2024	EUR	76 500 000	79 500 000
Sonae Indústria, SGPS, S.A.	Commercial paper programme	July 2016	April 2021	EUR	4 000 000	2 000 000
Surforma, S.A.	Bank loan	September 2017	to be repaid from March 2019 to September 2023 3)	EUR	2 529 900	3 000 000
Sonae Indústria, SGPS, S. A.	Commercial paper 4) programme	June 2018	to be repaid from December 2019 to June 2021	EUR	1 050 000	6 750 000
Sonae Indústria, SGPS, S. A.	Commercial paper programme	February 2019	February 2022	EUR	5 000 000	5 000 000
Sonae Indústria, SGPS, S. A.	Commercial paper programme	December 2019	to be repaid from January 2021 to January 2024	EUR	5 000 000
Sonae Indústria, SGPS, S. A.	Commercial paper 5) programme	January 2020	to be repaid from July 2021 to January 2024	EUR	4 400 000
Tafisa Canada Inc.	Bank loan	August 2020	to be repaid from November 2025 to September 2030	EUR	3 612 550
Others				EUR	652 918	804 910
Total				EUR	155 639 826	154 145 966

1) There is an obligation under this contract to fulfil two financial ratios calculated based on the individual financial statements of Tafisa Canada Inc: Financial Liabilities / (Net Equity + Financial Liabilities) and EBITDA / Cash outflows regarding net interest and similar charges. These ratios are tested quarterly until the end of the loan and failure may lead to early repayment of this loan;
2) The shares of subsidiaries Megantic BV and Tafisa Canada Inc were pledged as collateral for this loan. Under this agreement, Sonae Indústria, SGPS, SA is obliged to maintain a certain maximum level of Financial Debt calculated based on the Company's individual financial statements, excluding subordinated loans held or subscribed by shareholders, also committing itself to a maximum "Net Debt / EBITDA" ratio for Tafisa Canada Inc., which is calculated based on the individual financial statements of this subsidiary. Failure to comply with any of these ratios may lead to the anticipated maturity of the loan;
3) This financing is subject to the moratorium provided for in the legislation in force in the context of the COVID-19 pandemic, applicable between September 2020 and March 2021, with the maturity being carried over to September 2023;
4) Under this agreement, Sonae Indústria, SGPS, S. A. is obliged to maintain a minimum level of Financial Autonomy (Total Net Equity / Total Assets). This ratio is tested annually from 31 December 2018 until the end of the programme, based on the Company's consolidated financial statements, and its failure may lead to early maturity of this loan;

5) In this contract, Sonae Indústria, SGPS, SA is required to maintain a certain maximum level of Financial Debt, calculated based on the Company's consolidated financial statements and excluding the subordinated bond loan from Sonae Indústria, SGPS, SA and the debt of Tafisa Canada Inc., also committing to a maximum level of the "Net Debt / EBITDA" ratio for Tafisa Canada Inc., calculated based on the individual financial statements of this company. Failure to comply with any of these restrictions can lead to early maturity of the loan.

Figures on the previous table correspond to the nominal value of bank loans disclosed on note 24.

The aforementioned contracts are subject to variable interest rates, except for the one that was contracted in August 2020, which is subject to fixed interest rate.

At 31 December 2020, the aforementioned ratios associated with existing loans fulfilled the contractually established limits.

At 31 December 2020, in addition to mortgaged tangible fixed assets disclosed on note 9, there were other assets amounting to EUR 34 057 687 (EUR 36 645 370 at 31 December 2019) which were pledged as collateral for the Group's liabilities. These assets consisted mostly in inventories and accounts receivable.

24.3. CASH FLOWS

Amounts stated under cash receipts arising from loans obtained and cash payment arising from loans obtained, on financing activities of the Consolidated Statement of Cash Flows include the rollover of commercial paper programmes detailed on note 24.2.

Financial liabilities (nominal value) arising from financial activities, which are disclosed on note 24, are detailed as follows:

		31.12.2020
Consolidated Statement of Financial Position		Opening balance	Increase	Decrease	Exchange rate effect	Others	Closing balance
Non-current liabilities: Subordinated bonds Unsubordinated bonds Bank loans - net of current portion Lease creditors - net of current portion		50 000 000 8 000 000 147 559 519 3 335 541	7 500 000 17 100 479 1 023 009	(18 818 850) (1 945 259)	(3 323 878) ( 91 125)	4 803 150 97 651	50 000 000 15 500 000 147 320 420 2 419 817
Current liabilities: Current portion of non-current bank loans Current bank loans Current portion of non-current lease creditors		5 755 509 830 938 1 790 941	645 742 123	( 500 000) (638 250 000)	( 13 608) ( 46 511) ( 77 217)	2 261 933 (7 460 978) ( 115 365)	7 503 834 815 572 1 598 359
	Total	217 272 448	671 365 611	(659 514 109)	(3 552 339)	( 413 609)	225 158 002
Movements which do not affect cash flows:
Lease creditors - net of current portion Overdrafts (classified under Cash and cash equivalents on the Consolidated Statement of Cash Flows)	(-) (-) Total		1 023 009 ( 23 877) 670 366 479	(659 514 109)

Consolidated Statement of Cash Flows			Cash receipts from	Cash payments to
Financing activities: Unsubordinated bonds Bank loans Lease creditors			7 500 000 662 866 479	(657 568 850) (1 945 259)
	Total		670 366 479	(659 514 109)

		31.12.2019
Consolidated Statement of Financial Position		Opening balance	Increase	Decrease	Exchange rate effect	Others	Closing balance
Non-current liabilities: Subordinated bonds Unsubordinated bonds Bank loans - net of current portion Lease creditors - net of current portion		189 112 412 491 753	50 000 000 8 000 000 14 476 595 6 712 320	(3 029 985) (2 632 912)	2 580 507 35 639	(55 580 010) (1 271 259)	50 000 000 8 000 000 147 559 519 3 335 541
Current liabilities: Current portion of non-current bank loans Current bank loans Current portion of non-current lease creditors		15 192 246 2 136 274 529 015	1 475 750 463	(1 000 000) (1541 100 000)	13 263 14 192 25 955	(8 450 000) 64 030 009 1 235 971	5 755 509 830 938 1 790 941
Total		207 461 700	1 554 939 378	(1547 762 897)	2 669 556	( 35 289)	217 272 448
Movements which do not affect cash flows:
Lease creditors - net of current portion Overdrafts (classified under Cash and cash equivalents on the Consolidated Statement of Cash Flows)	(-) (-)		6 712 320 680 473
Total			1 547 546 585	(1547 762 897)
Consolidated Statement of Cash Flows			Cash receipts from	Cash payments to
Financing activities: Subordinated bonds Unsubordinated bonds Bank loans Lease creditors			50 000 000 8 000 000 1 489 546 585	(1545 129 985) (2 632 912)

Total 1 547 546 585 (1547 762 897)

25. FINANCIAL DERIVATIVES

The fair value of derivative instruments is stated as follows:

	Other current assets	Other current liabilities
	31.12.2020	31.12.2020	31.12.2019
Exchange rate forwards (notes 20 and 31)	21 180	26 684	143 493
	21 180	26 684	143 493

25.1. Exchange rate forwards

In the periods ended 31 December 2020 and 31 December 2019, the Group contracted exchange rate forwards to hedge exchange rate risks on forecast operating and financing transactions where the Group acts as debtor or as creditor. The Group does not use hedge accounting for these derivative instruments as it is estimated that such use would not significantly affect its consolidated financial statements.

These derivative instruments are recognized at fair value through profit or loss. When hedged items are related to the group's operating activity, changes in fair value of these derivatives are recognized under Other income and gains (note 35) or under Other expenses and losses (note 36), on the Consolidated Income Statement. When hedged items are related to the Group's financing activity, changes in fair value of these derivatives are recognized under Financial income or Financial expenses (note 39), on the Consolidated Income Statement.

The fair value of exchange rate forwards was determined using derivative valuation software and external appraisals when software do not allow some derivatives to be valued, and consisted in updating the receivable/payable amount at maturity date to the closing date of the consolidated financial statements (level 2 of fair value hierarchy). Receivable/payable amount, which was used for valuing, corresponds to the amount denominated in foreign currency multiplied by the difference between the contracted exchange rate and the market exchange rate at the maturity date that was determined at valuation date (forward exchange rate determined between valuation and maturity date using market information).

	31.12.2020	31.12.2019
Other income and gains (note 35)	526 669	122 378
Other expenses and losses (note 36)	(316 579)	(294 350)
Net effect	210 090	(171 972)

Derivative instruments recognized at fair value through profit or loss held by the Group at 31 December 2020 fully mature within the following twelve-month period.

25.2. Derivatives at fair value through reserves

In 2020 and 2019, no derivative financial instruments at fair value through reserves were contracted.

26. FINANCIAL RISKS

26.1. Liquidity risk

Liquidity risk described in note 3.27, b) related to the nominal value of gross debt referred to in note 24, can be analysed as follows:

		31.12.2020		31.12.2020
	Maturity of bank loans and bonds (note 24)	Interest	Total	Maturity of Lease creditors (nota 24)	Interest	Total
2021	8 319 406	7 652 188	15 971 593	1 598 359	126 617	1 724 976
2022	29 870 485	7 328 104	37 198 588	1 176 237	72 368	1 248 605
2023	84 084 451	6 385 111	90 469 562	1 036 645	26 693	1 063 338
2024	43 752 934	4 521 421	48 274 355	120 090	5 251	125 341
2025	1 620 418	3 508 421	5 128 839	34 114	2 115	36 229
2026	722 510	3 542 977	4 265 487	4 671	1 854	6 525
2027	722 510	3 533 146	4 255 656	4 847	1 678	6 525
2028	662 301	3 521 851	4 184 152	5 029	1 495	6 524
2029	50 782 719	3 515 071	54 297 790	5 219	1 306	6 525
2030	602 092	3 713	605 805	32 965	3 463	36 428
	221 139 826	43 512 003	264 651 829	4 018 176	242 840	4 261 016

		31.12.2019		31.12.2019
	Maturity of bank loans and bonds (note 24)	Interest	Total	Maturity of Lease creditors (nota 24)	Interest	Total
2020	6 586 447	8 240 588	14 827 035	1 790 941	166 424	1 957 365
2021	9 205 509	7 951 182	17 156 691	1 479 030	102 967	1 581 997
2022	31 705 509	7 722 567	39 428 076	960 299	55 601	1 015 900
2023	79 648 501	6 778 512	86 427 013	896 212	16 565	912 777
2024	35 000 000	4 512 812	39 512 812
2025		3 548 611	3 548 611
2026		3 548 611	3 548 611
2027		3 548 611	3 548 611
2028		3 558 333	3 558 333
2029	50 000 000	3 548 611	53 548 611
	212 145 966	52 958 438	265 104 404	5 126 482	341 557	5 468 039

The calculation of interest in the previous table was based on interest rates at 31 December 2020 and 31 December 2019 applicable to each item of debt. Gross debt maturing in 2021 (2020) includes scheduled repayment of debt along with the repayment of debt as at end 2020 (2019) which is maturing within less than one year.

Maturities for the remaining financial instruments are stated on the respective notes.

26.2. Market risk

26.2.1. Interest rate risk

The analysis of interest rate risk, described on note 3.27, b), consisted in calculating the way net profit before tax for 2020 and 2019 would have been impacted if there would have been a change of +0.75 or -0.75 percentage points in interest rates that were determined for the corresponding periods:

		Sensitivity Analysis
		2020			2019
		"Notional" (Euros)	Effect in Profit and Loss (Euros)		"Notional" (Euros)	Effect in Profit and Loss (Euros)
			0.75%	-0.75%		0.75%	-0.75%
Gross Debt
	EUR CAD	173 399 293 47 740 533	( 802 817) ( 356 084)	802 817 356 084	161 659 004 50 486 962	(1 000 862) ( 308 106)	1 000 862 308 106
		221 139 826	(1 158 901)	1 158 901	212 145 966	(1 308 968)	1 308 968

On the sensitivity analysis disclosed on the previous table, the effect on profit and loss excludes bank overdrafts and borrowings which are not subject to change in interest rate. Nevertheless, debt notional disclosed includes bank overdrafts and borrowings which are not subject to change in interest rate.

Considering Euribor 6 months as a reference indicator for Euro interest rates, a change of 0.75 percentage points corresponds to 6.1 times the standard deviation of that variable in 2020 (11.2 times in 2019).

26.2.2. Exchange rate risk

With respect to exchange rate risk, described in note 3.27., b), the following calculations were performed:

a) Sensitivity analysis of amounts denominated in a currency other than the functional currency of each company included in the consolidation, by considering a change of +1% and -1% in actual 2020 and 2019 closing exchange rates of each currency against the Euro:

i) Loans (-) net of treasury applications (+)

At 31 December 2020 and 31 December 2019, the Group had no outstanding loans or treasury applications held in a currency other than the functional currencies of its subsidiaries.

ii) Other balances: net assets (+) and net liabilities (-)

	Amount held in foreign currency		Eur equivalent		Sensitivity analysis (EUR)
	31.12.2020	31.12.2019	31.12.2020	31.12.2019	2020		2019
					-1%	1%	-1%	1%
USD	906 184	3 451 574	738 477	3 072 419	( 7 385)	7 385	( 30 724)	30 724
ZAR	20 083 215	21 095 032	1 114 418	1 337 003	( 11 144)	11 144	( 13 370)	13 370
GBP	( 760)	5 286	( 845)	6 213	8	( 8)	( 62)	62

Sensitivity refers to the effect that -1% and 1% changes in closing exchange rates for 2020 and 2019 financial years would have on net exchange differences disclosed on notes 35, 36 e 39.

b) Sensitivity analysis of existing derivatives to hedge the exchange rate risk set out in the previous point, by considering a change of +1% and -1% in actual 2020 and 2019 closing exchange rates of each currency against the Euro:

i) Loans net of treasury applications

At 31 December 2020 and 31 December 2019, the Group had derivatives to hedge outstanding loans or treasury applications held in a currency other than the functional currencies of its subsidiaries.

ii) Other balances: net assets (+) and net liabilities (-)

	Amount held in foreign currency		Eur equivalent		Sensitivity analysis (EUR)
	31.12.2020 31.12.2019		31.12.2020	31.12.2019	2020		2019
					-1%	1%	-1%	1%
ZAR	20 644 814	19 648 389	1 145 581	1 245 315	11 456	( 11 456)	12 453	( 12 453)

Sensitivity refers to the effect that -1% and 1% changes in closing exchange rates for 2020 and 2019 financial years would have on the hedging of the amounts identified on a).

26.2.3. Credit risk

Credit risk described on note 3.27, a) is mostly reflected through the amount stated in Trade Debtors (note 18) and Other current debtors (note 19).

The Group discloses the ageing of financial assets in the related notes.

The Group estimates that the maximum exposure to the credit risk does not differ significantly from the carry amount disclosed on the related notes. However, the Group contracts credit insurance for most of its receivables, significantly reducing its exposure to credit risk.

The Group estimates that there are no relevant differences between the carrying amount of Trade debtors and Other current debtors and the respective fair value.

At 31 December 2020, there was no indication of increase in credit risk as a result of the Covid-19 pandemic. The weighted average credit loss rate decreased from 0.089% at 31 December 2019 to 0.068% at 31 December 2020. As such, impairment losses in trade debtors remained stable in the period ended 31 December 2020 (note 18).

27. OTHER NON-CURRENT LIABILITIES

At 31 December 2020 and 31 December 2019 details of Other non-current liabilities were as follows:

	31.12.2020	31.12.2019
Accrued expenses
Personnel expenses	350 783
Financial instruments	350 783

Other creditors	5 485 468	3 404 222
Liabilities out of scope of IFRS 9	5 485 468	3 404 222

Total	5 836 251	3 404 222

Amounts stated as Other creditors fully relate to deferred income arising on investment subventions.

28. POST RETIREMENT LIABILITIES

Various Group companies assumed the liability of giving their employees cash contributions to pension plans for old age, incapacity, early retirement and survival. These contributions are determined as a percentage that increases as a result of the number of years that the employee has worked at the company, and which is applied to a salary table that is negotiated on a yearly basis.

Present value of defined benefit liabilities associated are evaluated every year through actuarial reports and based on the "Projected Unit Credit" methodology. Actuarial assumptions employed on the last report prepared at 31 December 2020 and 31 December 2019 were:

	Portugal
	31.12.2020 31.12.2019
Mortality table	TV 88/90	TV 88/90
Salary growth rate	3.00%	3.00%
Return on fund	3.80%	2.75%
Actuarial tecnical rate	2.75%	2.50%
Pension growth rate	0.00%	0.00%

Benefit plans set up in previous periods by several Group companies are as follows:

Portugal:

Various Group companies have a defined benefit plan and funds managed by third parties, calculated in accordance with International Accounting Standard

19 and based on actuarial studies carried out by an independent entity. Employees of two companies hired until 31 December 1994 are covered by this plan under which they will receive as from retirement, a life-long monthly payment equivalent to 20% of their salary at their retirement date. Employees may choose to be paid a lump sum instead of a monthly amount.

The actuarial discount rate of 2.75% used for calculating the defined benefit liability of Portuguese subsidiaries was obtained from the yield curves of high quality zero coupon government bonds from the Euro Zone, plus a spread, determined based on iTaxx Europe Main index.

The average duration of the defined benefit obligation recognized by the Portuguese subsidiaries is 19 years.

An actuarial report calculated the liabilities of these companies on 31 December 2020 to be EUR 762 010 (EUR 904 548 at 31 de December 2019).

The main risk to which these defined benefit plans expose the Group is the liquidity risk. At 31 December 2020 assets funding the plans represented 38.53% (36.65% at 31 December 2019) of the defined benefit obligation. However, this risk is mitigated by the long average duration of the Group's defined benefit liabilities and by the fact that employees do not retain any right to benefits if they terminate work.

The main changes, during the periods ending 31 December 2020 and 31 December 2019, to the present value of the defined benefit obligations are presented as follows:

	31.12.2020		31.12.2019
	Plan with fund	Total	Plan with fund	Total
(+) Opening balance of defined benefit obligations' present value (+) Interest cost	1 427 766 36 761	1 427 766 36 761	1 316 268 36 197	1 316 268 36 197
(+) Current service cost (+) Remeasurements:	42 668	42 668	43 277	43 277
Due to change in financial assumptions	58 979	58 979	63 175	63 175
Due to experience adjustements (+) Recognised past service cost (-) Settlement	( 217 514) ( 86 074) 22 956	( 217 514) ( 86 074) 22 956	( 31 151)	( 31 151)
(=) Closing balance of defined benefit obligations' present value	1 239 630	1 239 630	1 427 766	1 427 766

	31.12.2020	31.12.2019
(+) Opening balance of plan assets (+) Interest income (+) Remeasurements	523 218 18 751 ( 64 349)	530 601 14 592 ( 21 975)
(=) Closing balance of plan assets	477 620	523 218

During 2020 and 2019 the fair value of the plan assets changed as follows:

Funding assets do not include any assets occupied or used by the Group nor do they include any securities issued by the Company or its subsidiaries.

At 31 December 2020 and 31 December 2019, the amount of liabilities for defined benefits recognized in the Consolidated Statements of Financial Position is detailed as follows:

	31.12.2020	31.12.2019
(+) Present value of defined benefit obligations (-) Fair value of plan assets (=) Defined benefit liability	1 239 630 477 620 762 010	1 427 766 523 218 904 548

Sensitivity of the defined benefit obligation is as follows:

	2020		2019
	-0,5 pp	Valuation basis	+0,5 pp	-0,5 pp	Valuation basis	+0,5 pp
Defined benefit obligation	1 359 442	1 239 630	1 132 627	1 565 457	1 427 766	1 304 876

The valuation basis refers to the actuarial discount rate that was included in the actuarial assumptions disclosed herewith.

29. TRADE CREDITORS

At 31 December 2020 and 31 December 2019, Trade creditors stated on the Consolidated Statements of Financial Position had the following maturities:

	31.12.2020	31.12.2019
To be paid
< 90 days	22 104 595	25 847 386
90 - 180 days	84 766	107 088
> 180 days	129 295	71 956
	22 318 656	26 026 430

30. OTHER TAXES AND CONTRIBUTIONS (CURRENT LIABILITIES)

At 31 December 2020 and 31 December 2019 Other taxes and contributions had the following composition:

	31.12.2020	31.12.2019
Other taxes and contributions
Value Added Tax	26 275	31 338
Social Security Contribution	198 309	222 728
Others	336 519	326 330
	561 103	580 396

31. OTHER CURRENT LIABILITIES

At 31 December 2020 and 31 December 2019 Other current liabilities were composed of:

	31.12.2020	31.12.2019

Derivatives	26 684	143 493
Tangible fixed assets suppliers	2 387 393	4 622 908
Other creditors	428 849	428 932
Subtotal	2 842 926	5 195 333
Other creditors	487 605	497 142
Advances from trade debtors	206 654	31 017
Accrued expenses
Insurances	21 155	16 369
Personnel expenses	4 355 269	3 991 959
Accrued financial expenses	367 145	242 484
Rebates	3 427 758	3 680 082
External supplies and services	420 478	375 632
Other accrued expenses	228 495	434 874
Subtotal	9 514 559	9 269 559
Financial instruments	12 357 485	14 464 892
Deferred income
Investment subventions	542 361	471 735
Other deferred income		136 525
Liabilities out of scope of IFRS 9	542 361	608 260

Total	12 899 846	15 073 152

31.12.2020	< 90 days	90 - 180 days	> 180 days	Total
Derivatives	528	26 156		26 684
Maturity of current fixed assets' suppliers	1 712 078	657 315	18 000	2 387 393
Maturity of Other current creditors	426 194	2 220	435	428 849
	2 138 272	685 691	18 435	2 842 926

31.12.2019	< 90 days	90 - 180 days	> 180 days	Total
Derivatives	4 826	124 905	13 762	143 493
Maturity of current fixed assets' suppliers	3 925 819	679 089	18 000	4 622 908
Maturity of Other current creditors	428 932			428 932
	4 359 577	803 994	31 762	5 195 333

32. PROVISIONS AND ACCUMULATED IMPAIRMENT LOSSES

Movements occurred in provisions and accumulated impairment losses during the periods ended 31 December 2020 and 31 December 2019 were as follows:

				31.12.2020
Description	Opening balance	Exchange rate effect	Increase	Utilization	Reversion	Other changes	Closing balance
Impairment losses
Investment properties Tangible fixed assets Goodwill	2 259 929 3 579 884	( 3 654)	3 638 503 228 992			(2 218 194)	2 259 929 4 996 539 228 992
Intangible assets	19 242						19 242
Trade debtors Subtotal impairment losses	115 366 5 974 421	( 1 271) ( 4 925)	6 710 3 874 205		( 5 257) ( 5 257)	(2 218 194)	115 548 7 620 250
Provisions
Litigations in course	567 033						567 033
Other	9 887 075		561 700	(3 291 155)			7 157 620
Subtotal provisions	10 454 108		561 700	(3 291 155)			7 724 653
Subtotal impairment losses and provisions	16 428 529	( 4 925)	4 435 905	(3 291 155)	( 5 257)	(2 218 194)	15 344 903
Other losses
Investments	125 415						125 415
Write-down to net realizable value of inventories	795 289	( 25 717)	645 066		( 212 317)	( 43 644)	1 158 677
Total	17 349 233	( 30 642)	5 080 971	(3 291 155)	( 217 574)	(2 261 838)	16 628 995

				31.12.2019
Description	Opening balance	Exchange rate effect	Increase	Utilization	Reversion	Other changes	Closing balance
Impairment losses:
Investment properties Tangible fixed assets	2 259 929 4 501 382		5 389			(926 887)	2 259 929 3 579 884
Intangible assets Trade debtors	19 242 121 467	902	313 738			(320 741)	19 242 115 366
Subtotal impairment losses	6 902 020	902	319 127			(1 247 628)	5 974 421
Provisions:
Litigations in course	583 290			(16 257)			567 033
Other Subtotal provisions	4 470 719 5 054 009		5 416 356 5 416 356	( 16 257)			9 887 075 10 454 108
Subtotal impairment losses and provisions	11 956 029	902	5 735 483	( 16 257)		(1 247 628)	16 428 529
Other losses:
Other investments	3 988		121 427				125 415
Write-down to net realizable value of inventories	934 312	18 096	146 072		(303 191)		795 289
Total	12 894 329	18 998	6 002 982	( 16 257)	( 303 191)	(1 247 628)	17 349 233

Impairment losses are offset against the corresponding asset on the Consolidated Statement of Financial Position.

Increase and utilization of provisions and impairment losses are stated on the following headings of profit and loss and other comprehensible income:

	31.12.2020			31.12.2019
	Losses	Gains	Total	Losses	Gains	Total
Items of profit or loss:
Cost of sales	270 474	( 34 734)	235 740	38 786	( 134 262)	( 95 476)
(Increase) / decrease in production	374 592	( 177 583)	197 009	107 286	( 168 929)	( 61 643)
Provisions and impairment losses	3 272 909	(3 296 412)	( 23 503)	5 735 483	( 16 257)	5 719 226
Profit / (loss) from investments				121 427		121 427
Subtotal (Consolidated Income Statement)	3 917 975	(3 508 729)	409 246	6 002 982	( 319 448)	5 683 534
Items of other comprehensible income:
Revaluation of tangible fixed assets	1 162 996		1 162 996
Subtotal (Other consolidated comprehensive income for the period)	1 162 996		1 162 996
Total consolidated comprehensive income for the period	5 080 971	(3 508 729)	1 572 242	6 002 982	( 319 448)	5 683 534

32.1. Impairment losses on tangible fixed assets

Movements occurred in impairment losses during the period ended 31 December 2020 and 31 December 2019 were as follows:

Impairment losses recognized through profit or loss or through other comprehensible income for 2020 and 2019 are included under "Increases" on the tables above and are detailed on note 9;
Impairment losses reverted in 2020 and 2019 are included under "Reversion" on the tables above;
Other changes comprise reductions arising from reclassifications, disposal and write-off. The amount disclosed under Other changes in the period ended 31 December 2020 refers mostly to items of tangible fixed assets which were reclassified as Non-current assets held for sale (note 16), on the Consolidated Statement of Financial Position.

32.2. Provisions

At 31 December 2020, the amount of provisions could be detailed as follows:

Provisions for ongoing litigations amounting to EUR 567 033 refer mostly to litigation with former workers of decommissioned industrial plants. This provision is stated under non-current liabilities.
Other provisions include:

Provision amounting to EUR 1 195 000 for environmental liabilities. This provision is stated under non-current liabilities;

Provision amounting to EUR 4 290 920 for responsibilities which, under the terms of the Sonae Arauco, S. A. joint-venture agreement, are transferred to Sonae Indústria, SGPS, S. A. (note 5). In 2020, this provision was utilized by EUR 2 834 799, which refer to obligations arising from the close down of Horn industrial plant, referred to on note 5.2.1. At 31 December 2020, this provision is stated under current liabilities for EUR 1 022 312 and under non-current liabilities for EUR 3 268 608;

Provision amounting to EUR 1 500 000 which was set up for legal contingencies which the Board of Directors decided to recognize. This provision is stated under non-current liabilities.

33. OPERATING LEASES

In the period ended 31 December 2020, the Group recognized under External Suppliers and Services, on the Consolidated Income Statement, rents related to leases classified as low-value or short-term leases amounting to EUR 274 772 (EUR 228 139 in the period ended 31 December 2019) (note 3.5).

Right-of-use assets recognized on the Consolidated Statement of Financial Position as at 31 December 2020 and 31 December 2019 are detailed on note 9.

Maturities of Lease creditors recognized on Consolidated Statement of Financial Position as at 31 December 2020 and 31 December 2019 are disclosed on note 26.1.

As disclosed on note 9, in the period ended 31 December 2020, the Group was not granted any Covid-19 related rent concessions.

34. RELATED PARTIES

34.1. Balances and transactions with related parties may be summarized as follows:

Balances	Accounts receivable			Accounts payable
	31.12.2020	31.12.2019	31.12.2020	31.12.2019
Subsidiaries of the ultimate parent company	188 361	158 894	182 115	320 225
Joint ventures of Sonae Indústria, SGPS, S. A.	550 450	617 500	1 419 584	1 637 931

Transactions	Income			Expenditure
	31.12.2020	31.12.2019	31.12.2020	31.12.2019
Subsidiaries of the ultimate parent company	250 274	12 344	1 891 877	1 419 911
Joint ventures of Sonae Indústria, SGPS, S. A.	4 007 231	4 491 352	10 346 478	11 737 659

Income and expenses resulting from transactions with related parties, which are disclosed above, refer to operating activities and were carried out under arm's length conditions.

Furthermore, as at 31 December 2020 and 31 December 2019, Efanor Investimentos, SGPS, S. A. (ultimate controlling entity of Sonae Indústria, SGPS, S. A.) held directly or indirectly all subordinated bonds issued by the Company, with a nominal value of EUR 50 000 000.

34.2. Remuneration of the Board of Directors of the Company is detailed as follows:

	31.12.2020	31.12.2019
Short term benefits Medium term benefits	1 031 654 148 707	931 721
	1 180 361	931 721

The amounts disclosed on the previous table relate to remunerations of the Board of Directors of Sonae Indústria, SGPS, S. A. which were recognized under Staff expenses, on the Consolidated Income Statements for the periods ended 31 December 2020 and 31 December 2019.

At 31 December 2020 and 31 December 2019 there were no post retirement liabilities attributed to the members of the board of directors.

34.3. During the periods ended 31 December 2020 and 31 December 2019, the Group recognized on its consolidated financial statements the following fees from

audit company Deloitte & Associados, SROC, S. A. and respective international network:

	31.12.2020	31.12.2019
Total fees related to audit of end year accounts Total fees related to other realiability assurance services	129 504 500	132 591 500
	130 004	133 091

35. OTHER OPERATING INCOME

Details of Other operating income on the Consolidated Income Statement for the periods ended 31 December 2020 and 31 December 2019 are as follows:

	31.12.2020	31.12.2019

Gains on disposals of non-current investments	1 685
Gains on disp. and write off of invest. prop., tang. and intang. assets	211 275	326 603
Supplementary revenue	1 788 735	2 187 497
Investment subventions	529 969	468 421
Positive exchange gains	1 357 439	859 900
Adjustment to fair value of financial instruments at fair value through profit or loss	526 669	122 378
Others	4 564 329	275 450
	8 980 101	4 240 249

In the context of the pandemic described on note 2, the governments of several countries where Sonae Indústria and its joint venture Sonae Arauco conduct activity have deployed a set of measures with the aim of mitigating the negative effects felt by economic agents as a result of the pandemic of Covid-19. These measures took different shapes in each country and mostly aimed to protect employment. In some cases, employment contracts were temporarily suspended and governments paid wages directly to employees. In these situations, both Sonae Indústria and Sonae Arauco did not record the corresponding wage expenses or payments made by government entities. In other situations, contracts were not suspended and employers continued to pay the whole or a portion of salaries to employees, and were subsequently partially reimbursed under government support. In these situations, Sonae Indústria and Sonae Arauco recorded personnel expenses and the corresponding reimbursements made by government entities, which, in the case of Sonae Indústria, were recorded under the heading Other income and gains (Government subsidies for exploration), of the Consolidated Income Statement for the period ended 31 December 2020.

Subsidies to support the resumption of economic activity granted by governments were also recorded under this heading.

The subsidy amounts previously mentioned that were recorded by the subsidiaries of Sonae Indústria and by the subsidiaries of its joint venture Sonae Arauco, in the period ended 31 December 2020, were as follows:

Sonae Indústria subsidiaries: EUR 4 321 085 Subsidiaries of Sonae Arauco: EUR 2 164 236

At 31 December 2020, these amounts had been almost entirely received and were stated under Other cash receipts relating to operating activities, on the Consolidated Statement of Cash Flows.

The amount of subsidies recorded by the subsidiaries of the joint venture Sonae Arauco was reflected in the caption Gains and losses in joint ventures, in the Consolidated Income Statement of Sonae Indústria for the period ended 31 December 2020, in proportion to the interest in this joint venture (50 %), by applying the equity method.

36. OTHER OPERATING EXPENSES

Details of Other operating expenses on the Consolidated Income Statement for 2020 and 2019 are as follows:

	31.12.2020	31.12.2019
Taxes
Losses on disp. and write off of invest. prop., tang. and intang. assets	1 387 588 862 712	1 343 837 547 312
Negative exchange gains	1 490 038	1 025 950
Adjustment to fair value of financial instruments at fair value through profit or loss	316 579	294 350
Others	167 745	240 299
	4 224 662	3 451 748

37. RESEARCH AND DEVELOPMENT EXPENSES

During the period ended 31 December 2020, the Group recognized in several items of the Consolidated Income Statement research and development expenses amounting to EUR 253 129 (EUR 261 250 in 2019).

38. RECURRING AND NON-RECURRING ITEMS

Recurring and non-recurring operating items on the Consolidated Income Statement are detailed as follows:

	31.12.2020	31.12.2019
	Recurring	Recurring

Sales	200 337 064	228 500 563
Services rendered	1 485 298	1 486 041
Change in value of biological assets	( 164 644)	( 145 199)
Other income and gains	8 745 015	3 923 646
Cost of sales	(109 879 424)	(127 189 314)
Increase / (decrease) in production	( 165 783)	1 997 447
External supplies and services	(42 364 945)	(51 797 596)
Staff expenses	(26 613 528)	(27 107 102)
Impairment losses in trade debtors - (increase)/reduction	( 1 454)	(313 738)
Other expenses and losses	(3 339 875)	(2 876 734)
Recurring operating profit/(loss) before amortization, depreciation, provisions and impairment losses (except trade debtors)	28 037 724	26 478 014

Non-Recurring operating profit/(loss) before amortization, depreciation, provisions and impairment losses (except trade debtors)	(1 362 025)	( 713 387)
Total operating profit/(loss) before amortization, depreciation, provisions and impairment losses (except trade debtors)	26 675 699	25 764 627

Classification of items as either recurring or non-recurring is done in accordance with criteria set out on note 3.25.

39. FINANCIAL RESULTS

Financial results for the periods ended 31 December 2020 and 31 December 2019 were as follows:

	31.12.2020	31.12.2019
Financial income:
Interest income
related to bank loans	19 055 19 055	22 465 22 465

Gains in currency translation related to loans	880	12 410
related to cash and cash equivalents	933 057	571 736
	933 937	584 146
Cash discounts obtained	78 000	83 378
Other finance gains	5 750	5 770
	1 036 742	695 759
Financial expenses:
Interest expenses
related to bank loans	(4 357 211)	(7 818 896)
related to bonds related to leases	(3 759 990) (187 875)	(130 517) (262 817)
related to loans from related parties		(173 333)
others	(5 307)	(4 621)
	(8 310 383)	(8 390 184)
Losses in currency translation related to loans	(22 119)	(10 640)
related to cash and cash equivalents	( 959 918)	( 601 291)
	( 982 037)	( 611 931)
Cash discounts granted	(1 470 389)	(1 727 428)
Other finance losses	(1 077 145)	(1 446 131)
	(11 839 954)	(12 175 674)

Finance profit / (loss)	(10 803 212)	(11 479 915)

40. TAXES

Corporate income tax accounted for in 2020 and 2019 is detailed as follows:

	31.12.2020	31.12.2019
Current tax	1 300 747	3 330 869
Deferred tax	1 763 077	1 917
	3 063 824	3 332 786

Reconciliation of consolidated Net profit/(loss) from continuing operations, before tax, with taxation for the year may be detailed as follows:

	31.12.2020	31.12.2019
Consolidated net profit before tax	(2 905 209)	(10 036 563)
Tax rate	21.00%	21.00%
Expectable tax	( 610 094)	(2 107 678)
Differences to foreign tax rates	635 661	544 273
Consolidation adjustments	( 237 887)	( 968 586)
Permanent differences Non deductible costs Non taxable profits	2 089 451 ( 185 921)	1 256 888 ( 182 257)
Tax losses carried forward Deferred tax asset not recognized (non compliance with IAS 12) Utilization of tax losses carried forward whose deferred tax was not recognized in prior periods	1 125 465	2 725 878 ( 1 270)
Tax withheld in foreign countries	209 353	934 368
Effect of change in tax rates		( 245)
Others	37 796	1 131 414
Consolidated corporate income tax	3 063 824	3 332 786

The amount disclosed as Consolidation adjustments comprises the share of the consolidated net profit of the joint venture Sonae Arauco, S.A., which was recorded in the consolidated financial statements for the periods ended 31 December 2020 and 31 December 2019 using the equity method.

In the period ended 31 December 2019, the amount stated as Others refers mostly to deferred tax asset on provisions which are not relevant for tax purposes, which were not recognized as the conditions required by the accounting standards were not met.

Group companies which recorded corporate income tax on the periods ended 31 December 2020 and 31 December 2019 are subject to the following tax rates:

	2020		2019
	National	Provincial	National	Provincial

Portugal	21.0%		21.0%
Canada	15.0%	11.5%	15.0%	11.6%
South Africa	28.0%		28.0%
France	28.0%		28.0%

41. EARNINGS PER SHARE

Earnings per share were calculated as follows:

	31.12.2020 Net profit/(loss)		31.12.2019 Net profit/(loss)

	from continuing operations	total	from continuing operations	total
Net profit
Net profit considered to calculate base earnings per share (net loss attributable to equity holders of Sonae Indústria)	(5 969 033)	(5 969 033)	(13 369 349)	(13 369 349)
Net profit considered to calculate diluted earnings per share	(5 969 033)	(5 969 033)	(13 369 349)	(13 369 349)
Number of shares
Weighted average number of shares used to calculate basic earnings per share	45 403 029	45 403 029	45 403 029	45 403 029
Weighted average number of shares used to calculate diluted earning per share	45 403 029	45 403 029	45 403 029	45 403 029
Basic earnings per share	( 0.1315)	( 0.1315)	( 0.2945)	( 0.2945)
Diluted earnings per share	( 0.1315)	( 0.1315)	( 0.2945)	( 0.2945)

42. SEGMENT INFORMATION

The main activity of the Group is the production and commercialization of wood based panels and derivative products through industrial plants and commercial facilities located in Portugal, Canada and South Africa.

The Company's system of internal report to the chief operating decision maker focus on type of business. Secondary activities are materially irrelevant as far as segmental report is concerned and the Group decided to present one only segment.

Consolidated revenue derives mostly from the production and sale of wood based panels and derivative products.

43. CONTINGENCIES

In October 2010 Sonae Indústria, SGPS, S. A. received a notice of assessment from tax authorities according to which the loss resulting from the dissolution of its subsidiary Socelpac, SGPS, S.A. in 2006, amounting to EUR 74 million, should be considered at 50% for tax calculation purposes. The company filed a lawsuit challenging this interpretation.

The subsidiary Surforma, S.A. (ex-Sonae Indústria de Revestimentos, S. A.) rendered surety of EUR 2 271 000 in favour of tax authorities for suspension of tax enforcement procedures initiated against Sonae Indústria, SGPS, SA, having been brought court challenges against the respective settlement.

The subsidiary Maiequipa – Gestão Florestal, S. A. rendered surety of EUR 1 242 746 in favour of tax authorities for suspension of tax enforcement procedures initiated against Sonae Indústria, SGPS, SA, having been brought court challenges against the respective settlement. One of the guarantees, in the amount of 611 652 euros, was returned in February 2021, since the conclusion of the guaranteed process was favorable to society.

Sonae Indústria, SGPS, SA presented bank guarantees of EUR 9 286 997 to suspend tax enforcement procedures initiated by tax authorities, having been brought court challenges against the respective settlement, except for the process IRC 2015, for which only a complaint was filed, up until now.

According to the information available on this date, the Board of Directors considers that the probability of a negative outcome of the aforementioned lawsuits and complaint is low, thus no adjustment was done to the estimation of current tax recognized in these consolidated financial statements.

Surety rendered by Sonae Indústria, SGPS, S. A. in favour of "Instituto de Segurança Social" (Social Security Institute), amounting to EUR 321 858, to guarantee the contingency of Sonae Arauco Portugal, S. A. with that entity.

the complaint was submitted specifically to the former subsidiaries Sonae Arauco Deutschland GmbH e GHP GmbH with a maximum contingency (based on claimed values) of EUR 31.5 million. In the other pending case, these subsidiaries are jointly involved with other German producers and the maximum contingency (based on claimed values) amounted to EUR 26 million as at 31 December 2020. According to the opinion of these former subsidiaries' lawyers, at the closing date of these consolidated financial statements, it is not possible to reliably estimate the outcome of the proceedings in progress or the amount of any payments that may be established. Under the terms of the agreement for the subscription of Sonae Arauco, S. A. shares, entered into in 2015 by Sonae Arauco, S. A., Sonae Indústria SGPS S. A. and the Arauco Group, Sonae Indústria, SGPS, S. A. assumes the obligation to compensate Sonae Arauco, S. A. for any losses resulting from these proceedings.

no grounds for the co-employment thesis. In January 2020, the court, in relation to the lawsuit of five former employees of Darbo, handed down a sentence in the same direction and on the same grounds, with the amount of the sentence being around EUR 950 000. Sonae Indústria appealed this decision

44. SUBSEQUENT EVENTS

On 28 January 2021, the Board of Directors of Sonae Indústria, SGPS, S.A. decided, after a favourable opinion of the company's Statutory Audit Board, to carry out a share capital increase with the following characteristics:

i) The share capital of Sonae Indústria, SGPS, S.A. will be increased from the current 253 319 797.26 euros to 308 321 344.20 euros, by cash inflows in the amount of 55 001 546.94 euros;
ii) The subscription price of each new share, which corresponds to the issue price, will be 1.14 euros, with no premium;
iii) The number of new ordinary, registered, book-entry shares, without nominal value, will be 48 246 971;
iv) If the capital increase is not fully subscribed, it will be limited to subscriptions that are collected;
v) The share capital increase will be carried out through a Public Offer (Offer) to be subscribed by shareholders in the exercise of their pre-emptive rights and other investors holdings subscription rights. Each holder of the Company's ordinary shares will be attributed one subscription right for each share representing the current share capital of Sonae Indústria, SGPS, S.A. that it holds.

The realization of the Offer and subsequent admission to trading of shares that may be issued, on the regulated Euronext Lisbon market, depend on the completion of some legal procedures, namely, on the approval of the respective prospectus by the Portuguese Securities Market Commission (CMVM).

The completion of this operation to increase the Company's share capital is related to the need to reinforce its shareholders' funds and to improve its capital structure and reduce the overall cost of debt, in order to provide the Company with the appropriate means to pursue its strategic plans.

45. APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS

On 26 March 2021, the Board of Directors of Sonae Indústria, SGPS, S. A. decided that these consolidated financial statements shall be submitted to approval at the Company's General Shareholders' Meeting.

Statutory External Auditor Report and Statutory Audit Board Report

Statutory External Auditor Report on separate and consolidated information

Statutory Audit Board Report

STATUTORY AUDITOR'S REPORT

(Free translation of a report originally issued in Portuguese language: In case of doubt the Portuguese version will always prevail)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the accompanying financial statements of Sonae Indústria, SGPS, S.A. ("the Entity"), which comprise the statement of financial position as at 31 december 2020 (showing a total of Euro 460,793,925.58 and equity of Euro 273,281,510.42, including a net loss of Euro 12,418,475.54), the statement of profit and loss by nature, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and the accompanying notes to the financial statements, including a summary of the significant accounting policies.

In our opinion, the accompanying financial statements give a true and fair view, in all material respects, of the financial position of Sonae Indústria, SGPS, S.A. as at 31 december 2020 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted in the European Union (IFRSs).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) and further technical and ethical standards and guidelines as issued by Ordem dos Revisores Oficiais de Contas (the Portuguese Institute of Statutory Auditors). Our responsibilities under those standards are further described in the "Auditor's responsibilities for the audit of the financial statements" section below. We are independent from the Entity in accordance with the law and we have fulfilled other ethical requirements in accordance with the Ordem dos Revisores Oficiais de Contas code of ethics.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Description of the most significant risks of	Summary of the auditor's responses to the
material misstatement identified	assessed risks of material misstatement

Impairment of investments in subsidiaries, joint ventures and associates and changes in accounting policy

(Notes 2.2., 2.19., 4., 5., 6., 17. and 24. to the notes to the separate financial statements)

As at 31 December 2020, Sonae Indústria, in its separate	Our audit procedures included the evaluation of relevant
financial statements, has significant investments in	controls in relation with the assessment of impairment
subsidiaries and joint ventures, with a carrying amount of 231	indicators in what relates with non-current assets of the
million euros (including loans granted) and 227 million euros,	Entity, as well as review of the impairment tests, in the
respectively (Notes 5 and 6). The mentioned investments are	cases where impairment indicators in non-current assets
accounted for at cost less impairment losses (Note 2.2.).	were identified by the Entity.
As disclosed in Note 2.2., the Entity recognizes impairment

losses when impairment indicators are identified and the recoverable amount of a given asset or group of assets is lower than its carrying amount.

In Note 2.19 of the notes to the financial statements, the Entity draws attention to the effects of events related to the pandemic associated with the coronavirus (Covid-19) in the year on the Joint Venture, which generated a relevant impact in terms of turnover and profitability of the Entity's subsidiaries and joint venture, generating substantial operational challenges.

The impairment analysis and the impairment tests involve complex judgements, based on business plans, which are supported in assumptions, such as discount rates, forecasted margins, short term and long term growth rates, capital expenditure plans as well as the demand behavior; these assumptions have been determined taking into account the recent events associated with Covid-19 (Note 2.19), which constitute an additional uncertainty in the judgments made by the Entity.

In some situations, namely in subsidiaries with real estate assets, the Entity estimates fair value less costs to sell, by the use of valuations performed by specialists. Such valuations are also based on several assumptions and judgements.

As a result of the analysis performed, the Entity recognized, on its separate financial statements, as at 31 December 2020, impairment losses in the amount of 6.2 million Euro, in relation with investments in subsidiaries (Notes 5, 17 and 24).

Considering the materiality of the referred assets to the separate financial statements, the complexity of the valuation models used, based on estimates and assumptions based on economic and market values and the level of estimates involved in the measurement of impairment, also taking into consideration the increased uncertainty environment associated with the aforementioned pandemic, we consider this area to be a key audit matter.

In what concerns the estimate of the recoverable amount used by the Entity in impairment evaluation, our procedures included:

obtaining the valuation models used to determine the recoverable amount of each financial investment and test the clerical correction of those models;
review of the methodology used by the Entity to determine the value in use, namely its compliance with applicable accounting standards;
assessing the assumptions used in the referred models, involving, whenever deemed necessary Deloitte specialists to challenge the used model, discount rates and long term growth rates used;
analysis of the sensitivity tests performed and defined by Management;
discussion meetings with management and other officers;

For the financial investment, associated with entities whose assets were subject to real estate appraisals, we assessed the assumptions used by the Entity and its specialists, as well as assessed the adequacy of the methodologies used comparing this year valuations with the accounting recognition.

We evaluated the adequacy of disclosures made in relation with this matter.

Litigation and legal contingencies

(Notes 5.2., 17. and 27. to the notes to the separate financial statements)

As described in Notes 5.2 and 27., the Entity holds legal proceedings/contingencies, of which the most relevant are the lawsuits over entities held by Sonae Arauco, S.A. fully indemnifiable by Sonae Indústria SGPS, S.A. as contemplated in the share purchase agreement with the other partner of the joint venture. Among the aforementioned contingencies the most relevant ones, are the ones filed by employees of the former subsidiary, Darbo SAS, sold in 2015 and the anti-trust contingencies filed by clients (Germany) for damages resulting from the alleged violation of competition regulations against subsidiaries of the joint venture, Sonae Arauco, S.A. (Note 5.2. and 17.).

In accordance with the information disclosed in Note 27., it is not possible to reliably estimate the outcome of some of these contingencies, namely referring to the alleged violation of competition regulations in former subsidiaries of the Entity in Germany, up to a maximum of 31.5 million euros (of the total responsibility of Sonae Indústria) and 26 million euros (jointly responsibility with other German producers), and related to the former subsidiary of the Entity in France, Darbo SAS (maximum amount of, approximately, 4.6 million euros), despite recent court decisions in July 2019 and January 2020 (Note 27).

The classification of such litigations as contingent liabilities or as provisions, as well as their measurement, are matters involving a high degree of judgement and uncertainty, so there is a risk of the classification assumed and / or the

Our audit procedures regarding the assessment of such contingencies include the following:

Since some of these contingencies refer to geographies that are audited by other audit firms, we issued audit instructions for the auditors of those entities in accordance with ISA 600 - Audits of Group Financial Statements (Including The Work of Component Auditors):
- o We assessed the technical competence of the component auditors;
- o We were involved in the planning process of the above mentioned audits and procedures in this area;
- o We jointly reviewed and analysed these contingencies;
We obtained from the legal departments of Sonae Indústria and Sonae Arauco Groups, a list of ongoing contingencies and its assessment by management;
We also obtained the legal confirmation letters, to our requests and to the auditors of the components, of the legal advisors of the Group in charge of the contingencies, as also held discussions with the Group's legal department;
We debated the assumptions and arguments that

estimates recorded may prove to be inadequate and the provisions contain material errors, therefore we consider this area to be a key audit matter.

support the positioning of Management. We evaluated the adequacy of disclosures made in relation with this matter.

Responsibilities of management and supervisory body for the financial statements

Management is responsible for:

the preparation of financial statements that give a true and fair view of the Entity's financial position, financial performance and cash flows in accordance with International Financial Reporting Standards as adopted in the European Union (IFRSs);
the preparation of the management report, corporate governance report, non-financial information and remunerations report in accordance with applicable laws and regulations;
designing and maintaining an appropriate internal control system to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error;
the adoption of accounting policies and principles appropriate in the circumstances; and
assessing the Entity's ability to continue as a going concern, and disclosing, as applicable, the matters that may cast significant doubt about the Entity's ability to continue as a going concern.

The supervisory body is responsible for overseeing the Entity's financial reporting process.

Auditor's responsibilities for the audit of the financial statements

Our responsibility is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatements, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity's internal control;
evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the Entity to cease to continue as a going concern;
evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
communicate with those charged with governance, including the supervisory body, regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit;
determine, from the matters communicated with those charged with governance, including the supervisory body, those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter;
provide the supervisory body with a statement that we have complied with relevant ethical requirements regarding independence, and communicate all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, which measures have been taken to eliminate the threats or what safeguards have been applied.

Our responsibility also includes the verification that the information contained in the management report is consistent with the consolidated financial statements and the verification of the requirements as provided in numbers 4 and 5 of article 451º of the Portuguese Companies' Code, in matters of corporate governance, as well as the verification that the consolidated non-financial information and the remuneration report were presented.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

On the management report

Pursuant to article 451.º, n.º 3, al. e) of the Portuguese Companies' Code ("Código das Sociedades Comerciais"), it is our opinion that the management report was prepared in accordance with the applicable legal and regulatory requirements and the information contained therein is consistent with the audited consolidated financial statements and, having regard to our knowledge and assessment over the Entity, we have not identified any material misstatements. As referred to in article 451, paragraph 7 of the Portuguese Companies' Code, this opinion is not applicable to the non-financial information included in the management report.

About the corporate governance report

Pursuant to article 451º, number 4, of the Portuguese Company's Code ("Código das Sociedades Comerciais"), we conclude that the corporate governance report includes the elements required to the Entity under the terms of article 245.º-A of the Portuguese Securities Code ("Código dos Valores Mobiliários"), and we have not identified any material misstatements on the information disclosed therein, which, accordingly, complies with the requirements of items c), d), f), h), i) and m), no. 1 of that article.

On the non-financial information provided for in article 508-G of the Portuguese Company's Code

Pursuant to article 451, number 6, of the Portuguese Company's Code ("Código das Sociedades Comerciais"), we inform that the Entity included in its management report the non-financial information, under the terms of article article 508-G of the Portuguese Company's Code, which has been included in the Management Report section "Non-financial information".

About the remuneration report

In compliance with article 245-C, no. 6, of the Portuguese Securities Code, we inform that the Entity has included a separate chapter, in its corporate governance report, and the information required by subparagraphs a), b), d), e), f) and g) of paragraph 2 of article 245-C of the Portuguese Securities Code.

On the additional matters provided in article 10 of Regulation (UE) 537/2014

Pursuant to article 10 of Regulation (UE) 537/2014 of the European Parliament and of the Council of April 16th, 2014, in addition to the key audit matters mentioned above, we also report on the following:

We were appointed as auditors of the Entity in the shareholders' general assembly held on 9 may 2018 for a first mandate from 2018 to 2020.
Management has confirmed to us that they are not aware of any fraud or suspicion of fraud having occurred that has a material effect on the financial statements. In planning and executing our audit in accordance with ISAs, we maintained professional scepticism and we designed audit procedures to respond to the risk of material misstatements in the financial statements due to fraud. As a result of our work, we have not identified any material misstatement on the financial statements due to fraud.
We confirm that the audit opinion issued is consistent with the additional report that we prepared and delivered to the Entity's supervisory body as at 26 march 2021.
We declare that we have not provided any prohibited services as described in article 77, number 8, of the Ordem dos Revisores Oficiais de Contas statutes (Legal Regime of the Portuguese Statutory Auditors) and we have remained independent from the Entity in conducting the audit.

_________________

Porto, 26 march 2021

Deloitte & Associados, SROC S.A. Representada por António Manuel Martins Amaral, ROC

STATUTORY AUDITOR'S REPORT

(Free translation of a report originally issued in Portuguese language: In case of doubt the Portuguese version will always prevail)

REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Opinion

We have audited the accompanying consolidated financial statements of Sonae Indústria, SGPS, S.A. ("the Entity") and of its subsidiaries ("the Group"), which comprise the consolidated statement of financial position as at 31 december 2020 (showing a total of Euro 408,103,021 and equity of Euro 112,577,294, including a net loss of Euro 5,969,033), the consolidated statement of profit and loss by nature, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and the accompanying notes to the consolidated financial statements, including a summary of the significant accounting policies.

In our opinion, the accompanying consolidated financial statements give a true and fair view, in all material respects, of the consolidated financial position of Sonae Indústria, SGPS, S.A. as at 31 december 2020 and of its financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted in the European Union (IFRSs).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) and further technical and ethical standards and guidelines as issued by Ordem dos Revisores Oficiais de Contas (the Portuguese Institute of Statutory Auditors). Our responsibilities under those standards are further described in the "Auditor's responsibilities for the audit of the consolidated financial statements" section below. We are independent from the entities that constitute the Group in accordance with the law and we have fulfilled other ethical requirements in accordance with the Ordem dos Revisores Oficiais de Contas code of ethics.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Description of the most significant risks of	Summary of the auditor's responses to the
material misstatement identified	assessed risks of material misstatement

Valuation of investments in joint ventures

(Notes 2, 3.2.b), 5., 8. and 43. to the notes to the consolidated financial statements)

As at 31 December 2020, Sonae Indústria holds a significant investment in a joint venture, Sonae Arauco, S.A., with a carrying amount of 210 million Euro (which includes Goodwill	Our audit procedures included:
	Obtaining the financial statements of the joint venture  and last available Auditors' Report;
in the amount of approximately Euro 81 million – Note 5.4), having in the period, recognized, Losses related to joint ventures in the amount of 3.1 million Euro (Note 5.3).	Validating the application of the equity method on the  mentioned financial investment;
The Group recognizes the interests in joint ventures in	 Validating the impairment indicators associated with

accordance with the equity method (Note 3.2.b)), hence there is a risk for those investments being incorrectly measured due to: (i) not recognition of possible impairment losses that might arise, and from (ii) misstatements on the financial statements of the subsidiaries of the Group.

In what concerns impairment analysis over the referred investment it is worth to mention:

In accordance with its policies (Note 3.2.b)), the Group performs an evaluation of impairment indicators at the reporting date;
As disclosed in Note 3.2.b) the Group recognizes impairment losses when the recoverable amount of a given asset or group of assets is lower than its carrying amount;
As a result of its analysis, the Group concluded that there are no impairment to record in the joint venture (Note 8).

In Note 2 of the notes to the financial statements, the Group draws attention to the effects of events related to the pandemic associated with the coronavirus (Covid-19) in the year on the Joint Venture, which generated a relevant impact in terms of turnover the same (Note 5.2.), generating substantial operational challenges.

In what refers to the analysis of the existence of errors in the preparation of Sonae Arauco's financial statements, it should be noted that the impairment tests carried out at the level of this component, in the various geographies, incorporate complex judgments, materialized in business plans, which are based on several assumptions, associated with discount rates, expected margins, short and long term growth rates, investment plans and customer demand behaviours; these assumptions have been determined taking into account the recent events related with Covid-19, which constitute an additional uncertainty in the judgments made.

Considering the i) materiality of the referred assets and matters above mentioned to the consolidated financial statements; ii) the complexity in performance and analysis of the valuation models used, based on estimates and assumptions based on economic and market values and the level of estimates involved in the measurement of impairment, also taking into consideration the increased uncertainty environment associated with the aforementioned pandemic; and iii) the materiality of the financial statements of the joint venture, financial statements of its subsidiaries and transactions with Sonae Indústria Group, we consider this area to be a key audit matter.

the Joint Venture;

Verifying the valuation models used to determine the recoverable amount of non-current assets of the referred joint ventures, which include the effect and future perspectives on the evolution of the Covid-19 associated pandemic, through (i) reviewing the clerical correction of the valuation model used; (ii) evaluation of the assumptions underlying the model, including the discount rates used, long-term growth rates and projected cash flows; and (iii) consultation with Deloitte's internal experts to critically assess the model used, discount rates and long-term growth rates used;
Analysis of the sensitivity tests performed and defined by Management;
Inquiry to management and other officers.

Given that, Sonae Arauco, S.A., is audited by other audit firms, we will issue audit instructions for the auditors of those entities in accordance with ISA 600 - Audits of Group Financial Statements (Including The Work of Component Auditors).

We assessed the technical competence of the component auditors and were involved in the planning of the mentioned audits and, when considered relevant, reviewed the audit working papers assuring that the risks identified at group level were appropriately addressed. We reviewed the conclusion of the audit procedures to mitigate such risks, namely in what refers to internal control testing in the areas under analysis, and in what concerns revenue recognition, and analysis of the adequacy of the application of the going concern assumption.

We analysed the conclusions of the financial statements audit, reviewed the reports issued by the component auditors and discussed with them the main conclusions and supporting information.

We evaluated the adequacy of disclosures made in relation with this matter.

Litigation and legal contingencies

(Notes 5.1., 5.2., 32 and 43 to the notes to the consolidated financial statements)

As described in Notes 5.1., 5.2., 32. and 43., the Entity holds a number of legal proceedings / contingencies, of	Our audit procedures regarding the assessment of such contingencies include the following:
which the most relevant are the lawsuits over entities held by Sonae Arauco, S.A. fully indemnifiable by Sonae Indústria SGPS, S.A. as contemplated in the share subscription agreement with the other partner of the joint venture. Among the aforementioned contingencies the most relevant ones, filed by employees of the former subsidiary, Darbo SAS, sold in 2015 and the anti-trust contingencies filed by customers (Germany) for damages resulting from the	Since some of these contingencies refer to geographies  that are audited by other audit firms, we issued audit instructions for the auditors of those entities in accordance with ISA 600 - Audits of Group Financial Statements (Including The Work of Component Auditors):
alleged violation of competition regulations against subsidiaries of the joint venture, Sonae Arauco, SA (Notes	o We assessed the technical competence of the component auditors;
5.1, 5.2. and 32.2).	o We were involved in the planning process of the above mentioned audits and procedures in this
In accordance with the information disclosed in Note 43., it	area;
is not possible to reliably estimate the outcome of some of these contingencies, namely referring to the alleged violation	o We jointly reviewed and analysed these

of competition regulations in former subsidiaries of the Entity	contingencies;
in Germany, up to a maximum of 31.5 million euros (of the total responsibility of Sonae Indústria) and 26 million euros (jointly responsibility with other German producers), and related to the former subsidiary of the Entity in France,
Darbo SAS (maximum amount of, approximately, 4.6 million euros), despite recent court decisions, in July 2019 and January 2020 (Note 43).
The classification of such litigations as contingent liabilities or as provisions as well as their measurement are matters	legal department;

involving a high degree of judgement and uncertainty, so there is a risk of the classification assumed and / or the estimates recorded may prove to be inadequate and the provisions contain material errors, therefore we consider this area to be a key audit matter.

We obtained from the legal departments of Sonae Indústria and Sonae Arauco Groups, a list of ongoing contingencies and its assessment by management;
We also obtained the legal confirmation letters, to our requests and to the auditors of the components, of the legal advisors of the Group in charge of the contingencies, as also held discussions with the Group's
We debated the assumptions and arguments that support the positioning of Management.

We evaluated the adequacy of disclosures made in relation with this matter.

Responsibilities of management and supervisory body for the consolidated financial statements

Management is responsible for:

the preparation of consolidated financial statements that give a true and fair view of the Group's financial position, financial performance and cash flows in accordance with International Financial Reporting Standards as adopted in the European Union (IFRSs);
the preparation of the management report, corporate governance report, consolidated non-financial information and remunerations report in accordance with applicable laws and regulations;
designing and maintaining an appropriate internal control system to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error;
the adoption of accounting policies and principles appropriate in the circumstances; and
assessing the Group's ability to continue as a going concern, and disclosing, as applicable, the matters that may cast significant doubt about the Group's ability to continue as a going concern.

The supervisory body is responsible for overseeing the Group's financial reporting process.

Auditor's responsibilities for the audit of the consolidated financial statements

Our responsibility is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatements, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control;
evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the Entity to cease to continue as a going concern;
evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion;
communicate with those charged with governance, including the supervisory body, regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit;
determine, from the matters communicated with those charged with governance, including the supervisory body, those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter;
provide the supervisory body with a statement that we have complied with relevant ethical requirements regarding independence, and communicate all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, which measures have been taken to eliminate the threats or what safeguards have been applied.

Our responsibility also includes the verification that the information contained in the consolidated management report is consistent with the consolidated financial statements and the verification of the requirements as provided in numbers 4 and 5 of article 451º of the Portuguese Companies' Code, in matters of corporate governance, as well as the verification that the consolidated non-financial information and the remuneration report were presented.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

On the management report

Pursuant to article 451º, n.º 3, al. e) of the Portuguese Companies' Code ("Código das Sociedades Comerciais"), it is our opinion that the management report was prepared in accordance with the applicable legal and regulatory requirements and the information contained therein is consistent with the audited consolidated financial statements and, having regard to our knowledge and assessment over the Group, we have not identified any material misstatements. As referred to in article 451, paragraph 7 of the Portuguese Companies' Code, this opinion is not applicable to the non-financial information included in the management report.

About the corporate governance report

On the consolidated non-financial information

Pursuant to article 451, number 6, of the Portuguese Company's Code ("Código das Sociedades Comerciais"), we inform that the Group included in its management report the non-financial information, under the terms of article article 508-G of the Portuguese Company's Code, which has been included in the section "Non-financial information".

About the remuneration report

On the additional matters provided in article 10 of Regulation (UE) 537/2014

We were appointed as auditors of Sonae Indústria, SGPS, S.A. (parent-company of the Group) in the shareholders' general assembly held on 9 may 2018 for a first mandate from 2018 to 2020.
Management has confirmed to us that they are not aware of any fraud or suspicion of fraud having occurred that has a material effect on the financial statements. In planning and executing our audit in accordance with ISAs, we maintained professional scepticism and we designed audit procedures to respond to the risk of material misstatements in the consolidated financial statements due to fraud. As a result of our work, we have not identified any material misstatement on the consolidated financial statements due to fraud.
We confirm that the audit opinion issued is consistent with the additional report that we prepared and delivered to the Group's supervisory body as at 26 march 2021.
We declare that we have not provided any prohibited services as described in article 77, number 8, of the Ordem dos Revisores Oficiais de Contas statutes (Legal Regime of the Portuguese Statutory Auditors) and we have remained independent from the Group in conducting the audit.

_________________

Porto, 26 march 2021

Deloitte & Associados, SROC S.A. Representada por António Manuel Martins Amaral, ROC

Report and Opinion of the Statutory Audit Board of Sonae Indústria

(Translation of the Portuguese original)

To the Shareholders of Sonae Indústria

1 – Report

1.1 – Introduction

In accordance with applicable legal and statutory standards and the mandate we have been conferred, the Statutory Audit Board prepared this report regarding the supervisory work carried out, along with the opinion in relation to the management report and further separate and consolidated financial statements as at 31 December 2020, which are the Board of Directors' responsibility.

1.2 – Supervision

During the period, the Statutory Audit Board, in the scope of his competences, has accompanied the Company's management and that of its subsidiaries, has examined the evolution of its activities, the regularity of the accounting records, the quality of the process of preparation and disclosure of the financial information, the accounting policies and the measurement criteria, as well as the compliance with the legal and statutory standards.

In the scope of his duties, the Statutory Audit Board held quarterly, ordinary meetings and other extraordinary meetings to discuss matters subject to his duties and competences. According to the nature of the matters under analysis, the meetings were attended by the Management team and by the managers responsible for Planning and Management Control, Administrative and Finance, Internal Audit and by the Statutory External Auditor. We have been in close contact with the Statutory External Auditor who kept us informed about the nature and conclusions of performed audit work. In addition, the Statutory Audit Board attended the meeting of the Board of Directors in which the Management Report and Accounts of the period were approved and, during the whole period, was granted access to all the documents and persons deemed adequate for the performance of his supervisory role.

Additionally, and in the scope of his competences, the Statutory Audit Board verified the effectiveness of the risk management and internal control systems, and assessed the planning and results of the internal and external auditors work, monitored the system for receiving and managing the communication of irregularities (whistle blowing), evaluated the process of preparation of the separate and consolidated accounts, informed the Board of Directors on the conclusions and quality of the work of the Statutory External Auditor and his participation in that process, and also in the scope of his duties, evaluated the competence and independence of the Statutory External Auditor and the External Auditor and supervised the definition of the respective remuneration.

In the course of the financial period, the Statutory Audit Board has paid particular attention to the accounting treatment of all operations that have materially impacted the evolution of the activity presented in the consolidated and separate financial position of Sonae Indústria SGPS, SA. Within the scope of his duties, the Statutory Audit Board examined the separate and consolidated statements of financial position, income statements, statements of comprehensive income, the statement of changes in shareholders' funds, the statement of cash flows and respective notes to these financial statements as at 31 December 2020, having received all the information and explanations requested to the Statutory External Auditor, as well as the Additional Audit Report set out in Article 24º of Law 148/2015, dated 09 September.

The Statutory Audit Board analysed recommendations I.2.2, I.2.3, I.2.4, I.3.1, I.3.2, I.5.1, I.5.2, III.1.1, III.8 of the Code of Corporate Governance (with particular attention to the risk policy, in accordance and in the scope of his legal competences), VII.1.1, VII.2.1, VII.2.2 and VII.2.3.

The Statutory Audit Board is fully composed by independent members in the context of the applicable legal criteria, with the professional skills required for the performance of the respective role. The members developed their competences and inter-relationship with the other statutory bodies and services of the Company in accordance with the legal and recommendatory principles and standards and have not received a report from the Statutory External Auditor on any irregularities or difficulties in carrying out the respective functions.

The Statutory Audit Board examined the Corporate Governance Report, attached to the Management Report in relation to the consolidated financial statements, under the terms and for the purpose of paragraph 5 of Article 420º of the Companies Code ("Código das Sociedades Comerciais") and confirmed that this report includes the elements referred in Article 245º - A of the Securities Code ("Código de Valores Mobiliários").

Additionally, and in the scope of his competencies, the Statutory Audit Board analysed the Management Report, including the Corporate Governance Report and the remainder reporting documents, separate and consolidated, prepared by the Board of Directors, and concluded that the information disclosed complies with the legal standards in force and is adequate for the appropriate understanding of the Company's results and that of the companies in its consolidation perimeter, and examined the Statutory External Auditor Report which is in agreement.

2 – Opinion

Further to the aforementioned terms, the Statutory Audit Board is the opinion that the Shareholders General Meeting has all conditions to approve:

a) The Management Report;
b) The separate and consolidated statements of financial position, income statements, statements of comprehensive income, the statement of changes in shareholders' funds, the statement of cash flows and respective notes to these financial statements as at 31 December 2020;
c) The proposal for appropriation of results presented by the Board of Directors.

3 – Statement of Responsibility

In accordance with paragraph 1- a) of Article 8º of the Securities Market Commission ("CMVM") regulation number 5/2008 and with paragraph 1-c) of Article 245º of the Securities Code ("Código de Valores Mobiliários"), we hereby inform that, to the extent of our knowledge, the information included in the separate and consolidated financial statements was prepared in compliance with the applicable accounting standards and reflects the true and appropriate image of the assets and liabilities, of the financial position and results of Sonae Indústria SGPS, SA and the companies in its consolidation perimeter, and that the Management Report truthfully reflects the businesses evolution, performance and financial position of Sonae Indústria SGPS, SA and its subsidiaries included in the consolidation perimeter and includes a description of the main risks and uncertainties they are confronted with. Moreover, it is hereby confirmed that the Corporate Governance Report complies with Article 245º-A of the Securities Code ("Código de Valores Mobiliários").

Maia, 26 March 2020

The Statutory Audit Board

____________________________ António Augusto Almeida Trabulo

____________________________ Ana Luísa Nabais Aniceto da Fonte

________________________ Óscar José Alçada da Quinta

AI Terminal

Sonae SGPS

1901_10-k_2021-03-29_d37ca5df-8e0c-45ef-9569-83408cc32bfd.pdf

ANNUAL REPORT

SEPARATE AND CONSOLIDATED FINANCIAL STATEMENTS

Table of contents

Management Report

Appendices to the Management Report and Qualified Shareholdings

Corporate Governance Report

Separate Financial Statements

Consolidated Financial Statements

Statutory External Auditor Report and Statutory Audit Board Report

KEY INDICATORS (STATUTORY FIGURES)

RECURRENT EBITDA AND % TURNOVER MILLION EUROS

NET DEBT AND NET DEBT TO RECURRENT EBITDA MILLION EUROS

CHAIRMAN'S MESSAGE

1. SECTOR REVIEW

MACROECONOMIC CONTEXT1

WOOD BASED PANELS

NORTH AMERICA (TAFISA CANADA)

Demand by Product

Supply information

EUROPE (SONAE ARAUCO)

Demand by product9

Supply information10

2. BUSINESS REVIEW

2.1. TURNOVER & RECURRENT EBITDA

2.2. CONSOLIDATED FINANCIAL PERFORMANCE

2.2.1. CONSOLIDATED INCOME STATEMENT

CONSOLIDATED INCOME STATEMENT

2.2.3. CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF FINANCIAL POSITION MILLION EUROS

2.3. INDIVIDUAL RESULTS OF SONAE INDÚSTRIA, SGPS, S.A.

2.4. PROPOSED ALLOCATION OF RESULTS

2.5. PROPORTIONAL INDICATORS (UNAUDITED)

EXPLANATORY COMMENTS ON PROPORTIONAL INDICATORS

PROPORTIONAL FINANCIAL INDICATORS

PROPORTIONAL TURNOVER BY DESTINATION MARKET 2019

PROPORTIONAL TURNOVER BY DESTINATION MARKET

2.6. COVID-19

COVID-19 | PEOPLE

COVID-19 | RISKS AND OUTLOOK

2.7. OUTLOOK FOR 2021

2.8. INFORMATION ON SHAREHOLDINGS AND SHARE PERFORMANCE

2.8.1. EFANOR TENDER OFFER

2.8.2 SHARE PERFORMANCE14

2.9. TRANSACTIONS WITH OWN SHARES

2.10. TRANSACTIONS BETWEEN THE COMPANY AND ITS DIRECTORS

2.11. DIVIDEND POLICY

2.12. SUBSEQUENT EVENTS

3. RISK MANAGEMENT

3.1. CREDIT RISK MANAGEMENT POLICY

a) Receivables (Customers)

b) Financial assets other than trade debtors

3.2. MARKET RISKS

a) Interest Rate Risk

b) Foreign Exchange Risk

c) Liquidity Risk

3.3. LEGAL RISKS

3.4. OPERATIONAL RISKS

4. NON-FINANCIAL INFORMATION

4.1. ABOUT SONAE INDÚSTRIA

4.1.1. BUSINESS

Strategic partnership with Arauco

Fully owned businesses

Wood based panels

4.1.2. HISTORY

4.1.3. PRODUCTS

Raw and technical products

Laminates and Compacts

Sonae Arauco - The new Core&Technical brand and Ecoboard Concept

DECORATIVE PRODUCTS

DECORATIVE PRODUCTS IN NORTH AMERICA

Innovus - The perfect match with life

SURFORMA® - LAMINATES & COMPACTS

4.1.4. STRATEGY

VISION:

MISSION:

VALUES & PRINCIPLES

STRATEGIC GUIDELINES:

MACROECONOMIC CONTEXT¹

Demand by product⁹

Supply information¹⁰

2.8.2 SHARE PERFORMANCE¹⁴

Productivity (Turnover/Number of Employees)²¹

Workforce by sex, age group and professional classifications (Total FTEs²³)

Employees by type of contract (Labour Agreements) (Headcount²⁴)

Employees by contract time (Headcount²⁴ )

Gender Pay Gap²⁶

Total training hours and training hours by employee²⁷