Annual Report • Apr 6, 2018
Annual Report
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| Part I REPORT OF THE BOARD OF DIRECTORS |
5 |
|---|---|
| Part II APPENDIX TO THE REPORT OF THE BOARD OF DIRECTORS |
43 |
| Part III CORPORATE GOVERNANCE REPORT |
49 |
| Part IV NON-FINANCIAL INFORMATION REPORT |
151 |
| Part V CONSOLIDATED FINANCIAL STATEMENTS |
179 |
| Part VI SEPARATED FINANCIAL STATEMENTS |
297 |
| Part VII REPORT AND OPINION OF THE FISCAL BOARD |
351 |
| Part VIII STATUTORY AUDIT AND AUDITORS' REPORT |
355 |
31 December 2017
"The new Sonae Capital will of course inherit the value and principles that have been the structural basis of the business I do and that I have done in the past"
"This story is not mine alone. It belongs to all those who believe in this project and share with me the will to make it grow..."
Belmiro Mendes de Azevedo (Founder's Letter)
The accounts for the year we are now presenting to our shareholders was sadly marked by the loss of the founder of Sonae Capital, its first Chairman and its main driving force, Engineer Belmiro de Azevedo.
Set up a decade ago, the company had the privilege of his close presence in the early years, marking it indelibly, particularly with his choice of the young management team, after which he began a progressive process of delegation, until he passed it on to the next generation. The current management team and those that come after it should continue to follow his principles of good governance practices, openness to change and the development of leadership skills that will sustain value creation.
The company lost, its employees lost and this board lost their great leader. Those who were closer to him lost a person who was an example to them, and a friend.
The best way we have, and will have, to remember and honour the memory of "Engineer Belmiro" will certainly be through our commitment and our work to develop Sonae Capital and, using his constantly renewed founding inspiration, seek to lead the company to where he would have liked to see it.
After achieving in previous years a conservative capital structure adequate for the business portfolio and assets owned by the group, we began to implement our vocation as an investment holding.
Paulo Azevedo, Presidente do Conselho de Administração
2017 was a year of decisive investment in the business areas with approved value creation plans — Energy, Industrial Engineering and Fitness. After achieving in previous years a conservative capital structure adequate for the business portfolio and assets owned by the group, we began to implement our vocation as an investment holding. Additionally, we continued to make every effort to find profitable development routes in the other businesses, at the same time as selling real estate assets, a privileged source for financing future growth options.
The addition of a new segment, Industrial Engineering, through the acquisition of Adira, is aimed at the search for new growth opportunities and value creation in new business areas under the scope of the announced "Investment Theme" – Exporting Portuguese Engineering. Our capacity to add value will be critical for us to scale this growth route and for generating value for shareholders.
Organic investment and in acquisitions made in the growth of current operations in the Fitness and Energy segments have led the level of investment to its highest values in recent years. In both cases, it was easy to see the added value this growth has brought to the whole. In the second half of the year, we also began the process of discontinuing some operations where we had been unable to achieve the value we wanted, particularly the international operations in the Refrigeration & HVAC segment.
The addition of a new segment, Industrial Engineering, through the acquisition of Adira, is aimed at the search for new growth opportunities and value creation in new business areas under the scope of the announced "Investment Theme" – Exporting Portuguese Engineering. Our capacity to add value will be critical for us to scale this growth route and for generating value for shareholders.
Sonae Capital still has a very important set of Real Estate Assets all over the country and it is important to continue placing them on the market. Of special relevance is the Tróia Peninsula – houses, plots and macro-plots – not only because of the financial dimension, but also for the positive externalities to operational improvements in managing the resort and the value this adds to the other assets there. In 2017, the company placed assets worth €41m (including €16.2m related to tourism real estate in Tróia) on the market, which, not including any macro-plots, is in line with our expectations, although this is a relatively low amount given the overall value of the group's portfolio of real estate assets and the current positive market. The growing interest in our assets has allowed us to continue to envisage positive results in this area, assuming a vital role in the financing of the growth option in the current segments (organic and/ or through acquisition) of the new growth platforms and the company's capacity to distribute dividends.
It is under this scope, without jeopardising the sound financial structure suited to the type of business and assets the group has, that the Board of Directors has decided to maintain, as in the last two years, the policy of remuneration of shareholders in the form of payment of dividends, as defined in 2016.
The management once again showed its resilience, persistence and the necessary skill for implementing the strategy defined. We on the Board of Directors are still confident that we will be able to continue to generate economic and social value in the areas we operate in, including the most recent growth platform, fully achieving our vocation as an investment holding.
Finally, a special word of thanks must be given to all the teams in the Sonae Capital Group, for their effort, commitment and merit for the successful results achieved. This thanks must also be extended to all the members of our governing bodies and to all our partners: Clients, Suppliers, Partners and Investors.
As this is the first time I am addressing the shareholders after the passing of Engineer Belmiro de Azevedo, my father and founder of Sonae Capital, I would like to pay tribute to his work. Engineer Belmiro de Azevedo was not just the chairman of the Board of Directors and main shareholder in Sonae Capital, he was the driving force behind the birth of each one of Sonae Capital's current businesses, with dedication, commitment and effort, as if 100% of his time and mind was devoted to each one of them, infecting many with enthusiasm and overcoming the obstacles in the way. Living up to his legacy will be a Herculean task, but it is also one that we are happy to undertake, using the best there is in each one of us.
2017 is marked by the strong investment both in the current businesses, with particular emphasis on the investment in the Energy segment and in the acquisition of new businesses – Adira.
Cláudia Azevedo, CEO
In order to better convey the strategic objectives and the main trends of our portfolio, we have carried out, as of the current quarter, a reorganization of Sonae Capital's Earnings Announcement, splitting the Real Estate Assets and the Business Units. In the first block, we intend to continue to create value through the sale of Real Estate Assets. In the second one, which includes operations in six different segments, we intend to strengthen our competitive position in order to reach increasing levels of profitability.
During 2017 we continued to take important steps towards the materialization of the defined corporate strategy, based on: (i) improving the competitive position of each of our businesses; (ii) search for new value-generating businesses that fit within the Group's competencies; (iii) sale of non-strategic Real Estate Assets; and (iv) maintenance of a balanced capital structure based on the type of business and assets held by the Group.
Thus, in terms of improving the competitive position of Sonae Capital's Business Units, I will by start highlighting the 7.4% growth in turnover to 157.9M€, as well as the 50.0% growth in EBITDA to 17.3M€ when compared to the previous year. Particularly remarkable was the performance of the Energy segment, where we almost doubled EBITDA, and of Hospitality, where the main business indicators improved in all hotels in operation. In the Fitness segment we successfully continued the growth of the Solinca chain and, already in 2018, we acquired the "Pump" chain, holding a well-deserved prominent position in the Fitness market in Portugal. In the Refrigeration and HVAC segment, the results remained below expectations. In Tróia, the operations that support the Resort continue to show improvements in profitability.
Regarding the search for new growth and value-generating platforms, we concluded during 2017 the acquisition of ADIRA, a Portuguese-based company, leveraging one of the country's main assets and resources - the Engineering know-how - strongly focused on the international market and a key player in the "Metal Forming" sector. This business is reported in our most recent segment: Industrial Engineering. The first few months have been devoted mainly to the integration of ADIRA into Sonae Capital's reality and to the replenishment and allocation of the required resources to implement the defined strategy, which results should begin to be visible in the second half of 2018.
The sale of Real Estate Assets this year evolved in line with the expected trend, both in the segment of residential units in Tróia, where we carried out 29 deeds, and in the other Real Estate Assets segment where the ongoing negotiations, already started in 2017, allow us to have good prospects for the following months.
2017 is marked by the strong investment both in the current businesses, with particular emphasis on the investment in the Energy segment and in the acquisition of new businesses – Adira. Nevertheless, we have a strong capital structure and adequate to the Group's businesses and assets held, with a Loan-to-Value ratio of 15.9% and Net Debt to EBITDA ratio of 2.57x, allowing us to face future growth with safety. Net debt increased 43.4M€ to 109.4M€ due to the strong investment (61.6M€) and the Dividend payment (25M€) partially offset by the operational cash flow generated (43.2M€).
The combination of the results and the cash flow generated in the period, with the perspectives for the continued sale of Real Estate assets allows the Board of Directors to propose, for the third consecutive year, a shareholder remuneration without harming the maintenance of an adequate capital structure and the ability to finance the identified growth options. The Board of Directors will propose to the Shareholders' General Meeting a dividend distribution of 15M€.
2018 will naturally bring several challenges. Firm in pursuit of a clear strategy and with deep confidence in the quality of our people, I believe we are on the right track to achieve the ambitious results that we continue to propose to ourselves every day."
CEO
* Business Units
The strategy implementation, based on the defined guidance, has demonstrated the increased firmness and sustainability of the Group's business results:
Strong growth in turnover and profitability:
| Million Euro | FY 2017 | FY 2016 | p 17/16 |
|---|---|---|---|
| Turnover | |||
| Business Units | 157.89 | 147.01 | +7.4% |
| Energy | 45.22 | 38.23 | +18.3% |
| Industrial Engineering | 4.27 | - | - |
| Fitness | 23.25 | 18.09 | +28.5% |
| Hospitality | 22.96 | 19.76 | +16.2% |
| Refrigeration & HVAC | 51.24 | 60.89 | -15.8% |
| Troia Resort - Operations | 10.95 | 10.04 | +9.1% |
| Real Estate Assets | 32.09 | 47.55 | -32.5% |
| Troia Resort | 15.43 | 20.76 | -25.7% |
| Other Real Estate Assets | 16.65 | 26.79 | -37.8% |
| Eliminations & Adjustments | -7.64 | -7.90 | +3.3% |
| Consolidated Turnover | 182.33 | 186.66 | -2.3% |
| Other Operational Income | 5.08 | 40.02 | -87.3% |
| Total Operational Income | 187.42 | 226.67 | -17.3% |
| EBITDA | |||
| Business Units | 17.30 | 11.53 | +50.0% |
| Energy | 14.19 | 7.81 | 81.8% |
| Industrial Engineering | -0.59 | - | - |
| Fitness | 1.79 | 2.16 | -17.1% |
| Hospitality | -0.46 | -2.26 | +79.6% |
| Refrigeration & HVAC | 1.48 | 3.21 | -53.7% |
| Troia Resort - Operations | 0.89 | 0.61 | +45.1% |
| Real Estate Assets | 6.63 | 22.37 | -70.3% |
| Troia Resort | 2.35 | 16.56 | -85.8% |
| Other Real Estate Assets | 4.28 | 5.81 | -26.3% |
| Eliminations & Adjustments | -3.05 | -2.63 | -16.2% |
| Consolidated EBITDA | 20.88 | 31.27 | -33.2% |
| Amortizations & Depreciations | -19.44 | -15.79 | -23.1% |
| Provisions & Impairment Losses | 0.18 | 0.37 | -51.3% |
| Non-recurrent costs/income (1) | -0.35 | 0.08 | - |
| EBIT | |||
| Business Units | 4.75 | 2.46 | +93.0% |
| Real Estate Assets | -0.02 | 16.51 | - |
| Eliminations & Adjustments | -3.47 | -3.05 | -13.6% |
| Consolidated EBIT | 1.26 | 15.92 | -92.1% |
| Net Financial Expenses | -4.25 | -6.28 | +32.4% |
| Investment Income and Results from Assoc. Undertakings | 2.41 | 16.68 | -85.6% |
| EBT | -0.58 | 26.32 | - |
| Taxes | -1.90 | -5.80 | +67.2% |
| Net Profit - Continued Businesses | -2.48 | 20.52 | - |
| Net Profit - Discontinued Businesses | -2.92 | -1.83 | -59.8% |
| Net Profit - Total | -5.40 | 18.69 | - |
| Attributable to Equity Holders of Sonae Capital | -6.51 | 17.59 | - |
| Attributable to Non-Controlling Interests | 1.11 | 1.10 | +1.2% |
(1) EBITDA excluding the estimated present value of potential costs for the period of the Guaranteed Income from real estate sales at Troia Resort
The Group's consolidated Turnover in 2017 amounted to 182.33M€. Ebitda and Ebit amounted to 20.88M€ and 1.26M€, generating margins of 11.5% and 0.7%, respectively, registering a very different evolution of the Business Units and the sale of Real Estate Assets from the previous year's performance.
The Business Units' Turnover amounted to 157.89M€, an increase of 7.4% over the previous year. Ebitda also improved considerably by 50.0% to 17.3M€, generating a margin of 11.0% (+ 3.2pp vs. the previous year). It should also be noted that the EBIT of 4.75M€ (+93% compared to 2016) is more than enough to offset all the Sonae Capital financial costs.
Regarding Business Units, the following should be highlighted:
Consolidated Net Profit (continued operations) was negative by 2.48M€, representing a decrease of 23M€ compared to the previous year, mainly due to: the (i) already registered performance at Ebitda level (-10.4M€ due to capital gains generated by Real Estate Assets sales in 2016); (ii) improvement in Financial Results (+2.0M€) due to the lower net debt average level and especially lower financing costs; and (iii) essentially the lower Investment Results due to the sale in 2016 of investments in road concessions.
| Capital Structure/Capex/Ratios | |||||
|---|---|---|---|---|---|
| Million euro | Dec 2017 | Dec 2016 | p 17/16 | ||
| Net Capital Employed | 400.7 | 386.4 | +3.7% | ||
| Fixed Assets | 322.6 | 284.1 | +13.5% | ||
| Non-Current Investments (net) | 8.6 | 4.7 | +85.3% | ||
| Working Capital | 71.8 | 98.2 | -26.8% | ||
| Capex (end of period) | 61.6 | 12.7 | >100% | ||
| % Fixed Assets | 19.1% | 4.5% | +14.6 pp | ||
| Net Debt | 109.4 | 66.0 | +65.6% | ||
| % Net Capital Employed | 27.3% | 17.1% | +10.2 pp | ||
| Debt to Equity | 37.5% | 20.6% | +16.9 pp | ||
| Net Debt excluding Energy | 70.4 | 48.9 | +43.8% | ||
| Capital Structure Ratios | |||||
| Loan to Value (Real Estate) | 15.9% | 8.6% | |||
| Net Debt/EBITDA (recurrent) | 2.57x | 2.38x |
| Consolidated Balance Sheet | |||||
|---|---|---|---|---|---|
| Million euro | Dec 2017 | Dec 2016 | p 17/16 | ||
| Total Assets | 516.1 | 501.5 | +2.9% | ||
| Tangible and Intangible Assets | 275.3 | 246.3 | +11.8% | ||
| Goodwill | 47.4 | 37.8 | +25.2% | ||
| Non-Current Investments | 2.0 | 1.7 | +16.6% | ||
| Other Non-Current Assets | 34.4 | 29.3 | +17.2% | ||
| Stocks | 94.4 | 102.6 | -8.0% | ||
| Trade Debtors and Other Current Assets | 53.0 | 48.5 | +9.2% | ||
| Cash and Cash Equivalents | 7.3 | 32.2 | -77.3% | ||
| Assets held for sale | 2.4 | 3.0 | -20.2% | ||
| Total Equity | 291.4 | 320.4 | -9.0% | ||
| Total Equity attributable to Equity Holders of Sonae Capital | 280.5 | 310.4 | -9.7% | ||
| Total Equity attributable to Non-Controlling Interests | 10.9 | 9.9 | +10.0% | ||
| Total Liabilities | 224.8 | 181.2 | +24.0% | ||
| Non-Current Liabilities | 116.2 | 120.7 | -3.7% | ||
| Non-Current Borrowings | 88.5 | 94.3 | -6.1% | ||
| Deferred Tax Liabilities | 21.6 | 19.6 | +10.2% | ||
| Other Non-Current Liabilities | 6.1 | 6.8 | -10.8% | ||
| Current Liabilities | 108.6 | 60.5 | +79.6% | ||
| Current Borrowings | 28.2 | 4.0 | >100% | ||
| Trade Creditors and Other Current Liabilities | 75.5 | 52.8 | +43.1% | ||
| Liabilities associated to assets held for sale | 4.8 | 3.7 | +28.9% | ||
| Total Equity and Liabilities | 516.1 | 501.5 | +2.9% |
| Profit and Loss Account — Energy | |||||
|---|---|---|---|---|---|
| Million euro | FY 2017 FY 2016 p 17/16 |
||||
| Total Operational Income | 46.60 | 38.80 | +20.1% | ||
| Turnover | 45.22 | 38.23 | +18.3% | ||
| Other Operational Income | 1.38 | 0.57 | >100% | ||
| Total Operational Costs | -32.41 | -30.99 | -4.6% | ||
| Cost of Goods Sold | -23.17 | -23.46 | +1.2% | ||
| External Supplies and Services | -5.09 | -4.43 | -15.0% | ||
| Staff Costs | -2.64 | -2.32 | -13.6% | ||
| Other Operational Expenses | -1.50 | -0.78 | -91.7% | ||
| EBITDA | 14.19 | 7.81 | +81.8% | ||
| EBITDA Margin (% Turnover) | 31.4% | 20.4% | +11.0 pp | ||
| EBIT | 7.23 | 4.63 | +56.2% | ||
| EBIT Margin (% Turnover) | 16.0% | 12.1% | +3.9pp | ||
| Capex | 38.99 | 7.21 | >100% | ||
| EBITDA-Capex | -24.80 | 0.60 | - | ||
| Total Capacity (MW) | 65.5 | 62.8 | +4.3% | ||
| Owned & Operated | 62.3 | 52.6 | +18.4% | ||
| Operated (not consolidated) | 3.2 | 10.2 |
Turnover of the Energy segment amounted to 45.22M€, an increase of 18.3% over the previous year, due to: (i) the increase in electricity sales prices; (ii) the higher production level; and (iii) the operations acquired in the period. These acquisitions, combined with the termination of an energy services contract (non-owned operation), currently translate into a 65MW owned or operated capacity. It should be noted that no further discontinuations are foreseen during the next 8 quarters (4Q19).
As a result of the turnover positive performance, EBITDA amounted to 14.19M€, almost the double of the previous year figure, reaching a 31.4% margin, a significant increase of 11pp, reinforcing the continuous improvement in performance demonstrated above. It should be noted that the contribution of the operations acquired during the year amounted to 5.1M€ and 4.0M€, respectively at turnover and Ebitda levels.
Capex amounted to 39.0M€, mainly as a result of the aforementioned acquisitions.
.
| Profit and Loss Account — Industrial Enginnering | |||||||
|---|---|---|---|---|---|---|---|
| Million Euro | FY 2017 FY 2016 |
||||||
| Total Operational Income | 4.37 | - | - | ||||
| Turnover | 4.27 | - | - | ||||
| Other Operational Income | 0.10 | - | - | ||||
| Total Operational Costs | -4.96 | - | - | ||||
| Cost of Goods Sold | -2.62 | - | - | ||||
| External Supplies and Services | -0.98 | - | - | ||||
| Staff Costs | -1.24 | - | - | ||||
| Other Operational Expenses | -0.13 | - | - | ||||
| EBITDA | -0.59 | - | - | ||||
| EBITDA Margin (% Turnover) | -13.8% | - | - | ||||
| EBIT | -0.99 | - | - | ||||
| EBIT Margin (% Turnover) | -23.2% | - | - | ||||
| Capex | 16.20 | - | - | ||||
| EBITDA-Capex | -16.79 | - | - |
The acquisition of ADIRA was completed in Q32017. This subsidiary only contributed to the consolidated financial results of the Group from the month of August.
Following its strategic purpose, Sonae Capital has incorporated an Industrial Engineering segment aimed at creating a cluster of technological-based companies with a strong exporting drive and leveraged in the Portuguese engineering skills.
The first movement in this area was materialized during 2017 with the acquisition of ADIRA.
ADIRA, a Portuguese-based company with more than 60 years of history, is a key player in the "Metal Forming" industry, developing, designing, manufacturing and commercializing machine tools, that has the majority of its activity focused on external markets. At the same time, ADIRA is acknowledged as a technologically dynamic company with a widespread brand, being associated to recurrent investment in innovation and R&D, which has resulted in the attribution of several national and international awards.
The acquisition of ADIRA was completed in 3Q17 and only contributed to the Group's consolidated results as of August.
In this initial phase, the main focus of the Team has been the integration of the main Group's corporate processes, following a clear vision on the transformation plan that is urgent to implement.
The contribution of this segment to the Group's consolidated results was 4.3M€ at the top line level and -0.6M€ at Ebitda which includes, in addition to Adira's regular activity, costs related to the acquisition and integration process.
| Profit and Loss Account — Fitness | ||||||
|---|---|---|---|---|---|---|
| Million euro | FY 2017 | p 17/16 | ||||
| Total Operational Income | 23.62 | 18.32 | +29.0% | |||
| Turnover | 23.25 | 18.09 | +28.5% | |||
| Other Operational Income | 0.38 | 0.23 | +63.3% | |||
| Total Operational Costs | -21.84 | -16.16 | -35.1% | |||
| Cost of Goods Sold | -0.14 | -0.10 | -34.7% | |||
| External Supplies and Services | -13.11 | -9.73 | -34.7% | |||
| Staff Costs | -7.34 | -5.41 | -35.6% | |||
| Other Operational Expenses | -1.25 | -0.19 | -36.5% | |||
| EBITDA | 1.79 | 2.16 | -17.1% | |||
| EBITDA Margin (% Turnover) | 7.7% | 11.9% | -4.2 pp | |||
| EBIT | 0.06 | 0.19 | -68.6% | |||
| EBIT Margin (% Turnover) | 0.3% | 1.0% | -0.8 pp | |||
| Capex | 3.23 | 1.99 | +62.1% | |||
| EBITDA-Capex | -1.44 | 0.16 | - | |||
| # Health Clubs in Operation | 19 | 17 | +2 |
The Fitness segment continues to show positive performances and strengthened its competitive position, reflected mainly in the increase in the number of active members (+30.8%) and in average monthly fees (+5.2%) when compared to the same period last year. As a result, turnover in the period under analysis registered a significant increase of 28.5% over the previous year.
The performance verified at the turnover level allows to partially offset the new openings effort (two in 2017: 'Constituição' and 'Rio Tinto', both in the Porto Metropolitan Area and, in early 2018, two new openings: 'Loures' in the Lisbon Metropolitan area and 'Lumiar' in Lisbon city) that affected the Ebitda performance especially in the 4Q17, a predictable situation until the clubs do not reach a stabilized number of members.
During 2017 the Team continued to focus on improving its competitive position, looking for opportunities to expand the number of clubs in operation. The investment in the opening of new clubs, following a capital light approach, allowed Solinca to close the year with 19 clubs in operation.
| Profit and Loss Account — Hospitality | ||||||
|---|---|---|---|---|---|---|
| Million euro | FY 2017 FY 2016 p 17/16 |
|||||
| Total Operational Income | 23.53 | 20.35 | +15.7% | |||
| Turnover | 22.96 | 19.76 | +16.2% | |||
| Other Operational Income | 0.57 | 0.59 | -2.7% | |||
| Total Operational Costs | -23.99 | -22.60 | -6.2% | |||
| Cost of Goods Sold | -1.77 | -1.71 | -3.8% | |||
| External Supplies and Services | -14.69 | -14.04 | -4.6% | |||
| Staff Costs | -6.70 | -6.20 | -8.0% | |||
| Other Operational Expenses | -0.84 | -0.66 | -27.3% | |||
| EBITDA | -0.46 | -2.26 | +79.6% | |||
| EBITDA Margin (% Turnover) | -2.0% | -11.4% | +9.4 pp | |||
| EBIT | -1.52 | -3.30 | +54.0% | |||
| EBIT Margin (% Turnover) | -6.6% | -16.7% | +10.1 pp | |||
| Capex | 0.95 | 1.36 | -29.8% | |||
| EBITDA-Capex | -1.42 | -3.62 | +60.9% | |||
| # Units | 5 | 5 |
The main operating indicators in the Hospitality segment (now including the operation of the Troiaresort Tourist Apartments - "Troia Residence") continue to show favorable evolutions, evidenced by the improvement in average revenue per room and RevPAR in 2017 of 5.9% and 18.5%, respectively. It should be noted that all operations have Rev-PAR higher than the same period last year, attesting to the positive dynamics of the sector in general and of this segment, in particular.
The positive performance achieved in the period should be highlighted, both in turnover and Ebitda, showing growth of 16.2% and 79.6%, respectively.
Excluding the value of rents, it should be noted that the EBITDAR of the Hospitality segment amounted to 4.2M€, an improvement of 50.1% over the same period last year.
It is important to highlight that the "Porto Palácio Hotel" reached, in 2017, positive Ebitda, an important landmark in the history of this emblematic hotel in Porto city. In addition, the "The House" unit, opened according to a capital light approach, continued to reach positive EBITDA, now in its first full year of operation.
Capex remained at a reduced level of 0.95M€, 29.8% lower than in the same period of the previous year, allowing an improvement, together with Ebitda's performance, of 60.9% at the Ebitda-Capex level.
| Profit and Loss Account — Refrigeration & HVAC | |||||||
|---|---|---|---|---|---|---|---|
| Million Euro | FY 2017 | FY 2016 | |||||
| Total Operational Income | 51.36 | 62.05 | -17.2% | ||||
| Turnover | 51.24 | 60.89 | -15.8% | ||||
| Other Operational Income | 0.12 | 1.16 | -89.7% | ||||
| Total Operational Costs | -49.88 | -58.84 | +15.2% | ||||
| Cost of Goods Sold | -26.17 | -24.77 | -5.7% | ||||
| External Supplies and Services | -14.05 | -23.78 | +40.9% | ||||
| Staff Costs | -8.43 | -9.29 | +9.3% | ||||
| Other Operational Expenses | -1.23 | -1.00 | -22.8% | ||||
| EBITDA | 1.48 | 3.21 | -53.7% | ||||
| EBITDA Margin (% Turnover) | 2.9% | 5.3% | -2.4 pp | ||||
| EBIT | 0.89 | 2.82 | -68.3% | ||||
| EBIT Margin (% Turnover) | 1.7% | 4.6% | -2.9 pp | ||||
| Capex | 0.10 | 0.07 | +42.6% | ||||
| EBITDA-Capex | 1.38 | 3.14 | -55.9% |
2017's turnover showed an expected decrease of 15.8% to 51.2M€, compared to the same period of last year, due to the delivery of a major international project in 2016 which influenced positively the previous year. This decrease in activity was partially offset in 4Q17, when the activity was 5.5% higher than in the same quarter of the previous year.
It should be noted that the backlog on the Portuguese operation, at the end of the period, amounts to 23.2M€, representing approximately 5.4 months of turnover, indicating a continued recovery of activity levels in the upcoming quarters, particularly in the Refrigeration segment. Profitability recovery will remain the key challenge going forward.
| Profit and Loss Account — Troia Resort — Operations | ||||||
|---|---|---|---|---|---|---|
| Million Euro | FY 2017 FY 2016 |
|||||
| Total Operational Income | 11.73 | 10.69 | +9.7% | |||
| Turnover | 10.95 | 10.04 | +9.1% | |||
| Other Operational Income | 0.78 | 0.65 | +20.2% | |||
| Total Operational Costs | -10.84 | -10.08 | -7.6% | |||
| Cost of Goods Sold | -1.44 | -1.25 | +4.8% | |||
| External Supplies and Services | -4.93 | -4.53 | -8.7% | |||
| Staff Costs | -3.65 | -3.31 | -10.3% | |||
| Other Operational Expenses | -0.82 | -0.71 | -14.4% | |||
| EBITDA | 0.89 | 0.61 | +45.1% | |||
| EBITDA Margin (% Turnover) | 8.1% | 6.1% | +2.0 pp | |||
| EBIT | -0.92 | -1.87 | %51.0% | |||
| EBIT Margin (% Turnover) | -8.4% | -18.7% | +10.3 pp | |||
| Capex | 0.63 | 0.13 | >100% | |||
| EBITDA-Capex | 0.25 | 0.48 | -47.4% |
The turnover of Troia Resort Operations (excluding real estate activity) amounted to 10.95M€ in 2017, an increase of 9.1% over the previous year. All the operations showed very positive performances, of which the most notable was the contribution of the Atlantic Ferries operation of 6.2M€ (+5.4%).
Ebitda (with Atlantic Ferries as its main contributor) amounted to 0.89M€ and, as a result of the turnover performance, recorded an improvement of 45.1%.
Capex remained at controlled levels, with the main contribution being investments of renovation / improvements in the river transport operation.
The Tróia Real Estate Assets Unit recorded a turnover of 15.4M€, as a result of the following contributions:
Within the Group's current real estate portfolio there are diversified assets with different licensing and construction stages, including land plots with and without construction viability, residential units, residential, tourist and commercial construction projects, offices, factory buildings and retail, with a wide geographical dispersion.
This block considers all of the real estate assets of Sonae Capital Group, except the units already developed and in commercialization in the Tróia Resort, and the assets held by the WTC fund.
During 2017, important steps continued to be taken towards putting the defined company strategy into practice. This is based on: (i) improving the competitive position of each one of our businesses; (ii) seeking out new businesses that generate value and fall under the skills area existing in the group; (iii) selling non-strategic real estate assets; and (iv) maintaining a balanced capital structure according to the type of businesses and assets held by the group.
2017 was also marked by achieving the strategic aim of Sonae Capital to integrate new businesses with a high capacity for creating shareholder value. The acquisition of ADIRA, a Portuguese company that leverages one of the main assets and resources of the company, engineering know-how, geared heavily towards the international market and an important player in the "Metal Forming" sector, made this aim a reality.
In the Hospitality segment, the continued improvement in the operating indicators, added to the good phase in industry, seen in the growth in turnover and EBITDA, have made it possible to expect continued improvements in the profitability and competitive position of the current operations. In addition, we will continue to seek non-organisational solutions for improving the overall competitiveness positioning of the segment.
In the Fitness segment, the reinforcement of the competitive position, seen in the increase in the average number of active members, making up the expansion plan that is being implemented, and, in particular, allied to the strategic relevance of the acquisition of the "Pump" chain, will allow us to continue to improve our position in the segment, both in terms of volume and of profitability.
The results achieved this year, along with suiting the levels of net indebtedness to the type of businesses and assets held by the group will allow us to look positively to the future. The combination of the expected positive performance of the business units at Sonae Capital and the continued sale of real estate assets is one of the fundamental factors for the effective implementation of the corporate strategy. We believe that Sonae Capital is in a privileged position to keep financing the growth of existing operations and, in addition, to tackle new options for future growth.
Regarding the achievement of what is considered a well balanced capital structure and the gains registered on the sale of nonstrategic assets, the Sonae Capital Board of Directors has approved a proposal of dividends distribution in the total gross amount of 15,000,000 euro to shareholders. This dividend results from the allocation of net results and the distribution of free reserves, correspondent to a gross dividend of 0.06 euro per share.
From the total dividends of 15,000,000 euros, the amount of dividends that would be attributable to the shares that, at the dividends distribution date, are held by the Company or by any of its subsidiaries shoud remain as Free Reserves. This proposal is subjected to final approval of the Shareholders' General Meeting.
This proposal requires the final approval of the Shareholders' General Meeting.
| Sonae Capital's Sahre Information | ||||
|---|---|---|---|---|
| Name: Sonae Capital, SGPS, SA | ISIN Code: PTSNP0AE0008 | |||
| Security's Issuer: Sonae Capital, SGPS, SA | NYSE Euronext: SONC | |||
| Listing Date: 28 January 2008 | Reuters: SONAC LS | |||
| Share Capital: 250.000.000 euros | Bloomberg: SONC.PL | |||
| Listed ammount: 250.000.000 shares |
Treasury stock: As at 31 December 2017, the Company owns 4,783,433 own shares
During 2017, Sonae Capital's share price increased 18.6%, closing the year at 0.887 euros. This performance was higher than that of the Portuguese Stock Market Index (PSI 20), whiched increased 15.2% in the same period.
The following table summarises the most relevant information on the Sonae Capital shares traded in Euronext Lisbon:
| Euronext Lisbon | 2017 | 2016 |
|---|---|---|
| Closing price N-1 | 0.748 | 0.510 |
| Maximum price | 0,999 (15.05.2017) |
0,810 (12.12.2016) |
| Minimum price | 0,681 (07.02.2017) |
0,442 (20.01.2016) |
| 31 December N | 0.748 | 0.748 |
| Transactions | ||
| Average daily quantity | 375.775 | 273.068 |
| Total shares traded | 95.822.619 | 70.178.592 |
| Total volume (million euro) | 81.6 | 42.3 |
| Average daily volume (million euro) | 0,38 | 0,17 |
| Market capitalization 31.12.N (million euro) (a) | 221,7 | 187,0 |
(a) Market capitalization calculated based on the total number of shares
Relevant events announced to the market during 2016 were:
The net profit of Sonae Capital, SGPS, SA, the holding company of the Group, was 5,589,342 euros. This profit compares with 8,738,316 euros in the previous year. It was negatively impacted by lower results of the financial function in about 6.4M€ and for a loss of 6.6M€ in the results of investments, despite the improvement of 2.7M€ in taxes as a result of the effiency of the tax perimeter.
The profit of the year already reflects in the amount of 204.853euros for the short term variable remuneration of executive directors and personal, in the form of distribution of profits for the year, pursuant to article 31, nr.2 of the Articles of Association and on proposal of the Remuneration Committee, which is responsible for implementing the remuneration policy approved at the Shareholders' General Meeting of 28 April 2017.
The Company disposed of 732,993 shares during 2017, for the total amount of 624,386€ (reference price of 0.852€ per share) as a result of the distribution of shares among employees in accordance with the provisions of the Medium-Term Variable Remuneration Plans. As at 31 December 2017, Sonae Capital held 4,783,433 own shares, representing 1.913% of its share capital.
During 2017, Non-Executive Board Members made significant contributions in the discussion of the different strategic options, while maintaining close contact with corporate directors and management teams, as in previous years. During the year, Non-Executive Board Members effectively performed their duties as members of the Board of Directors and members of the Board Audit and Finance Committee and the Board Nomination and Remuneration Committee.
Further information on the above mentioned Committees can be found in point 29 of the Company's Corporate Governance Report, complementing information on activities performed by Non-Executive Board Members described in this section of the report.
Sonae Capital, SGPS, SA, as the holding company of the Group, posted a positive net profit of 5,589,342 euros in 2017. The Board of Directors proposes to the Shareholders' General Meeting that this amount be transferred to Legal Reserve (279,467 euros) and for the dividends payout (5,309,875 euros). Since the proposed gross dividend is 0.10€ per share, free reserves in the amount of 9,690,125 euros are intended to be used for the aforementioned dividends payout.
As at 12th January 2018 following the non-opposition decision of the Portuguese Competition Authority ('Autoridade da Concorrência') and the fulfillment of certain conditions precedent, Sonae Capital, SGPS, SA announced that the above mentioned acquisition had become effective.
The Board of Directors wishes to thank all Sonae Capital's stakeholders for their support and trust shown throughout the year, highlighting the cooperation and monitoring by the Supervisory Board and Statutory Auditor.
We thank our employees for their commitment, their valuable contribution to the significant improvement in operational results and the shared effort to achieve the goals set.
We reaffirm that we continue to believe that the foundation for the Group's sound growth is increasingly more established, believing in the success and sustainability of the defined strategy
Maia, 2 March 2018
The Board of Directors
| Duarte Paulo Teixeira de Azevedo | Maria Cláudia Teixeira de Azevedo |
|---|---|
| Chairman | CEO |
| Álvaro Carmona e Costa Portela | Ivone Pinho Teixeira |
| Member of the Board of Directors | CFO |
| Francisco de La Fuente Sánchez | Miguel Jorge Moreira da Cruz Gil Mata |
| Member of the Board of Directors | Member of the Board of Directors |
| Paulo José Jubilado Soares de Pinho |
Member of the Board of Directors
The consolidated financial statements presented in this report are audited and have been prepared in accordance with the International Financial Reporting Standards ("IAS / IFRS"), issued by the International Accounting Standards Board ("IASB"), as adopted by the European Union.
With the aim of continuing to improve the quality and transparency of the information provided, not only at the Consolidated level, but also, at each Business Units level, and aligned with the best market practices, the international operations (Angola, Mozambique and Brazil) of the Refrigeration & HVAC segment are now considered assets held for sale and therefore their contribution to the consolidated results is recognized as discontinued operations. In order to maintain the information comparability, the 2016 figures are presented according to this new reality.
In addition, in order to better report the results of our business portfolio, aware of the significant differences between the fundamentals of each of our businesses, we now report clearly detailed information between Real Estate Assets and Business Units.
Investment in Tangible and Intangible Assets.
Operational Profit (EBIT) + Amortization and Depreciation + Provisions and Impairment Losses + Impairment Losses of Real Estate Assets in Stocks (included in Costs of Goods Sold) – Reversal of Impairment Losses and Provisions (including in Other Operation Income).
EBITDA + Provisions related to the estimated present value of potential costs for the full period of the Guaranteed Income from real estate sales at Troia Resort.
EBITDAR EBITDA + Building Rents.
Net Debt / Equity.
Heating, Ventilation and Air Conditioning.
Net Debt of real estate assets / Real estate assets Valuation.
Non-Current Loans + Current Loans – Cash and Cash Equivalents – Current Investments.
OPERATIONAL CASH FLOW
EBITDA - Capex.
Promissory Purchase and Sale Agreement.
Revenue Per Available Room.
31 December 2017
The signatories individually declare that, to their knowledge, the Report of the Board of Directors, the Consolidated and Individual Financial Statements and other accounting documents required by law or regulation were prepared in accordance with applicable International Financial Reporting Standards, and give a true and fair view, in all material respects, of the assets and liabilities, financial position and the consolidated and individual results of Sonae Capital, SGPS, SA, and of the companies included in the consolidation perimeter, and that the Report of the Board of Directors faithfully describes major events that occurred during 2017 and their impacts, if any, in the business performance and financial position of Sonae Capital, SGPS, SA and of the companies included in the consolidation perimeter, and contains an appropriate description of the major risks and uncertainties that they face.
Maia, 02 March 2018
O Conselho de Administração Duarte Paulo Teixeira de Azevedo Chairman of the Board of Directors Álvaro Carmona e Costa Portela Member of the Board of Directors Francisco de La Fuente Sánchez Member of the Board of Directors Paulo José Jubilado Soares de Pinho Member of the Board of Directors Maria Cláudia Teixeira de Azevedo CEO Ivone Pinho Teixeira CFO Miguel Jorge Moreira da Cruz Gil Mata Member of the Board of Directors
Disclosure of the number of shares and other securities issued by the Company held and of the transactions executed over such securities, during the financial year in analysis, by the members of the statutory governing and auditing bodies and by people discharging managerial responsibilities ("dirigentes"), as well as by people closely connected with them pursuant to article 248 B of the Portuguese Securities Code:
| Date | Additions | Reductions | Balance as at 31.12.2017 |
||||
|---|---|---|---|---|---|---|---|
| Quantity | Av. Price € | Quantity | Av. Price € | 31.12.2017 | Quantity | ||
| Duarte Paulo Teixeira de Azevedo () (*) | |||||||
| Efanor Investimentos, SGPS, SA (1) | Minority | ||||||
| Migracom, SA (2) | Dominant | ||||||
| Maria Cláudia Teixeira de Azevedo () () (**) | |||||||
| Efanor Investimentos, SGPS, SA (1) | Minority | ||||||
| Linhacom,SA (3) | Dominant | ||||||
| Sonae Capital, SGPS, SA | 31.03.2017 | 111.390 | 0,842 | 280.495 | |||
| Maria Margarida Carvalhais Teixeira de Azevedo (**) | |||||||
| Efanor Investimentos, SGPS, SA (1) | Minority | ||||||
| Sonae Capital, SGPS, SA | 838.862 | ||||||
| Ivone Maria Pinho Teixeira da Silva () (**) | |||||||
| Sonae Capital, SGPS, SA | 31.03.2017 | 110.070 | 0,842 | 110.070 | |||
| Álvaro Carmona e Costa Portela (*) | |||||||
| Sonae Capital, SGPS, SA | 24.942 | ||||||
| Sonae Capital/2014-2019 Bonds | 1 | ||||||
| Paulo José Jubilado Soares de Pinho (*) | |||||||
| Sonae Capital, SGPS, SA | 12.650 | ||||||
| Closely connected person (a) | 8.125 | ||||||
| Miguel Jorge Moreira da Cruz Gil Mata () (**) | |||||||
| Sonae Capital, SGPS, SA | 31.03.2017 | 122.895 | 0,842 | 820.726 | |||
| Date | Purchases | Sales | Position as at 31.12.2017 |
Balance as at 31.12.2017 |
|||
| Quantity | Av. Price € | Quantity | Av. Price € | Quantity | |||
| (1) Efanor Investimentos, SGPS, SA | |||||||
| Sonae Capital, SGPS, SA | 88.859.200 | ||||||
| Pareuro, BV (4) | Dominant | ||||||
| (2) Migracom, SA | |||||||
| Sonae Capital, SGPS, SA | 161.250 | ||||||
| Imparfin - Investimentos e Participações Financeiras, SA (5) | Minority | ||||||
| (3) Linhacom, SA | |||||||
| Sonae Capital, SGPS, SA | 43.912 | ||||||
| Imparfin - Investimentos e Participações Financeiras, SA (5) | Minority | ||||||
| (4) Pareuro, BV | |||||||
| Sonae Capital, SGPS, SA | 66.600.000 | ||||||
| (5) Imparfin - Investimentos e Participações Financeiras, SA | |||||||
| Sonae Capital, SGPS, SA | 513.160 |
(*) Member of the Board of Directors of Sonae Capital, SGPS, SA
(**) Member of the Board of Directors of Efanor Investimentos, SGPS, SA (directly and indirectly dominant company)
(***) shares acquired in compliance with the annual and medium-term variable remuneration policy (a) article 248 B, no.4, paragraph b) of the Portuguese Securities Code: held by Change Partners, SCR, SA, of which is Member of the Board of Directors
| Number of shares as at 31.12.2017 | |
|---|---|
| Efanor Investimentos, SGPS, SA (1) | |
| Sonae Capital, SGPS, SA | 88.859.200 |
| Pareuro, BV | Dominated |
| Pareuro, BV |
| Sonae Capital, SGPS, SA | 66.600.000 |
|---|---|
(1) Under the terms and for the purposes of articles 20 and 21 of the Portuguese Securities Code, Efanor ceased to have a controlled shareholders as of 29th November 2017
Shares held and voting rights attributable to shareholders owning more than 2% of the share capital of the Sonae Capital, SGPS, SA, as required by article 8(1)(b) of the Portuguese Securities Market Commission (CMVM) Regulation No. 5/2008:
| Shareholder | Nr. of Shares |
% of Share Capital |
% of Voting Rights |
|---|---|---|---|
| Efanor Investimentos, SGPS, S.A. (1) | |||
| Directly Owned | 88.859.200 | 35,544% | 36,237% |
| Through Pareuro, BV (controlled by Efanor) | 66.600.000 | 26,640% | 27,160% |
| Through Maria Margarida Carvalhais Teixeira de Azevedo (Member of the Board of Directors of Efanor) |
838.862 | 0,336% | 0,342% |
| Through Maria Cláudia Teixeira de Azevedo (Member of the Board of Directors of Efanor) |
280.495 | 0,1122% | 0,114% |
| Through Linhacom, S.A. (controlled by the Member of the Board of Directors of Efanor Maria Cláudia Teixeira de Azevedo) |
43.912 | 0,0176% | 0,018% |
| Through Migracom, S.A. (controlled by the Member of the Board of Directors of Efanor Duarte Paulo Teixeira de Azevedo) |
161.250 | 0,0645% | 0,066% |
| Total attributable | 156.783.719 | 62,713% | 63,937% |
| Quaero Capital, SA | 12.633.330 | 5,053% | 5,152% |
| Total attributable | 12.633.330 | 5,053% | 5,152% |
| Azvalor Asset Management, SGIIC, SA | 5.011.941 | 2,005% | 2,044% |
| Total attributable | 5.011.941 | 2,005% | 2,044% |
(1) Under the terms and for the purposes of articles 20 and 21 of the Portuguese Securities Code, Efanor ceased to have a controlling shareholder as of 29th November 2017
31 December 2017
The share capital of Sonae Capital, SGPS, S.A. (hereinafter referred to as "Company" or "Sonae Capital") is 250,000,000 euros, fully subscribed and paid up, and is divided into 250,000,000 ordinary, book entered and nominative shares each with the nominal value of 1 euro.
All the shares of Sonae Capital have been admitted to trading on the Euronext Lisbon regulated market since 28 January 2008.
The Company's shares have no restrictions on their transferability or ownership, nor are there shareholders holding special rights. Accordingly, the shares are freely transferable according to the applicable legal rules.
The Company held 4,783,433 treasury shares at 31 December 2017, representing 1.913% of the share capital, corresponding to the same percentage of voting rights.
The Company has not entered into any agreements which contain clauses intended to be defensive measures for the change of shareholder control in the case of takeover bids.
Under the same terms, the Company did not approve any statutory provision or rules or regulations in order to prevent the success of takeover bids.
No defensive measures were adopted during the 2017 financial year.
The majority of the share capital of the Company is attributed to a single shareholder. There is also no statutory rule that provides for the limitation of the number of votes that may be held or exercised by a shareholder, whether individually or jointly with other shareholders.
The existence of any shareholder agreements with regard to the Company is unknown.
The shareholders who, at 31 December 2017 and in accordance with the notifications received by the Company, in accordance with article 20 of the Securities Code, have a qualifying interest representing at least 2% of the share capital of Sonae Capital, are the following:
| Shareholder | No. of Shares Held | % Share capital with voting rights |
|---|---|---|
| Efanor Investimentos, SGPS, S.A.1 | 156.783.719 | 62,713% |
| Quaero Capital, S.A. | 12.633.330 | 5,053% |
| Azvalor Asset Management, SGIIC, S.A. | 5.011.941 | 2,005% |
The shares and bonds held by members of the management and supervisory bodies in the Company and in companies in a control or group relationship with the Company, either directly or through related persons, are disclosed in an appendix to the annual report of the Board of Directors, as required by article 447 of the Companies Code and article 14(7) of the CMVM Regulation No. 5/2008.
The powers granted by the Articles of Association to the Board of Directors of the Company to decide on share capital increase operations ceased to exist in December 2012 and, from that date, such power is exclusively held by the Shareholders' General Meeting, under the legally established terms.
In relation to the commercial activities of the businesses that comprise the portfolio of Sonae Capital, there is a set of commercial relationships between the Company and its Subsidiaries and holders of qualifying holdings, or companies held by them.
These transactions form part of the regular business activity of each company and are carried out in accordance with current market practices and conditions. In addition, when related parties are involved, these transactions are scrutinised and, if significant, approved in advance by the Supervisory Board.
No significant business or commercial transactions were carried out in 2017 between the Company and holders of qualifying holdings in the company.
The Shareholders' General Meetings are conducted by the Board of Shareholders' General Meeting, whose members are elected by the shareholders for a term of three years, coinciding with the term of office of the other governing bodies.
The members of the current term of office were elected, for their first term, by decision of the Annual General Meeting of 31 March 2015, for the current term of 2015-2017.
The Company's share capital is represented in its entirety by a single category of ordinary shares, each share corresponding to one vote, and there are no statutory limitations to the exercise of the right to vote.
For shareholders to participate in the Shareholders' General Meeting, the only rules that have to be complied with is applicable legislation regarding the "Registration Date" as a relevant moment for proving the quality of shareholder and for exercising the corresponding right to participate in and vote at the Shareholders' General Meeting, as well as the scheme for the participation and voting of shareholders who, on a professional basis, hold shares in their own name but on behalf of clients.
Shareholders may be represented at meetings of the Shareholders' General Meeting upon presentation of a written representation document addressed to the Chairman of the Board of the Shareholders' General Meeting and delivered at the beginning of the meeting, indicating the name and domicile of the representative and the date of the meeting. This communication may also be done by e-mail in accordance with the instructions contained in the notice of meeting.
A shareholder may designate different representatives in respect of the shares held in different securities accounts, without prejudice to the principle of voting unity and to a voting differently allowed to shareholders on a professional basis.
The Company makes available, within the legal deadlines, adequate information notices of meetings, voting procedures and procedures to be adopted for postal voting, voting by e-mail or by proxy, as well as a draft letter of representation, in Portuguese and English, on its website (www.sonaecapital.pt) in order to ensure, promote and encourage the participation of shareholders in general meetings, either directly or through representatives.
In addition to the Company's website, this documentation is also available to shareholders for consultation at the company headquarters during business hours, as well as in the CMVM Information Disclosure System (www.cmvm.pt), from the date of publication of the notice of meeting.
Shareholders may vote by post on all matters requiring approval of the Shareholders' General Meeting, and the vote may be cast electronically. The means of voting are defined in the notice convening the Shareholders' General Meeting, and a form is available at http://www.sonaecapital.pt/investidores/assembleias-gerais to request the technical elements necessary to vote in this manner.
The Company also makes available to shareholders draft ballot forms in Portuguese and English on its website at (www.sonaecapital.pt), simultaneously with the publication of the Shareholders' General Meeting notice, as well as the corresponding preparatory documents relating to the various items of the agenda, in Portuguese and English.
There is no limit to the number of votes that may be held or exercised by a single shareholder or group of shareholders.
Pursuant to the provisions of the Articles of Association, the decisions of the Shareholders' General Meeting shall be taken by basic majority, unless otherwise established by law.
The Company adopts a monistic governance model (composed of Board of Directors, Supervisory Board and Statutory Auditor), as provided for by articles 278 (1) (a) and 413 (1) (b), both of the Companies Code, complemented by a delegation of management powers in an Executive Committee.
The Board of Directors is the body responsible for managing the Company's business, for performing all management acts related to the corporate purpose, determining the strategic orientation of the Company, as well as designating and supervising the performance of the Executive Committee and the specialised committees it sets up.
The Board of Directors considers that the adopted governance model is appropriate to the exercise of the powers of each of the governing bodies, ensuring, in a balanced manner, both its independence and the functioning of the respective interface. Moreover, the specialised committees, restricted to matters of great relevance, maximize the quality and performance of the management body, reinforcing the quality of its decision-making process.
The Executive Committee exercises the powers delegated in it by the Board of Directors for day-to-day matters of the Company and the corporate services.
The other two bodies are responsible for oversight.
The details of the structure adopted, the bodies that comprise it and corresponding functions and responsibilities are presented in the following paragraphs.
The members of the Board of Directors are elected, in accordance with the law and articles of association, under the terms stated in a proposal approved by the Shareholders' General Meeting.
The articles of association envisage that a director may be elected individually if there are proposals subscribed by shareholders who hold shares individually or jointly with other shareholders representing between ten and twenty percent of the share capital (director elected under the minority rule). The same shareholder may not subscribe to more than one voting list. Each proposal must contain at least the identification of two persons eligible for the same position to be filled. If several
proposals are tabled by different shareholders or groups of shareholders, the votes will be taken on all proposals.
The articles of association also establish that in the event of death, resignation or temporary or permanent impediment of any of its members, other than the director elected under the minority rule, the Board of Directors shall ensure that director's replacement by co-opting, and this appointment requires ratification by the shareholders at the first Shareholders' General Meeting held after co-optation. In the event of definitive absence of a Director elected in accordance with the rules set forth in the preceding paragraph, the election shall occur at a Shareholders' General Meeting that is convened.
In the exercise of the Board of Directors' power to co-opt, the Board Nomination and Remuneration Committee is responsible for identifying potential candidates for the position of director with the appropriate profile for the exercise of the management functions.
A director shall be deemed to be definitively absent if he fails to attend two consecutive or interpolated meetings, without presenting a justification that is accepted by the Board of Directors.
The Company is fully convinced that the management and supervisory bodies' adequacy for the roles assigned to them is essential to ensure a suitable composition of the interests of all its stakeholders and is facilitated through creative solutions resulting from the combination of different perspectives and backgrounds. Accordingly, it is fundamental for the Company that when selecting the members of these bodies the shareholders have approved governing body election proposals that are based on diversity criteria, in order to ensure that they have a greater range of knowledge, skills, experience and values.
This conviction is demonstrated by the Company's compliance with the rule for balanced representation of men and women in the management and supervisory bodies of listed companies, even before the publication of Law 62/2017 on 1 August 2017, and also by the principles which guide the Appointments and Remuneration Committee in the performance of the functions regarding the identification of the aforementioned candidates. These responsibilities focus mainly on: i) professional qualification in parallel with the renewal of the composition of the governing bodies in order to ensure compatibility between seniority and the need for diversification of career paths, so as to avoid a monolithic line of thought in group thinking; ii) gender diversity; iii) diversity of knowledge; and iv) age diversity, with no restrictive view regarding the age limits for the performance of corporate roles.
In accordance with the Company's articles of association, the Board of Directors may be composed of an even or odd number of members, a minimum of three and a maximum of nine, elected at a Shareholders' General Meeting. The term of office of the
Board of Directors is three years, and its members may be re-elected one or more times. The current term of office of the Board of Directors is the 2015-2017 triennium. It is the Board of Directors that, in accordance with the articles of association, elects its Chairman.
The Board of Directors at 31 December 2017 was composed of seven members, three executive members and four non-executive members, two of whom are independent.
The current members of the Board of Directors who were elected for the 2015-2017 term are listed in the following table:
| Name | First appointed | Date of termination of term of office |
|---|---|---|
| Duarte Paulo Teixeira de Azevedo | March 2015 | 31 December 2017 |
| Álvaro Carmona e Costa Portela | March 2011 | 31 December 2017 |
| Maria Cláudia Teixeira de Azevedo | March 2011 | 31 December 2017 |
| Ivone Pinho Teixeira | March 2013 | 31 December 2017 |
| Francisco de La Fuente Sánchez | April 2008 | 31 December 2017 |
| Paulo José Jubilado Soares de Pinho | April 2008 | 31 December 2017 |
| Miguel Jorge Moreira da Cruz Gil Mata | April 2016 | 31 December 2017 |
| Duarte Paulo Teixeira de Azevedo | Chairman – Non-Executive |
|---|---|
| Álvaro Carmona e Costa Portela | Vice-Chairman – Non-Executive |
| Maria Cláudia Teixeira de Azevedo | Executive |
| Ivone Pinho Teixeira | Executive |
| Miguel Jorge Moreira da Cruz Gil Mata | Executive |
| Francisco de La Fuente Sánchez | Non-Executive (Independent) |
| Paulo José Jubilado Soares de Pinho | Non-Executive (Independent) |
Non-executive members were appointed on the basis of their prestige in the business, finance, academic and consulting fields, with the aim of strengthening the Board of Directors' competences, namely with regard to the strategy for setting up the business portfolio and the annual financial plan, as well as their revising.
The non-executive members of the Board of Directors, Francisco de La Fuente Sánchez and Paulo José Jubilado Soares de Pinho, are considered independent according to the criterion of independence established in section 18.1 of Annex I of the CMVM Regulation No. 4/2013 and Recommendation II.1.7 of the CMVM (2013).
Independent non-executive directors are under a duty to inform the Company immediately of any occurrence during their term of office that may cause incompatibilities or loss of independence, as required by law.
The current composition of the Board of Directors, in particular regarding the number of independent non-executive directors (2 out of 7 members), ensures the degree of supervision necessary for the activities carried out by the Executive Directors, taking into account the governance model adopted, the size of the company and its free float. The Report of the Board of Directors includes a chapter describing the activities carried out by the non-executive members of the Board of Directors.
The professional qualifications and other relevant details of the CVs of the members of the Board of Directors are detailed in this report, in the Annex I.
The Chairman of the Board of Directors and the Chief Executive Officer, Duarte Paulo Teixeira de Azevedo and Maria Cláudia Teixeira de Azevedo, respectively, are shareholders and members of the Board of Directors of Efanor Investimentos, SGPS, S.A., a legal person to which the control of the majority of the voting rights in this Company is imputed.
To the best knowledge of the Company, there are no other usual and significant family, business and commercial relationships between shareholders holding qualifying holdings in excess of 2% of the voting rights and members of the Board of Directors.
21. Organisational charts or functional charts relating to the division of powers among the various governing bodies, committees and/ or departments of the Company, including information on the delegation of powers, particularly with regard to the delegation of the day-to-day management of the Company
According to the current corporate governance structure, the Board of Directors is responsible for strategic decisions at the business portfolio level and their implementation.
The Board of Directors delegates in the Executive Committee powers for the day-today operational management, also controlling the way in which this body functions and how the delegated powers are exercised.
The following powers of the Board of Directors may not be delegated, while all others have been delegated:
The Corporate Centre plays an instrumental role in supporting the Executive Committee and Board of Directors in the definition and control of the implementation of the defined strategies, policies and objectives. Composed of sovereign functions and shared functions, which are described below, its purpose is to provide transversal services to all Group companies:
The Corporate Finance role is to be responsible for defining and implementing financial management strategies and policies, ensuring an integrated and transversal vision of the Group's needs as well as the upkeep of relations with the capital, debt and banking markets. It is also responsible for managing the Group's financial risks and for preparing and monitoring the Group's financial plan.
The Legal area provides legal support in all fields, guaranteeing the defence of the Group's interests and promoting in an integrated and cross-cutting manner the strategy defined by the Board of Directors. It is responsible for monitoring legal compliance, litigation management, the corporate secretariat and the management of the Group's legal risks.
The Corporate Management Planning and Control function is to assist in the strategic development of the Group and in the definition of management information policies and ensure the reporting of consolidated information internally. This function is part of the Investor Relations Office which has the main responsibilities of reporting information to the market and ensuring permanent contact with institutional investors, shareholders and analysts.
Corporate Human Resources is responsible for the definition and implementation of the Group's human resources strategy and policies as well as the planning and management of talent and careers of top managers, under the terms approved by the Board of Directors and Remuneration Committee.
Portfolio Development, including Mergers & Acquisitions, has the mission to support the Board of Directors of Sonae Capital in projects of organisational growth and in the Group's business management, as well as in portfolio optimisation projects including the analysis and negotiation of investment and divestment opportunities.
The Internal Audit function defines and implements the Internal Audit activities by systematically and independently evaluating the Group's activities in order to ensure the effectiveness of the internal management and control systems and processes.
The Risk Management function assists the Board of Directors in the identification, modelling and monitoring of the Group's risks with the aim of ensuring their control and mitigation, as well as making it possible to include the risk dimension in strategic and operational decisions.
The Information Systems function is to ensure the alignment of information systems with the Group's strategy, creating value through the provision of solutions that promote effectiveness, efficiency and innovation of processes.
The sovereign functions report to the Executive Committee of Sonae Capital.
As regards Shared Functions, the mission of the Financial Department, coordinated by a manager of the Corporate Centre, is:
The current organisation of the Corporate Centre of Sonae Capital also envisages the existence of the IOW and Innovation function. The responsibility of this is to, on the one hand, promote a common culture and practices of continuous improvement, within the scope of the IOW - Improving our Work model, cross-cutting all of the Group's companies and, on the other hand, to promote, facilitate and accelerate integrated innovation projects between the different areas in order to increase the Group's competitiveness. At the same time, it also has the responsibility of identifying, promoting, evaluating and exploring project financing opportunities, through incentives and subsidies, within the context of the activities carried out by the different Group companies, in order to boost the performance of each business.
The rule of procedure of the Board of Directors is available for consultation on the Company's website (http://www.sonaecapital.pt) (investors tab, Corporate Governance section, Regulations).
The Articles of Association establish that the Board of Directors must meet at least once every quarter and, in addition, whenever the Chairman or two Directors convene it. During 2017, the Board of Directors met 6 times and the attendance record, either in person or through representation, was as follows:
| Duarte Paulo Teixeira de Azevedo | 100% |
|---|---|
| Maria Cláudia Teixeira de Azevedo | 100% |
| Álvaro Carmona e Costa Portela | 100% |
| Ivone Pinho Teixeira | 100% |
| Francisco de La Fuente Sánchez | 100% |
| Paulo José Jubilado Soares de Pinho | 100% |
| Miguel Jorge Moreira da Cruz Gil Mata | 100% |
The Secretary of the Board of Directors is responsible for the preparation and functioning of the meetings. The Secretary also keeps records of all decisions taken in the minutes of the meetings and sends the agendas of the meetings and supporting documents at least five days in advance, always with a weekend before the date of the meeting.
The Remuneration Committee, elected at the Shareholders' General Meeting, is the body responsible for assessing the performance and approving the remuneration of the members of the Board of Directors and other governing bodies, in representation of the shareholders and in accordance with the remuneration policy approved by the Shareholders at the General Meeting.
On the other hand, non-executive members, as part of their supervisory role, monitor in particular the performance of executive directors.
The Board Nomination and Remuneration Committee (CNR), which is solely composed of non-executive directors, supports the Remuneration Committee in the performance of its remuneration responsibilities. These committees may be assisted by international consultants of recognised competence, in order to carry out these functions. The independence of the consultants is guaranteed by their autonomy vis-à-vis the Board of Directors, the Company and the Group, as well as by their broad experience and credibility recognised by the market.
The performance assessment of executive directors is based on pre-determined criteria, consisting of objective performance indicators set for each period and in line with the overall strategy of growth and positive business performance.
These indicators consist of the business, economic and financial KPIs (Key Performance Indicators), subdivided into collective, departmental and personal KPIs. The collective business KPIs consist of economic and financial indicators that are defined based on the budget, the performance of each business unit, as well as on the consolidated performance of the Company.
Departmental business KPIs, in turn, are similar in nature to the previous ones, and they measure the specific contribution of the director to the performance of the business. Personal KPIs include objective and subjective indicators and are intended to measure compliance with duties and commitments individually taken on by the executive director. Additional information can be found in points 71 to 75 below.
The list of positions held by the Company's directors and other relevant activities is included in the appendix I to this Report. Each of the members of the Board of Directors have consistently demonstrated their availability to perform their duties, having regularly attended the meetings of the body and participated in its work.
The committees created by the Board of Directors are the Executive Committee, the Board Audit and Finance Committee and the Board Nomination and Remuneration Committee.
The functioning of the various committees is established in the rules of procedure of the Board of Directors, available for consultation on the Company's website (http:// www.sonaecapital.pt) (investors tab, Corporate Governance section, Regulations).
| Name | Position |
|---|---|
| Maria Cláudia Teixeira de Azevedo | Chief Executive Officer |
| Ivone Pinho Teixeira | CFO |
| Miguel Jorge Moreira da Cruz Gil Mata | Executive |
The Executive Committee is empowered to deliberate on all matters that have been delegated by the Board of Directors or related to the day-to-day management of the Company, following the strategic guidelines defined by the Board of Directors and under the aforementioned delegation of powers.
Pursuant to the established policy, the members of the Executive Committee share responsibilities in more than one area, and the allocation of these responsibilities is done according to the profile and experience of each member.
The Executive Committee of the Company shall meet on a monthly basis and at any time a meeting is called in writing, at least 3 days in advance, by the Chief Executive Officer or by a majority of its members. Notwithstanding regular contact between the members of the Executive Committee in the periods between meetings, 18 meetings were held in 2017.
The Executive Committee may only take decisions if the majority of its members are attending or represented. Decisions are taken by majority of the votes cast by the members attending or represented and by those voting by post.
Employees of the Corporate Centre may attend Executive Committee meetings, at the request of one of the Executive Directors, to give support and opinions on certain matters.
The Secretary of the Executive Committee (who is also the Secretary of the Board of Directors) is responsible for the functioning of the Executive Committee and other logistical aspects. The Secretary is also responsible for recording the decisions in the minutes of the meetings and for providing the members of the Executive Committee with the agenda and supporting documents for the meeting, at least three business days prior to the date of the meeting. The fact that the Secretary is the same for both bodies ensures the adequate flow of information between both bodies, allows the timely distribution of information and minimises any problems in the interpretation of requests for clarification, contributing to greater efficiency and effectiveness of the process.
During 2017, the Executive Committee sent the agendas and approved minutes of the respective meetings to the Non-Executive Directors and to the members of the Supervisory Board. The members of the Executive Committee shall provide, in a timely and adequate manner, any information requested by other members of the governing bodies.
Board Audit and Finance Committee (BAFC) functions under the terms approved by the Board of Directors.
At 31 December 2017, the BAFC is composed of the independent Non-Executive Directors, Francisco de La Fuente Sánchez (Chairman) and Paulo José Jubilado Soares de Pinho.
The BAFC reviews the reports, financial information and financial statements of the Company prior to their approval by the Board of Directors, issues opinions on the reports addressed to shareholders and financial markets as to the adequacy and regularity of the information provided by the Executive Committee, including the internal business control systems, compliance with corporate governance best practices and it accompanies, on behalf of the Board of Directors, the audit and risk management activities and evaluates the processes and procedures in order to ensure the monitoring of internal control and efficient risk management. The BAFC meets with the Statutory Auditor and the Internal Audit team.
Refer to Chapter III of this report for information on risk-taking and control of risks.
The BAFC must meet at least six times a year, prior to the annual and interim disclosure of the results, once before the approval of the consolidated annual budget, once to evaluate the effectiveness of the Company's governance policies and practices and whenever convened by its Chairman, or by the Chairman of the Board of Directors, or by the Chief Executive Officer.
The Secretary of BAFC distributes the agenda and supporting documents to the members of the Committee at least five days before the date of the meeting and with a weekend beforehand. The Secretary also records the decisions taken in the minutes of the meetings.
The Board Nomination and Remuneration Committee (BNRC) is composed of the Chairman of the Board of Directors, Duarte Paulo Teixeira de Azevedo, Vice-Chairman Álvaro Carmona e Costa Portela and the independent Non-Executive Director Francisco de La Fuente Sánchez.
The members have been appointed for a period of three years (2015-2017).
The BNRC ordinarily meets once a year, before the meeting of the Remuneration Committee, and whenever such is deemed necessary.
The BNRC operates in accordance with the provisions of the rules of procedure of the Board of Directors. It is responsible for:
• Advising the Board of Directors on communications received from any of the members of the Board of Directors, within the scope of the process of prior consultation before acceptance by them of other management positions or other roles or of significant activities.
BNRC has at its disposal, in partnership with the Remuneration Committee, the possibility of hiring the services of specialised external entities whose independence, repute and competence are recognised by the market.
The Supervisory Board and Statutory Auditor are the supervisory bodies of the Company, according to the adopted governance model.
In accordance with the Company's articles of association, the Supervisory Board may be composed of an even or odd number of members, a minimum of three and a maximum of five. The number of members is defined at the Shareholders' General Meeting. The Supervisory Board shall also have one or two substitute members, if it is made up of three or more members, respectively.
The members of the Supervisory Board are elected for three-year terms, jointly with the members of the other governing bodies.
The Supervisory Board appoints its Chairman, if the Shareholders' General Meeting does not do so.
If the Chairman leaves office before the expiry of the respective term of office, the other members must elect a chairman from among themselves to carry out those duties until the end of the term of office. The substitute members must replace current members unable to perform their duties or who have resigned. They shall remain a full member until the next Shareholders' General Meeting, which shall appoint new members to fill the vacant positions. In the event that there are no substitute members, the Shareholders' General Meeting shall appoint new members.
It should also be noted, in compliance with article 245-A (1)(r) and (2) of the Portuguese Securities Code, that for the current year - reference period under the aforementioned regulations, as there were no appointments to the management and supervisory bodies, the diversity policies were not, therefore, applied.
The members appointed for the current mandate (triennium 2015-2017) and in office are:
| Name | Position | First appointed |
|---|---|---|
| António Monteiro de Magalhães | Chairman | March 2015 |
| Manuel Heleno Sismeiro | Member | April 2009 |
| Carlos Manuel Pereira da Silva | Member | March 2015 (substitute between Decem ber 2007 and March 2015) |
| Joaquim Jorge Amorim Machado | Substitute | March 2015 |
All the members of the Supervisory Board are independent, with the exception of Manuel Heleno Sismeiro, pursuant to article 414(5) of the Companies Code and they comply with all the incompatibility rules mentioned in paragraph 1 of article 414-A of the Companies Code. Manuel Heleno Sismeiro has lost independence due to the fact that he has been re-elected for more than two terms.
The members of the Supervisory Board are required to immediately inform the Company of any occurrence during their term of office that may cause incompatibilities or the loss of independence, as required by law.
The Statutory Auditor will be discussed in points 39 to 41 below.
The professional qualifications and other relevant details of the CVs of the members of the Supervisory Board are detailed in this report, in the Annex I.
The rules of procedure of the Supervisory Board are available for consultation on the Company's website (http://www.sonaecapital.pt) (investors tab, Corporate Governance section, Regulations).
The Supervisory Board meets at least once every quarter. 7 formal meetings of this body were held in 2017 and the respective attendance rate, in person or through representation, was as follows:
| António Monteiro de Magalhães | 100% |
|---|---|
| Manuel Heleno Sismeiro | 100% |
| Carlos Manuel Pereira da Silva | 100% |
The decisions of the Supervisory Board are approved by simple majority.
Each of the members of the Supervisory Board has consistently demonstrated their availability to perform their duties, having regularly attended the meetings of the body and participated in its work.
The information on other positions held by members of the Supervisory Board, their qualifications and professional experience is available in the curricula vitae included in the Annex I to this report.
It is the responsibility of the Supervisory Board to approve the provision of additional audit services to be provided by the Auditor.
At the first meeting of each financial year, the Supervisory Board prepares a plan and work schedule for that year which includes, inter alia, the coordination and supervision of the Auditor's work. It shall include the following activities:
In addition to the duties described in the previous point, the Supervisory Board is responsible for, among others:
Verifying, when it deems appropriate and in the manner deemed adequate, the size of cash in hand and stocks of any kind of the assets or securities belonging to the company or received by it as collateral, deposit or for any other reason;
Checking the accuracy of the accounting documents;
established in Law No. 148/2015 of 9 September, which approved the Legal Framework of Audit Supervision, implementing the transposition of Directive 2014/56/ EU of the European Parliament and the Council of 16 April 2014 amending Directive 2006/43/EC on annual and consolidated accounts and implementing Regulation (EU) No. 537/2014 of the European Parliament and the Council of 16 April 2014 on specific requirements for statutory audits in public interest entities, in particular those arising from Article 3 of the preliminary decree and Art. 24 of the Legal Framework of Audit Supervision;
• Complying with the other duties contained in the law or the memorandum of association.
For the performance of the duties mentioned above, the Supervisory Board:
In support of the activity of the Supervisory Board, the Company provides the human and technical resources necessary for the organisation of meetings, preparation of agendas, minutes and supporting documentation and their timely distribution. In addition, these meetings are attended by the internal liaisons considered relevant to the
issues under discussion, for presentation and explanation of the issues raised by the Supervisory Board. The items on the agenda of these meetings on matters related to Auditing are discussed, at the discretion of the Supervisory Board, without the presence of employees of the Company.
The Supervisory Board represents the Company before the Auditor and proposes to the Shareholders' General Meeting its appointment, as well as its dismissal, also evaluating the activity performed by the Auditor, ensuring that the appropriate conditions exist within the company for the performance of its services. The Supervisory Board is the company's liaison and first recipient of the respective reports.
The Supervisory Board annually prepares a report on its supervisory action for the year, including an annual assessment of the Statutory Auditor, and it issues an opinion on the management report, the consolidated and individual financial statements and corporate governance report presented by the Board of Directors, in order to comply with the legal deadlines for disclosure at the date established for the Annual General Meeting. The annual report on its audit activity is included in the reports and accounts made available on the Company's website (www.sonaecapital.pt).
The Statutory Auditor is the supervisory body responsible for the legal certification of the Company's financial information. Its fundamental duties are:
The Statutory Auditor Firm of the Company for the 2015-2017 period is PricewaterhouseCoopers & Associados, SROC, represented by Hermínio António Paulos Afonso or by António Joaquim Brochado Correia.
The Statutory Auditor is in its third term of office, which, unlike the two previous terms, each lasting two years, lasts for 3 years. It was re-elected for the present term on proposal of the Supervisory Board, at the Shareholders' General Meeting of 31 March 2015. The Company has the same statutory auditor since 2011 in almost all the companies in which it has interests.
The Statutory Auditor also provides the Company with Audit services as described in the points below.
The Auditor of the Company, designated for the provisions of Article 8 of the Portuguese Securities Code, is PricewaterhouseCoopers & Associados, SROC, registered under no. 9077 at the Portuguese Securities Market Commission, represented by the statutory auditor Hermínio António Paulos Afonso or by António Joaquim Brochado Correia.
In 2017, the representative of the Company's Statutory Audit Firm was Hermínio António Paulos Afonso.
The Auditor was elected at the Shareholders' General Meeting on proposal of the Supervisory Board for the first time in 2011, for the 2011-2012 biennium and it is in its third term. The partner that represents it has been working with the Company since that same date.
The Auditor and the Statutory Auditor partner representing it in the performance of these duties are in the third term of office, and the Company is therefore complying with the recommendations currently in force. Accordingly, non-rotation at the end of three terms of office may only occur for exceptional reasons if, after a careful and weighted assessment, it is concluded that remaining in office beyond that period does not conflict with safeguarding the independence of the Auditor and, once this prerequisite has been satisfied, that the weighing up of the costs and the benefits of their replacement recommends that they remain in office and that the conditions established in article 54 (4) and (5) of Law 140/2015 of 7 September are complied with.
In accordance with the Company's governance model, the election or dismissal of the Statutory Auditor is decided by the Shareholders' General Meeting, upon proposal of the Supervisory Board.
In addition, the Supervisory Board supervises the performance of the Auditor and the work throughout each year, considers and approves additional work by the auditor and annually conducts an overall assessment of the auditor, which includes an assessment of the auditor's independence.
Tax consultancy services and other services (mainly in the area of management consulting) were provided by technicians other than those involved in the audit process in order to ensure the independence of the Auditor. The Board Audit and Finance Committee and the Supervisory Board analysed the scope of the other services and approved them, considering that they did not jeopardise the independence of the Auditors.
The services provided by the Auditor, other than audit services, were previously approved by the Supervisory Board according to the recommended principles. The percentage of such services in the total amount of services provided by PricewaterhouseCoopers & Associados, SROC (PwC) to the Company amounts to 4.4% and is not estimated to represent 30% of the total average of fees received in the last three financial years, by reference to the period established in Article 77(1) of Law No. 140/2015 of 7 September. Considering the amounts involved, within the recommended limits, and the fact that the services are provided by a totally different team from the entity providing audit services, the Auditor's independence and impartiality are assured.
The Auditor reported to the Supervisory Board of the Company all the different audit services provided to the Company, without prejudice to the fact that such services are subject to the prior approval of the latter through the annual communication referred
to in article 24(6)(b) of Law No. 148/2015 of 9 September.
Within the scope of its work, the Auditor verified the application of the remuneration policies and systems, as well as the effectiveness and functioning of the internal control mechanisms. It did not identify any material deficiencies that should be reported to the Company's Supervisory Board.
The total remuneration paid to the Company's External Auditor in 2017 was EUR 156,671 corresponding to the following services:
| Services (values in euros) | Total 2017 | % | Sonae Capital SGPS |
% | Other Group entities |
% |
|---|---|---|---|---|---|---|
| Statutory Auditor 1 | 149.816 | 95,6 | 11.207 | 100,0 | 138.609 | 95,3 |
| Other Reliability Assurance Services 2 | 6.000 | 3,8 | 0 | 0,0 | 6.000 | 4,1 |
| Other Services 2 | 855 | 0,5 | 0 | 0,0 | 855 | 0,6 |
| Total | 156.671 | 100 | 11.207 | 100 | 145.464 | 100 |
1 Fees agreed for the year. 2 Amounts billed.
The amendments to the Articles of Association follow the terms of the Companies Code, requiring a two-thirds majority of the votes cast for approval of such resolution.
For the Shareholders' General Meeting to decide on the first call, the Articles of Association require that a minimum of 50% of the issued share capital be in attendance or represented at the General Meeting.
Irregularities are defined, within the scope of the Policy and Procedures for Reporting Irregularities in the Company, as facts that violate or seriously jeopardise:
Establishment of procedures for reporting irregularities, namely the provision of a mailbox with exclusive access for the Chairman of the Supervisory Board, along with the receipt by post, that guarantee all employees, shareholders or stakeholders that the report, communication or complaint of irregularities arrives inviolably to the addressee. Although there is a need for the explicit and unequivocal identification of the complainant, this identity must be kept confidential and only known by the Chairman of the Supervisory Board, whenever this is requested in the report or complaint.
After communicating or becoming aware of a potential irregularity, ensure a rigorous and impartial investigation process, through the access of the Supervisory Board to all relevant documentation that should be made available by the Company for the investigation of irregularities and to prevent access to the investigation procedure by any and all persons who, although indirectly, may have a conflict of interests with the outcome of the investigation process.
According to best corporate governance practices, the Company's Reporting of Irregularities Policy, the main characteristics of which are described above, is available for consultation on the Company's website (www.sonaecapital.pt) and it covers the entire perimeter of the Sonae Capital Group.
The Supervisory Board did not receive in 2017, through the means defined for this purpose, any reports on matters under the scope of this policy.
Risk Management is one of the core components of the Sonae Capital Group's culture and a pillar of Corporate Governance, being present in all the management processes. It is a responsibility of all Group employees, at different levels of the organisation.
Sonae Capital attaches primary importance to the implementation of internal control and risk management principles appropriate to the Group's activities. Visibility vis-à-vis the market, the exposure and diversification of business risks and the increasing speed of information transmission make it fundamental to adopt these principles, following a philosophy of value creation, ethical affirmation and social responsibility.
Risk Management is developed with the objective of creating shareholder value through (i) managing and controlling the opportunities and threats that may affect the objectives of Sonae Capital's portfolio and companies, (ii) preventing the occurrence of errors and irregularities and minimizing their consequences; and (iii) maximizing the
organization's performance and the reliability of its information, in an ongoing business perspective. It stands out as one of the components of the sustainable development of companies, since, when embodied in coordinated plans and systems of management and control, it contributes to a continuous development of the business through greater knowledge of the uncertainties and threats and more effective management and control of the risks that can affect organisations.
Risk Management is inherent in all management processes and is assumed as a responsibility for all managers and employees of the Group. These are a fundamental element of a conservative risk management culture that is intended to be transversal to all activities and hierarchical levels of the company.
The Risk Management role is to support companies in achieving their business objectives through a systematic and structured approach in identifying and managing risks and opportunities, promoting and supporting the integration of Risk Management into the planning and management control of the respective companies.
The Internal Audit role is to identify and evaluate the effectiveness and efficiency of the management and control of the risks of business processes and information systems, reporting functionally to the Supervisory Board.
It should be noted that the risks concerning the reliability and integrity of accounting and financial information are also evaluated and reported by the External Auditor activity.
The Board of Directors is the maximum body responsible for the risk management process. The Board of Directors is responsible for defining and approving the Group's risk management policies.
It is the responsibility of the Executive Committee to permanently assess the risks of the Group, approve the action measures/plans, models and mechanisms for the evaluation, control and mitigation of these risks.
The Board Audit and Finance Committee informs the Board of Directors on the adequacy of the internal information provided by the Executive Committee and of the internal control systems and principles, and on the compliance with the Corporate Governance best practices.
Moreover, the Board Audit and Finance Committee supports the Supervisory Board in appointing the Auditor as well as defining the scope and remuneration of its work and it reports to the Board of Directors on the quality and independence of the Internal Auditor and should be consulted by management on the appointment of the Internal Audit manager.
External Audit evaluates and reports the risks of reliability and integrity of accounting and financial information, thus validating the internal control system established for this purpose by Sonae Capital.
Internal Audit, acting as an independent internal advisory body, identifies and evaluates the effectiveness and efficiency of risk management and control of business processes and information systems, as well as the risks of non-compliance with laws, contracts, policies and procedures of the companies. Its activity is reported to and monitored by the Board Audit and Finance Committee, and is also reported to the Supervisory Board.
Regarding the interrelationship between the two Audit bodies, the Board Audit and Finance Committee reviews the scope of Internal Audit work and its relations with the scope of the Auditor's work and analyses with this and with the Internal Audit manager the reports on the review of the annual financial information and on the review of internal control, reporting its findings to the Board of Directors. These reports are issued for the Supervisory Board and for the Board Audit and Finance Committee at the same time.
In turn, Risk Management promotes the performance of procedures and the internal dissemination of best practices, and is responsible for coordinating the entire risk management process of the Sonae Capital Group, collaborating with the risk managers of each business unit in the activities arising from the risk management process, and continuously ensuring the efficiency and effectiveness of the process.
Risk Management, integrated in the Corporate Centre, reports to the Executive Committee. It promotes, coordinates, facilitates and supports the development of Risk Management processes, promoting the inclusion of the risk dimension in strategic and operational decisions. This role and the Internal Audit role are coordinated by managers at the Corporate Centre level of Sonae Capital and their activities are reported and monitored by the Board Audit and Finance Committee of their Board of Directors.
Similar to that which occurs with the Internal Audit and Risk Management roles, the financial and legal risk management role is also coordinated by two managers, at the Corporate Centre level of Sonae Capital and its activities are reported and monitored in the Board Audit and Finance Committee, and also reported to the Supervisory Board.
There are Risk Management Pivots at each business segment level, coordinated by the Group's Risk Management function, which works with the owners of each risk in order to ensure the implementation of the determined action plans, and the permanent update of the risk matrix of each segment.
Contextual Risks: The activity developed by the Sonae Capital Group is shaped by the macroeconomic situation and by the profiles of the business segments where it operates. Considering that a large part of the activity of its subsidiaries is currently developed in Portugal, Sonae Capital is exposed to the situation of the Portuguese economy, which is, in turn, greatly shaped by the evolution of the situation in the Euro Zone.
Sonae Capital's activity, business, operating results, financial position, future prospects or ability to achieve its objectives may be potentially adversely affected by a negative development of the economic situation in Portugal or the Euro Zone.
The Sonae Capital Group has several initiatives in order to mitigate this risk, whether through the internationalisation of business or through strict control of costs, or by presenting innovative and differentiating solutions according to the profile of the markets where it operates.
Financial Risks: Sonae Capital is exposed to a diversified set of risks of a financial nature, namely interest rate, foreign exchange risk (transaction and currency translation risks), liquidity and fluctuations in the capital and debt markets, credit (especially relevant in economic recession) and exposure to commodity prices.
Sonae Capital's financial risk management policy aims to minimise the potential adverse effects of financial market volatility and, to this end, a coherent set of systems and processes is implemented at Sonae Capital enabling the timely identification, monitoring and management by the Corporate Finance function.
The volatility of the financial markets has led liquidity risk, credit risk, and capital market and debt fluctuations to take centre stage in corporate priorities for the potential impact on business continuity and development. In fact, the business development of some Sonae Capital subsidiaries may require the reinforcement of Sonae Capital's investment in these subsidiaries, or Sonae Capital may wish to expand its business through organic growth or any acquisitions and business continuity requires the maintenance of liquidity reserves appropriate to the business requirements of the companies. The reinforcement of investment and maintenance of liquidity reserves may be done by means of equity or funds from third parties. Sonae Capital cannot ensure that such funds, if necessary, are obtained under the intended conditions, which may lead to changes or deferrals in the business development objectives or plans, restricting the success of the defined strategic objectives.
In this context, the aforementioned financial risk management systems and processes, centralised in the Company's corporate centre, are established in order to mitigate these risks by ensuring liquidity management through:
Sonae Capital does not contract derivatives or other financial instruments, except those strictly related to the hedging of risks arising from its operational activities and its financing. The risk management policy of the Company and the Group prevents the use of financial derivative instruments for purposes other than the strict hedging of these risks.
Legal, Tax and Regulatory Risks: Sonae Capital and its subsidiaries are subject to extensive and often complex regulations as a result of their activities and compliance requires investment in terms of time and other resources. It has legal and tax advice for this purpose. In fact, Sonae Capital and its businesses have a permanent legal and tax function dedicated to the activity, which works in conjunction with other corporate and sovereign functions so as to ensure, in a preventive manner, the protection of Sonae Capital's interests in strict respect for the fulfilment of its legal duties as well as the enforcement of good practices.
Legal and tax advice is also supported, nationally and internationally, by external professionals selected from reputable firms and according to high standards of competence, ethics and experience. However, Sonae Capital and its subsidiaries may be affected by legal and tax changes in Portugal, the European Union and other countries where it operates. Sonae Capital does not control these changes, or changes in the interpretation of laws by any authority. Any changes in legislation in Portugal, in the European Union or in the countries where Sonae Capital carries out its activities may affect the conduct of the business of Sonae Capital or its subsidiaries and, consequently, hinder or prevent the achievement of the strategic objectives.
Information Systems Risk: Sonae Capital's information systems are characterised by being comprehensive, multifaceted and distributed. In terms of information security, several actions have been developed to mitigate the risk of compromising the confidentiality, availability and integrity of business data, namely off-site backups, implementation of high availability systems, network infrastructure redundancy, verification and control of the quality of flows between applications, access and profile management and reinforcement of data network perimeter protection mechanisms. On a recurrent basis, the Internal Audit function performs audits in various domains: applications, servers and networks, with the objective of identifying and correcting potential vulnerabilities that may have a negative impact on the business as well as ensuring the protection of the confidentiality, availability and integrity of the information.
Following the audit of the management and governance processes in the information systems, based on the Cobit V5 framework, an Information Security project started in 2016 with a view to addressing the recommendations of the audit evaluation as well as outlining strategies and intervention plans to protect Sonae Capital's information and information systems. This project will culminate in the development of an Information Security Management System founded on policies, standards and procedures, based on information security risk management and supported by specific processes with unequivocally identified and qualified managers.
People Risks: Sonae Capital's ability to successfully implement the defined strategies depends on its ability to recruit and retain the most qualified and competent employees for each role. Although Sonae Capital's human resources policy is geared towards achieving these objectives, it is not possible to guarantee that in the future there may be no limitations in this area.
Public Health Risks: Sonae Capital acknowledges that health is an essential cornerstone for the sustained development of its businesses, a differentiating aspect and the driving force behind all its success.
Risk assessment and the definition of measures to minimise these risks are carried out continuously, in conjunction with the business units, particularly through training our staff, close relationships with staff in the workplaces and conducting audits.
Aware that people are its greatest asset, both employees and customers, Sonae Capital is committed to preventing the spread of diseases and improving the internal control environment for systems and equipment used to support its business activities. This is a fundamental cornerstone of motivation, sustainability and growth.
On this topic, special attention must be paid to the prevention and control procedures and plans implemented generally in the business segments to mitigate the risk of Legionnaires' disease.
Insurable Risks: As regards the transfer of insurable risks (technical and operational), the Group's companies contract cover pursuing an objective of rationalisation by the correct adjustment of the financial structure to the values of the risk capital, based on the permanent changes in the businesses encompassed. Moreover, this architecture was improved by the optimisation of the insurance programme in terms of coverage and retention, consistent with each business, internally ensuring effective insurance management.
Sonae Capital, as the shareholdings management company (SGPS), directly and indirectly develops management activities over its subsidiaries, and therefore, the fulfilment of the obligations taken on depends on the cash flows generated by its subsidiaries. Sonae Capital therefore depends on the distribution of dividends by its subsidiaries, the payment of interest, the repayment of loans granted and other cash flows generated by those companies. The ability of the invested companies to make available/repay funds to Sonae Capital will depend in part on their ability to generate positive cash flows from their operational activities, as well as on the statutory, legal and fiscal framework applicable to the distribution of dividends and other forms of payment/return of funds to its shareholders.
Sonae Capital's portfolio includes a diversified business portfolio, therefore some of the main risks its subsidiaries are exposed to may be sectoral. The main risks are identified below.
a. The activities developed by Resorts are subject to economic cycles and depend on the growth of tourism and real estate in Portugal. Thus, the tourism operations of this business depend on tourism demand, which is associated with the evolution of both the national and international economy. Any negative economic developments in Portugal or in the main tourist countries for the Portuguese market may have a negative impact on the performance of this activity, due to a reduction in the number of tourists.
The most relevant risks in the leisure sector, namely in the Fitness segment, where the Sonae Capital Group operates through Solinca Health & Fitness (health clubs), are as follows:
In order to minimise this risk, Solinca Health & Fitness carries out constant benchmarking of its competitors' actions and invests in new formats and products/services, or in the improvement of existing ones, in order to offer its customers an innovative proposal.
c. Making services, equipment and infrastructures available that do not comply with quality levels and the changing needs demanded by customers may expose the company to complaints, hinder customer attraction and loyalty as well as negatively impact on its image and reputation.
Consumers frequently change their preferences and expectations, which requires continuous adaptation and optimisation of the product offer and business concepts. The difficulty or inability to foresee, understand and/or satisfy the frequent variations of the needs and expectations of customers can be reflected in difficulties concerning their loyalty in the medium term.
To anticipate market and consumer trends, Solinca Health & Fitness regularly reviews customer behaviour, satisfaction and loyalty by conducting monthly surveys (Net Promoter Score). The introduction of new concepts, products and/or services is always tested on pilots before being generalised to all clubs. In addition, Solinca Health & Fitness allocates a significant portion of its annual budget to the renewal of equipment and facilities in order to ensure attractiveness and keep up with the challenges imposed by the market.
d. Solinca Health & Fitness may be held liable in the event of accidents or unforeseen circumstances due to inappropriate physical activity that affect the life, health or physical integrity of people, which may have an adverse effect on its reputation and consequently on its results.
Solinca Health & Fitness has several initiatives in place to mitigate this risk, namely the obligation of customers to carry out a medical evaluation questionnaire at the time of enrolment, offering an initial physical evaluation to all customers and encouraging its realisation, training in basic life support for all employees, as well as the existence of occupational accident, property damage and civil liability insurance.
e. Solinca Health & Fitness may be held liable in the event of the existence of public health risks arising from the development of its business activity, which could jeopardise the health of clients in its facilities, with an adverse effect on its reputation and consequently on its results. In this area, it is important to highlight the risk of legionnaires' diseases in places aerosols can form, such as showers, jacuzzis, Turkish baths and saunas.
Since 2012, Solinca Health & Fitness has had a set of initiatives in place in all its health clubs, aimed at reducing the risk of legionnaires' disease. These include thermal and/or chemical disinfection of water and the implementation of a periodic inspection, cleaning and maintenance programme on the systems and equipment involved.
f. Legislative changes (e.g. tax, legal, labour, competition, etc.) may threaten the specific strategies defined by Solinca Health & Fitness in the development of its activities, involve contractual changes with the main stakeholders or dictate an increase in its costs.
The activities related to Refrigeration and Air Conditioning have specific risks, mostly related to the competition of other companies operating in the same markets and the evolution of the economy. The most relevant risks are related to the following:
a. The activity developed by the Group is shaped by the macroeconomic situation and by the profiles of the markets where it operates. The products developed by the Group have the nature of durable goods, mainly aimed at the real estate and food distribution sectors. The Group's operating activity, as a result, is cyclical and is positively correlated with the cycles of the economy in general and, in particular, with developments in those specific sectors. Accordingly, the Group's business and that of its invested companies may be adversely affected by periods of economic recession, in particular by the deterioration of private investment. The availability of credit in the economy is also relevant to the business, due to the potential impact it has on the real estate market. The Group, through its subsidiaries, is directly represented in Portugal, Brazil and Mozambique, where it produces and sells. These markets have different macroeconomic, political and social profiles and, as such, are experiencing different responses to the global economic and financial crisis. In fact, the pace at which the various markets will emerge from the current crisis is dependent on variables that the Group does not control. Likewise, the possible occurrence of political and/or social tensions in any of the markets may have a material impact that cannot be estimated on the Group's operations and financial situation.
The development of this segment considering the market framework in Portugal is therefore based on the growth of the international component, via exports. The evolution of the world economy, the specific risks of the selected countries and the capacity to conquer new markets could, therefore, have an impact on the activity of this segment.
b. The Group's business is geographically diversified, with subsidiaries located in three different continents, therefore there are transactions and balances in reais and meticais.
The consolidated statements of financial position and the income statement are thus exposed to the currency translation risk (risk relative to the value of capital invested in subsidiaries outside the euro area) and the subsidiaries are exposed to the currency translation risk (risk associated with commercial transactions carried out in a currency other than the euro). The transaction risk arises essentially when there is a currency risk related to cash flows denominated in a currency other than the functional currency of each of the subsidiaries. The cash flows of group companies are largely denominated in their respective local currencies. This is true regardless of the nature of the cash flows, i.e. operational or financial, and allows a considerable degree of natural hedging, reducing the Group's transaction risk. In line with this principle, the Group's subsidiaries only contract financial debt denominated in the respective local currency. The currency translation risk arises from the fact that, in the preparation of the consolidated financial statements of the Group, the financial statements of subsidiaries with a functional currency different from the reporting currency of the consolidated accounts (Euro) have to be Converted into Euros. As exchange rates vary between accounting periods and since the value of the subsidiaries' assets and liabilities do not coincide, volatility is introduced in the consolidated accounts.
In order to minimise potentially adverse effects arising from the unpredictability of financial markets, the Group, besides having an exchange risk management policy and implementing control mechanisms for the identification and determination of exposure, sometimes uses derivative instruments to cover this risk.
The Energy production area focuses mainly on the development and management of cogeneration projects.
Cogeneration is a way of rationalizing energy consumption, since the production of electricity from the energy released during combustion is synonymous with a more efficient use of the fuel used - natural gas in the Sonae Capital projects. In a cogeneration plant there is a reduction in fuel consumption, compared to the production of the same quantities of thermal energy and electricity, separately.
Although this type of electricity generation is a more efficient and environmentally friendly alternative, it nevertheless carries with it certain specific risks that may have an impact on the companies' results. The most relevant risks are as follows:
a. The Sonae Capital Group's cogeneration projects use natural gas as the primary fuel in the combined production of electricity and thermal energy, so the purchase price of this raw material has significant weight on the variable cost structure. Consequently, the volatility of the purchase price of natural gas, normally pegged to the price of oil in international markets and the euro/dollar exchange rate, could translate into a significant impact on the company's results and margin.
It should be noted, however, that the tariff for the sale of electricity by cogeneration units is regulated and also pegged to the evolution of the price of oil in the international markets and the euro/dollar exchange rate, which, by itself, allows exposure to this risk to be significantly reduced. In particular, the electricity sales tariff defined by Ordinance 58/2002, the remuneration scheme applicable to most cogeneration units, and the purchase price of natural gas are highly correlated, giving a considerable level of natural hedging as regards gross margin.
However, DL 23/2010 and Ordinance 140/2012 established a new remuneration scheme for cogeneration in Portugal, applicable to new cogeneration units, which entailed the loss of the hitherto existing natural hedging, since the elasticity of prices to unit variations of the indexing factors is now totally different. The natural gas purchase price has significantly higher sensitivity than the electricity sales tariff, which translates into an increased risk of exposure to the volatility of the natural gas purchase price. This fact will become increasingly relevant as cogeneration facilities move to this new remuneration scheme.
The Sonae Capital Group, in order to mitigate this risk, regularly monitors the development of the natural gas price as well as its future development tendency, assessing at all times the attractiveness of the hedging of this risk by fixing natural gas purchase price over a set period of time, whether with the supplier or through derivative financial instruments.
In addition, as regards the allocation of CO2 emission allowances, the European greenhouse gas emissions allowance trading scheme (ETS) has introduced significant changes in the allocation rules for the period from 2013 onwards. The total quantity of allowances is determined at Community level and the allocation of allowances carried out by auction, with the free allocation still marginally permitted through compliance with benchmarks defined at Community level. The free allocation of allowances follows a downward trend year after year, with a view to its extinction in 2027. The cogeneration units covered by this scheme (rated terminal power above 20MW) will have increasing need to go to the market for CO2 allowances and are exposed to fluctuations in their price.
In order to minimise this risk, the Sonae Capital Group has established a growth plan for this business segment which provides for investment in renewable energy as well as the internationalisation of the business with a view to the technological and geographical diversification of its portfolio.
d. The cogeneration units have support systems that can be associated with the development of the Legionella bacteria. Of note are the cooling towers, evaporative condensers and air conditioning systems. Special attention is required in places where there is standing or stagnant water, where the water temperature can reach between 35ºC and 50ºC. The following preventive measures have been put in place to attenuate this risk: implementation of maintenance plans according to manufacturers' recommendations, best practices and local conditions; dispensing biocides to ensure reserves above the values deemed necessary for the non-development of bacteria colonies; checking, calibrating and adjusting water treatment dispensing equipment every month; analysis and quality control of the water every month; periodic analysis for the presence of Legionella; and periodic cleaning of the main equipment (cooling towers). In this area, Capwatt has been optimising the measures implemented in the facilities in order to improve the entire prevention and control process, seeking to minimise the risk of Legionella bacteria being found during an inspection.
The following specific risks are identified regarding the production of energy from renewable energy sources:
In order to minimise this risk, the Sonae Capital Group promotes, under the technical due diligence procedure carried out for each of its projects, a thorough study of the resource in order to define different scenarios and the consequent evaluation of the economic feasibility of the projects.
The Energy production area encompasses the following risks of a more general nature, regardless of the primary energy source used:
g. Energy generation under the special scheme in Portugal has the tariffs predefined by the Portuguese State, as a way of encouraging alternative forms of electricity production that are more efficient and environmentally clean. Consequently, the risks regarding the electricity sale price are currently reduced. Although electricity is sold at a price defined by the Portuguese State for a long period of time, the profitability of the operations depends on the stability in the short, medium and long term of regulatory policies and schemes that support the development of energy efficiency.
Any possible governmental changes to energy policy in the future may prove to be a risk to future projects and to the viability of developing the business in the long term.
In order to minimise this risk, the Sonae Capital Group conducts regular preventive and safety audits of the facilities and equipment and periodically reviews and adapts the insurance plans for property damage, operating losses and civil liability in force.
The Sonae Capital Group acquired ADIRA in 2017. It is a Portuguese-based company dedicated to the development, design, manufacture, production and marketing of machine tools, with the majority of its business activity aimed at foreign markets.
The business activity of ADIRA comprises specific risks that may have an impact on the company's results. The most relevant risks are as follows:
a. Changes in the global macroeconomic environment may restrict the company's activity or generate negative impacts on its results.
ADIRA seeks at all times to mitigate this risk by diversifying the destination markets of its exports. It operates in about 40 markets, which represent approximately 80% of its turnover. These markets have different macroeconomic, political and social profiles and, as such, are experiencing different responses to worldwide economic and financial crises.
In order to minimize this risk, ADIRA has external legal advice that allows it to ensure compliance with current laws and regulations and consequently avoid sanctions, fines and penalties that could threaten the company's reputation, business opportunities and potential for expansion.
e. ADIRA uses sheet steel in its production process, the price of which evolves according to the price of steel on international markets. The cost of acquiring this raw material has significant weight in the variable costs structure. Consequently, the volatility of the purchase price of sheet steel could translate into significant impacts on the company's profits and margin. In order to minimise this risk, ADIRA closely monitors the evolution of steel prices in international markets and has a diversified supplier base, among which it seeks to negotiate the best price.
The Sonae Capital Group has a diversified real estate portfolio, the strategic orientation for which is to sell, although subject to a price considered acceptable. However, even if current strategic orientation is to sell, Sonae Capital cannot guarantee the realisation of such or the period when that will occur, especially if no suitable acquisition proposals arise. This real estate portfolio (excluding real estate assets in Tróia) comprises a wide range of assets at different licensing and construction stages, including plots of land with and without construction permits, residential units, construction projects, offices, industrial buildings and commercial spaces, and with extensive geographical dispersion. At 31 December 2017, the date of the most recent valuation of the real estate assets of the Sonae Capital Group carried out by the reference entity Cushman & Wakefield, the valuation amount was EUR 113.7M. The capital employed in this asset block, at 31 December 2017, amounts to EUR 100.3M.
The loss of liquidity of portfolio assets and/or difficulties in placement of these assets on the market may affect the ability to grow the business and the fulfilment of its strategic objectives.
Besides the Sonae Capital Group developing a wide range of activities in various sectors of activity, and therefore exposed to diversified economic cycles, such as Tourism Promotion, Hospitality, Fitness, Energy, Refrigeration and HVAC, Industrial Engineering and the Real Estate Assets, several of these sectors are still very competitive, through the intervention of national and international companies, so the invested companies of Sonae Capital are exposed to heavy competition. The ability of Sonae Capital's subsidiaries to position themselves adequately in the sectors and markets in which they operate may have a significant impact on Sonae Capital's business or the results of its activities.
The Sonae Capital Group regularly monitors the behaviour of the markets in which it operates, seeking at all times to anticipate changes and/or new market trends, in order to offer its customers an innovative and differentiating proposal.
As a structured and disciplined approach that aligns strategy, processes, people, technologies and knowledge, Risk Management is integrated throughout Sonae Capital's planning process, with the objective of identifying, evaluating and managing the opportunities and threats that the businesses of Sonae Capital face in pursuit of their value creation goals.
Sonae Capital's management and monitoring of its main risks is implemented through different approaches and agents, including:
Internal Control policies and procedures defined at the central level and at the level of the businesses, in order to guarantee:
Regular audits are carried out by the Internal Audit team to ensure permanent compliance with established policies and procedures.
Risk Management Process supported by a uniform and systematic methodology, based on the international standard of Enterprise Risk Management - Integrated Framework of COSO (The Committee of Sponsoring Organizations of the Treadway Commission), which includes, in particular:
| • Identification of risks |
Prioritization of risks |
Risk strategy |
Assessment and Monitoring |
|---|---|---|---|
| Identify and assess risks Annually review the matrix, in budget terms |
Establish the importance of each risk in relative terms Allocate an owner |
Definition of key risk measures: (i) Tolerated risk profile; (ii) mitigation actions; (iii) transfer |
Integrated risk assessment: (i) how to measure, (ii) incorporation into the Business Plan and (iii) aggregate levels of risk and hedging |
| Business Risk Model (Individual and Aggregate) Follow-up Group |
Action Plan | Reporting and Planning |
This process comprises the following routines:
In accordance with the methods defined and implemented in previous years, the risk management processes were integrated with the processes of business management planning and control, from the strategic reflection phase to the operational planning phase. The risk management actions are included in the activity and resource plans of the business units and functional units, and monitored throughout the year.
In 2017, the Enterprise Wide Risk Management activities focused mainly on monitoring progress in the implementation of action plans and assessing their impact on risk perceptions, following the annual cycle of Enterprise Wide Risk Management, which is based on the following activities:
| jan feb |
mar apr |
may jun jul |
aug sep |
oct nov dec |
|---|---|---|---|---|
| Set-up/review of the risk management function |
Annual performance of risk management |
Monitoring and follow-up |
Review yearly | |
| Board of Directors |
Review of the alignment of risk management with Sonae Capital's strategy Definition/updating of the governance structure |
Analysis of the impact of decisions on risk management |
Monitoring of the significant risks and the general risk profile of Sonae Capital |
Approval of new risk profiles (if applicable) |
| Executive Committee |
Definition of periodic risk reporting mechanisms by business areas |
Approval of the risk profile of Sonae Capital at the corporate level and level of each business |
Definition and review of risk appetite defined at the corporate and business level Approval of the defined mitigation actions |
Approval of new risk portfolios (if applicable) |
| Corporate Risk Manager |
Internal disclosure/ communication of Sonae Capital's risk management policies, procedures and milestones |
Aggregation and hierarchy of risks to be handled Support to the Board of Directors for the standardisation and prioritization of the risks of the various businesses Sonae Capital risk profile proposal |
Follow-up of the KRIs of Sonae Capital (corporate and business) Follow-up of Sonae Capital's mitigation actions (corporate and business) |
Drawing up situation report of the KRIs and mitigation actions of the Group Presenting the situation to the Board of Directors |
| BU Risk Manager |
Assessment of business risks and definition of risk profiles and files and response strategies |
Update of KRIs Monthly reporting of KRIs and actions |
Analysis of current risks and identification of new critical risks Updating risk files |
The Risk Management Department continued to support risk management in the organisation's main projects, namely in the following projects: development of an Information Security Management System, and definition of the governance model and programme for raising cybersecurity awareness.
In 2017, we started the programme to adapt the Group to the standards set forth in the General Data Protection Regulation, approved in May 2016 and applicable from 25 May 2018.
Sonae Capital encourages the continuous training and adoption of the best international methodologies and practices in the Risk Management and Internal Audit areas. In this sense, the Group supports staff in attending a training and knowledge updating programme that includes the international professional certification in Internal Audit organised by the Institute of Internal Auditors - that of Certified Internal Auditor (CIA). The members of the Internal Audit team have obtained this professional certification.
External Audit evaluates and reports on the risks of reliability and integrity of accounting and financial information, thereby validating the internal control system established for this purpose by Sonae Capital, which embodies the clear separation between the preparer and its users and the implementation of various validation procedures throughout the process of preparation and disclosure of financial information.
The Board Audit and Finance Committee analyses the risks of the Company, the risk control models and mechanisms adopted and the mitigation measures taken by the Executive Committee. It evaluates their suitability and proposes to the Board of Directors any needs for change in the Company's risk management policy.
The implementation of an effective internal control environment, particularly in the financial reporting process, is a commitment taken by the Board of Directors of Sonae Capital to identify and improve the most relevant processes for preparing and disclosing financial information, with a view to ensure transparency, consistency, simplicity, reliability and relevance. The internal control system is designed to ensure a reasonable guarantee with regard to the preparation of the financial statements, according to the accounting principles used, and the quality of the financial reporting.
The reliability of the financial information is ensured by the clear separation between preparers and its users and the implementation of various control procedures throughout the process of preparation and disclosure of the financial information.
The internal control system for accounting, preparation and disclosure of financial information includes the following key controls:
reports is sent to the Board of Directors of Sonae Capital for review and approval. Upon the approval, the set of documents on the annual financial statements is sent to the Auditor, and the Statutory Audit Certificate and the External Audit Report are then issued;
Company are part of the list of people with access to privileged information, and are particularly aware of their obligations, as well as of the penalties arising from the misuse of inside information;
More specific information on how these and other risk factors were mitigated is available in the notes to the consolidated financial statements.
Sonae Capital, SGPS, SA, through its Investor Relations Office, is in constant contact with its shareholders and analysts, providing information that is always up-to-date. In addition, upon request, it provides timely clarification of the relevant facts about the Company's activities, which have made available to public in accordance with the law.
The aim of the Sonae Capital, SGPS, SA Investor Relations Office is to ensure adequate communication with shareholders, investors, analysts and financial markets, in particular with Euronext Lisbon and the Portuguese Securities Commission (CMVM).
When necessary, the Investor Relations Office provides all the information related to relevant events and answers questions from shareholders, investors, analysts and the general public about the financial indicators and information made available to public on the different businesses, keeping a record of the requests received and the answers given.
In strict compliance with the law and the regulations, the Company promptly informs its shareholders and the capital market in general of all the relevant facts related to its activity, avoiding delays between their occurrence and their disclosure, so that informed judgements can be made regarding the progress of the Company's business.
This release is made public through publication on the Portuguese Securities Commission Information Disclosure System (www.cmvm.pt) and on the Company's website (www.sonaecapital.pt).
The Investor Relations Office can be contacted by telephone (+351 22 010 79 03), fax (+351 22 010 79 35), email ([email protected]) or post (Lugar do Espido, Via Norte, Apartado 3053, 4471-907 Maia). The Director of the Investor Relations Office is Nuno Parreiro, who can be contacted using the same above numbers and addresses.
The representative for Capital Market Relations is Anabela Nogueira Matos, who can be contacted by telephone (+351 22 010 79 25), fax (+351 22 010 79 35) or email (anm@ sonaecapital.pt).
In 2017, the Investor Relations Office received a normal number of requests for information, bearing in mind the importance of the Company in the capital market.
Sonae Capital, SGPS, SA, through its Investor Relations Office, is in constant contact with its shareholders and analysts, providing information that is always up-to-date. In addition, upon request, it provides clarification of the relevant facts about the Company's activities, which have made available to public in accordance with the law. All information requested by investors is analysed and answered in the shortest possible time, by email, post or telephone, whichever is most suitable.
Sonae Capital has a website where all the information about the Company is posted. The address is: http://www.sonaecapital.pt.
Specific information is available for consultation at the following address:
• http://www.sonaecapital.pt/pt/investidores/identificacao-da-sociedade
Specific information is available for consultation at the following addresses:
Specific information is available for consultation at the following addresses:
Specific information is available for consultation at the following address:
Specific information is available for consultation at the following address:
• http://www.sonaecapital.pt/pt/investidores/assembleias-gerais
Specific information is available for consultation at the following address:
• http://www.sonaecapital.pt/pt/investidores/assembleias-gerais
Based on the remuneration policy and other payments approved by the Shareholders' General Meeting, the Sonae Capital Remuneration Committee is responsible for approving remuneration and other payments to the Board of Directors, the Supervisory Board and the members of the Shareholders' General Meeting.
With regard to the remuneration of the Executive Directors, the Board Nomination and Remuneration Committee assists the Remuneration Committee, presenting its proposals before any decisions are made.
The Board of Directors appointed the Board Nomination and Remuneration Committee (BNRC) for the 2015-2017 term of office.
The BNRC is composed of the Chairman of the Board of Directors, Duarte Paulo Teixeira de Azevedo, Vice-Chairman, Álvaro Carmona e Costa Portela and the independent Non-Executive Director Francisco de La Fuente Sánchez.
The Board Nomination and Remuneration Committee, which is solely composed of non-executive directors, supports the Remuneration Committee in the performance of its duties.
The members of the Remuneration Committee are independent of the board of directors, as explained in the paragraph below.
Duarte Paulo Teixeira de Azevedo, Chairman of the Board of Directors and non-executive member of this body, is on the Remuneration Committee. He was elected to this position by the Shareholders' General Meeting. His participation in the Remuneration Committee corresponds to representation of the shareholder interest, acting in that capacity and not in his capacity as Chairman of the Board of Directors. To ensure these duties are carried out independently, this member abstains from discussing or deciding on matters where conflict of interest exists or may exist.
The professional experience and qualifications of the members of the Remuneration Committee are detailed in the curricula vitae included in the Annex I to this document and enable them to carry out their duties carefully and skilfully. They have the adequate skills to carry out their duties.
The remuneration policy for the Company's statutory bodies is approved by the Shareholders' General Meeting.
The Shareholders' General Meeting held on 28 April 2017, consistently continuing with the policy previously followed, approved the Remuneration and Compensation Policy in force, in compliance with the provisions of article 2 of Law no. 28/2009 of 19 June.
The remuneration proposals for the members of the statutory bodies are decided based on:
The remuneration policy for the members of the governing bodies and managers of Sonae Capital, SGPS, SA in force during the year under review is detailed in the corresponding annex to this report.
The remuneration policy is a formal instrument ensuring alignment between the management team and the interests of the shareholders, insofar as the set of remuneration components is separate from the variable part, whose amount depends on the individual performance and the performance of Sonae Capital. This encourages a long-term interests-oriented company management and behaviours weighing the risks taken.
The structure of the remuneration policy includes control mechanisms, bearing in mind the connection to individual and collective performance, thus preventing excessive risk-taking behaviours. This objective is also reinforced by the fact that each Key Performance Indicator (KPI) is limited to a maximum value.
The remuneration policy for the Company's statutory bodies is approved by the Shareholders' General Meeting. The Remuneration Committee is responsible for preparing the remuneration policy proposal and approving the remuneration of the Board of Directors, including executive and non-executive members, and other Sonae Capital bodies. The members of the Remuneration Committee are elected by the Shareholders' General Meeting, which also sets the corresponding remuneration.
The Board Nomination and Remuneration Committee supports the Remuneration Committee in setting the remuneration for the Executive Directors, preparing remuneration proposals based on relevant information requested by the Remuneration Committee.
Guiding principles for the remuneration policy were established within the principles of corporate governance.
The Policy is defined in comparison with the global market and the practices of comparable companies, according to information from the main studies carried out in Portugal and in European markets. Mercer and Hay Group market studies are presently used as reference.
Therefore, the remuneration parameters for the members of the governing bodies are set and periodically reviewed in accordance with the remuneration practices of comparable national and international companies, and the potential maximum amounts to be paid to the members of the governing bodies, both individual and aggregate, are in line with market practices. The members of the governing bodies are individually and positively differentiated, considering specific factors, such us the profile and CV of the member, the nature and description of the duties and powers of the governing body in question and of the actual member and the degree of direct correlation between individual performance and business performance, among others.
The average applicable to senior executives in Europe is used to determine global market values. For remuneration purposes the group of peer companies consists of the societies with securities admitted to trading on Euronext Lisbon.
The Policy provides for the attribution of bonuses calculated according to the degree of success of the Company. The variable component of the remuneration is defined so as to link the bonuses to the degree of individual and collective performance. When predefined objectives are not achieved, measured using business and individual KPIs, the value of the short and medium term incentives will be partially or totally reduced.
Part of the Executive Directors variable bonus refers to a 4-year period, including the year to which it relates and the 3-year deferral period. The amount depends on the share performance and the extent to which the medium and long term objectives had been achieved during the deferral period. This ensures an alignment between the director, the interests of the shareholders and the medium term performance, aimed at business sustainability.
All aspects of the remuneration structure are clear and openly disclosed, internally and externally, through publication of the documents on the Company's website. This communication process helps to promote equity and independence.
The policy aims at ensuring a balance between the interests of the Company, the market position, the expectations and motivation of the members of the governing bodies and the need to retain talent.
The Remuneration and Compensation Policy applicable to the governing bodies and Company managers follow EU guidelines, national legislation and the recommendations from the CMVM.
The Shareholders' General Meeting held on 28 April 2017, consistently continuing with the policy previously followed, approved the Remuneration and Compensation Policy in force, which is guided by the following general principles:
The remuneration package for Executive Directors is defined in comparison with the market, based on market studies on remuneration packages for senior executives in Portugal and in Europe. The fixed remuneration for comparable market situations should then correspond to the average market value and the total remuneration should be close to the third quartile of the market.
Sonae Capital reviews its remuneration policy annually as part of the risk management process, with a view to creating a remuneration policy that is fully compliant with the expected risk profile. In 2017 no problematic payment practices that may pose relevant risks to Sonae Capital were identified.
When designing the remuneration policy, the need to control behaviours involving excessive risk taking was taken into account, with a balanced relevance assigned to the variable component so as to associate the individual remuneration to collective performance.
Sonae Capital has internal control procedures for the remuneration policy, aimed at identifying potential risks posed by the remuneration policy itself.
On the one hand, the variable remuneration structure is designed so as to discourage risky behaviour, insofar as the remuneration is associated with performance assessment. Definition of objective KPIs enables this method to work as an efficient control mechanism.
On the other hand, Sonae Capital policy does not allow for agreements aimed at minimising the essence of the Medium Term Variable Bonus to be concluded. This restriction includes transactions aimed at eliminating or minimising the risk of fluctuation in share prices.
The Board Nomination and Remuneration Committee brings its remuneration proposals for the directors before the Remuneration Committee for approval, in accordance with the internal procedure adopted.
The fixed remuneration of the Executive Directors is established based on the level of responsibility of the Board of Directors and is reviewed annually.
According to Sonae Capital's remuneration policy, in addition to the fixed remuneration, the Executive Directors also benefit from an incentive plan, also called variable bonus.
The variable bonus is awarded in the first quarter of the year following the year to which it relates and depends on the previous year performance and aims to guide and compensate the board directors for achieving pre-defined objectives. This is divided into two parcels:
The various components of the annual remuneration are clearly shown in the following table:
| Components | Description | Objective | Market position | |
|---|---|---|---|---|
| Fixed | Basic salary | Annual salary (in Portugal the fixed annual salary is paid in 14 parts) |
Adequacy to the status and responsibilities of the Director |
Average |
| Variable | Short term variable bonus (STVB) |
Performance bonus paid in the first half of the following year, after the income for the year has been calculated |
Designed to ensure competitiveness of the remuneration package and a link between the remuneration and the company objectives |
Third quartile |
| Medium term variable bonus (MTVB) |
Compensation deferred for 3 years; the amount established depends on the share performance |
Third quartile |
The variable bonus may be paid in cash, using any of the payment methods provided for by Law and in the Company's Articles of Association.
There is currently no plan assigning share acquisition options.
The remuneration of Non-executive Directors is established according to market data and the following principles: (1) attribution of a fixed remuneration (2) attribution of an annual responsibility allowance. No remuneration is paid in the form of a variable bonus.
The variable bonus is discretionary in nature and because its value depends on the achievement of objectives payment is not guaranteed. The variable bonus is calculated annually and the value of the predefined objective varies between 30% and 60% of the total annual remuneration (fixed remuneration and objective value of the variable bonus)
The variable component of the remuneration is calculated based on performance assessment of a set of performance indicators relating to the various businesses which are primarily economic and financial in nature – "Key Performance Indicators of Business Activity" (Business KPIs). The content of the performance indicators and their
specific weight in determining the effective remuneration provide for the alignment of the Executive Directors with the strategic objectives defined and the compliance with the legal regulations governing the company business.
The value of each bonus has a minimum limit of 0% and a maximum limit of 140% of the predefined target.
Payment of at least 50% of the variable component of the remuneration for the year to which it relates is deferred for a period of 3 years, in a total of four years, as provided for in point 70.1 (Medium Term Variable Bonus).
1. Characteristics of the Medium Term Variable Bonus (MTVB)
The MTVB is one of the components of Sonae Capital's Remuneration Policy. This component differs from the others as it has a restricted and casuistic character, being subject to the eligibility rules set out for that purpose.
The MTVB allows the eligible persons to share with shareholders the value that is created as a result of their direct influence on the strategy definition and management of the underlying businesses, in the proper measurement of the annual assessment of their performance.
The MTVB constitutes a way of aligning the executive directors' interests with the company objectives, reinforcing their commitment and strengthening the perception of the importance of their performance for the success of Sonae Capital, reflected in the market capitalisation of the share.
The executive directors of the company and of its subsidiary companies are eligible to be awarded the MTVB. According to the remuneration policy approved by the Board of Directors, the MTVB plan may also apply to employees covered by that policy.
| Participants | Reference value of the medium term variable bonus (% of the total variable remuneration target) |
|---|---|
| Directors Company Executive Directors |
At least 50% |
| Directors Executive Directors of Business Units |
At least 50% |
| Employees | terms to be defined by the Board of Directors of each Company |
The MTVB is set out on a period of four years, including the year to which it relates and a three-year deferral period.
The MTVB is valued at the date of attribution using prices which represent the price of the share, in the Portuguese stock market, considering for this effect the most favourable of the following: closing share price of the first day of trading after the Shareholder's General Meeting or the average closing share price (regarding the thirty-day period of trading prior to the Shareholder's General Meeting).
Members entitled to MTVB have the right to acquire a number of shares corresponding to the division between the amount of MTVB granted and the price of the share at the date of attribution calculated under the terms of the previous paragraph. If, after the granting date and before its exercise, dividends are distributed, changes in the nominal value of shares or in the share capital of the company occur or any other change in equity with impact in the economic value of the attributed rights, the number of shares attributed will be adjusted to an equivalent figure considering the effect of the mentioned changes.
In line with the statement of a policy that strengthens the alignment of executive directors with the company's long term interests, the Shareholders' Remuneration Committee may, at its discretion, adjust the percentage discount granted to the executive directors for acquisition of shares, and determine that the executive director contributes to the acquisition of shares up to a percentage that cannot exceed 5% of its share price at the date of the share transmission. All other employees to whom that right is assigned may acquire the shares under the conditions established by the Board of Directors of each Company.
When exercising the right to acquire shares, as granted under the scope of the MTVB, the Company retains the right to pay the equivalent value in cash at the vesting date rather than transfer actual shares.
The acquisition right of the shares attributed by the MTVB become due at the end of the deferral period.
The right to exercise the acquisition right of shares granted under the plan expires if the contractual link between the member and the company ceases before the three year period subsequent to its attribution, notwithstanding situations included in the following paragraphs.
The right will remain valid in case of permanent incapacity or death of the member, in which case the payment is made to the member or to his/her heirs on the vesting date.
In case of retirement of the member, the attributed right can be exercised in the respective vesting date. To ensure the effectiveness and transparency of the remuneration and compensation policy objectives, it was agreed that the executive directors of the company:
The Company did not establish any variable remuneration in options.
The main parameters and grounds for the variable remuneration system are described in the remuneration policy approved by the Shareholders' General Meeting of 28 April 2017, available at www.sonaecapital.pt.
The Company has no supplementary pension or early retirement schemes in place for Directors.
During 2017, remuneration and other payments made to the members of the Board of Directors were as follows:
| Name | Fixed Remuneration |
Short Term Variable Remuneration |
Deferred Performance Bonus |
Total |
|---|---|---|---|---|
| Board of Directors in office | ||||
| Maria Cláudia Teixeira de Azevedo | 148.153 | 63.552 | 89.100 | 300.805 |
| Ivone Pinho Teixeira | 143.494 | 46.776 | 88.045 | 278.315 |
| Miguel Jorge Moreira da Cruz Gil Mata | 129.915 | 63.791 | 98.304 | 292.010 |
| Executive Directors Subtotal | 421.562 | 174.119 | 275.449 | 871.131 |
| Duarte Paulo Teixeira de Azevedo | 142.300 | 0 | 0 | 142.300 |
| Álvaro Carmona e Costa Portela | 72.300 | 0 | 0 | 72.300 |
| Francisco de La Fuente Sánchez | 27.300 | 0 | 0 | 27.300 |
| Paulo José Jubilado Soares de Pinho | 27.300 | 0 | 0 | 27.300 |
| Non-executive Directors Subtotal | 269.200 | 0 | 0 | 269.200 |
| Total | 690.752 | 174.119 | 275.449 | 1.140.331 |
No amounts other than those described above were paid by a company in a control or group relationship.
The variable bonus for the executive directors was attributed based on the performance assessment and the remuneration policy approved at the Shareholders' General Meeting on 28 April 2017, as detailed in point 71 above and shown in the remuneration table under point 77 above.
The bonus paid in the form of profit-sharing is contained in the Short Term Variable Bonus listed in the table under point 77 above.
No compensation to former executive directors is due or was paid.
In 2017, the members of the Supervisory Board of Sonae Capital, SGPS, SA received the following fixed remuneration (no other type of remuneration was received):
| Name | Fixed Remuneration (Values in Euros) |
|---|---|
| António Monteiro de Magalhães | 9.200 |
| Manuel Heleno Sismeiro | 7.200 |
| Carlos Manuel Pereira da Silva | 7.200 |
| Total | 23.600 |
The remuneration received by the Statutory Auditor is detailed in point 47 above.
In 2017, the Chairman of the Board of the Shareholders' General Meeting received the amount of 5,000 euros as fixed remuneration.
In the event of removal without just cause of the members of the Board of Directors, the policy of the Group determines the payment of the compensation provided for by the law, without any additional compensation. A different value may be negotiated in each situation if deemed more suitable by both parties.
There are no individual agreements with directors defining the calculation method for any compensation in case of resignation, removal without just cause or termination of the employment relationship, following a change in the control of the Company.
The share attribution plan, with the conditions defined in point 73, includes the variable component of the remuneration and is addressed to the Executive Directors, as well as employees of Group companies, under terms to be defined by the Boards of Directors in question.
The attribution plan is described in points 71 to 73.
The remuneration and compensation policy for governing bodies, as well as the share attribution plan in force, were approved at the Annual General Meeting held on 28 April 2017, upon proposal from the Remuneration Committee, as laid down in Art. 2 of Law no. 29/2009 of June, and Recommendation II.3.4 CMVM (2013).
The remuneration policy approved upon the proposal from the Remuneration Committee established the principle of inalienability of the shares accessed by the executive directors of the company under the MTVB, in accordance with Recommendation III.6 CMVM (2013).
The decisions of the Annual General Meeting under review can be consulted at http:// www.sonaecapital.pt/investidores/assembleias-gerais.
The ongoing MTVB plans for the executive members of the Board of Directors of Sonae Capital in 2017 can be summarised as follows:
| Granting Date | 31.12.2017 | ||||||
|---|---|---|---|---|---|---|---|
| Granting Year |
Vesting Year |
Number of Participants1 |
# shares granted |
Share Price | Value | Share Price | Value |
| 2015 | 2018 | 2 | 319.431 | 0,392 € | 125.217 € | 0,887 € | 283.335 € |
| 2016 | 2019 | 3 | 347.144 | 0,572 € | 198.566 € | 0,887 € | 307.917 € |
| 2017 | 2020 | 3 | 278.206 | 0,827 € | 230.076 € | 0,887 € | 246.769 € |
| Total | 944.781 | 553.860 € | 838.021 € |
According to the remuneration policy approved, the Executive Directors must not sell, until the end of their term of office, the company shares acquired under the attribution of the variable remuneration up to the limit of twice the total annual remuneration value, with the exception of those that need to be sold in order to pay the taxes on the benefits from those shares.
In 2017, the Company did not approve any stock option plan.
There are no mechanisms of control for employees participating in the share capital Company.
The transactions between the Company and any related parties are governed by principles of thoroughness, transparency and strict compliance with the market competition rules. These transactions are subject to specific administrative procedures that arise from regulatory requirements, in particular those related to transfer price rules or the rules on voluntary adoption of internal checks and balances, particularly processes for reporting or formal validation, according to the value of the transaction in question.
In 2010, the Supervisory Board adopted the regulation on Company transactions with shareholders holding qualifying holdings (under the terms of Art. 16 and 20 of the Portuguese Securities Code) and its related parties (definition in Art. 20(1) of the Portuguese Securities Code), which establishes the relevant level of transactions carried out from which the Executive Committee must notify the Audit and Finance Committee and the Supervisory Board.
The adoption of this regulation implies that all transactions with related parties above 1 million euros are subject to half-yearly reporting to these two bodies by the Secretary of the Executive Committee. Transactions above 10 million euros must be formally submitted to the prior opinion of the Audit and Finance Committee, the Board of Directors and the Supervisory Board.
Under this regulation, in addition to the notification of the transaction, the Executive Committee shall also submit to the Audit and Finance Committee and the Supervisory Board the procedures established to ensure that the transaction is concluded under normal market conditions and does not entail any conflicts of interest.
After receiving all the relevant information, the Supervisory Board will issue its opinion on the transactions referred to it.
In 2017, the Supervisory Board received regular information on the transactions with related parties and detailed information was provided whenever warranted.
During the year, there was no need for prior approvals under the regulation in force.
As described in point 10, there were no significant business or other relationships between the holders of qualifying holdings and the company in 2017.
Business or transactions with holders of qualifying holdings or companies held by them that are not considered significant are part of normal activity of Sonae Capital's subsidiaries and are carried out under normal market conditions.
There were no business or transactions with any member of the board of directors or of the supervisory board in 2017.
The transactions with the Statutory Auditor related to various audit services were approved by the Supervisory Board and are detailed under point 47 of this report.
The transactions with companies in a control or group relationship were carried out under normal market conditions and are part of the Company's normal activity. The following types of transactions should be highlighted:
The value of trading and the balances are disclosed in the notes to the consolidated financial statements, as stated in point 92.
The procedures and criteria were already mentioned under point 87 above.
Relevant information on related party business relationships is available in note 45 of the Notes to the Consolidated Company accounts and in note 20 of the Notes to the Individual Company accounts, available on the Company's website www.sonaecapital. pt (investors tab, Annual Report and Accounts section).
This Corporate Governance Report contains a description of the governance structure, policies and practices followed by the Company and meets the standards set out in article 245-A of the Portuguese Securities Code and the duties of information expressed in the Portuguese Securities Commission (CMVM) Regulation No. 4/2013 of 1 August. The report also discloses, in accordance with the comply or explain principle, the Company's compliance with the CMVM recommendations provided for in the Corporate Governance Code, issued by the CMVM in 2013.
This document should be read as an integral part of the Annual Management Report and Consolidated and Individual Financial Statements for 2017.
The Company met the duties of information required in article 3 of Law no. 28/2009 of 19 June, articles 447 and 448 of the Portuguese Companies Code, article 245-A of the Portuguese Securities Code and Regulation No. 5/2008 of the CMVM.
The Company adopted the Corporate Governance Code published by the CMVM in July 2013.
All the legal and regulatory rules referred to in this Report are available at www.cmvm.pt.
Sonae Capital has been promoting the implementation and adoption of the corporate governance best practices, basing its policy on high standards of ethics and social responsibility.
The Board of Directors aims to implement an integrated and effective Group management, which will create value for the Company, promoting and ensuring the legitimate interests of shareholders, employees and stakeholders, while encouraging transparency in the relationship with investors and the market.
To this end, we would point out that of the forty recommendations of the new CMVM Corporate Governance Code of 2013, the Company has fully adopted thirty-five, with five not being applicable for the reasons set out below, which constitutes fullest adoption of these recommendations.
Below is a list of the recommendations included in the CMVM Corporate Governance Code, under the terms and for the purpose of article 245-A(1) (o) of the Portuguese Securities Code:
I.1 Companies shall encourage their shareholders to take part in and vote at the General Meetings, in particular by not setting a number of shares required for one vote that is too high number and implementing the means required for electronic voting
The Company encourages its shareholders to take part in the General Meetings, namely attributing one vote to each share, not limiting the number of votes that can be held or cast by each shareholder and ensuring that the shareholders have the means required for postal or electronic voting.
In addition, the Company publishes in its website, since the date of the notice for each Shareholders' General Meeting, the standard documents designed to facilitate access to the information necessary for issuing of shareholders' communications to ensure their presence at the general meeting, and an email address for clarification of any doubts and receipt of all the notices of participation in the General Meeting.
I.2 Companies must not adopt mechanisms that hamper shareholders' decisionmaking ability, namely setting a decision-making quorum at a number higher than that provided for by law.
RECOMMENDATION FULLY ADOPTED – POINTS 12, 13 AND 14 OF THIS REPORT
The Company's Articles of Association do not set a decision-making quorum higher than that provided for by law.
I.3 Companies shall not establish mechanisms which have the effect of causing a misalignment between the right to receive dividends or to subscribe for new securities and the voting right of each ordinary share, unless duly grounded depending on the long-term interests of the shareholders.
RECOMMENDATION FULLY ADOPTED – POINTS 12 AND 13 OF THIS REPORT
No mechanism of this kind has been introduced.
I.4 The Articles of Association of companies that provide for a limitation to the number of votes that may be held or exercised by a single shareholder, individually or in agreement with other shareholders, shall also establish that, at least every five years, the maintenance of such provision shall be subject to a resolution at the Shareholders' General Meeting – with no requirements for an aggravated quorum as compared to the legal one – and that upon such resolution all votes cast shall be counted without the operation of such limitation.
RECOMMENDATION NOT APPLICABLE
The Articles of Association do not establish any limitation to the number of votes that can be cast by one shareholder.
I.5 Measures the effect of which is to demand payments or the assumption of obligations by the Company in the event of the transfer of control, or of changes to the composition of the board which prove detrimental to the free transferability of shares and the free assessment by shareholders of the performance of members of the board shall not be established.
RECOMMENDATION FULLY ADOPTED – POINTS 4 AND 84 OF THIS REPORT
The Company does not unilaterally adopt policies causing any of the restrictions listed in the recommendation. Contracts concluded by the Company reflect the protection of company interests, with a view to achieving long term business sustainability under the background of market conditions.
II.1.1 Within the limits set by law, and unless the Company is of a reduced size, the Board of Directors shall delegate day-to-day running of the Company. The powers delegated must be detailed in the Corporate Governance annual report.
RECOMMENDATION FULLY ADOPTED – POINTS 28 AND 29 OF THIS REPORT
The Board of Directors delegated day-to-day running of the Company to the Executive Committee.
II.1.2 The Board of Directors shall ensure that the Company acts in a manner consistent with its objectives and shall not delegate its powers, in particular with regard to: i) definition of the Company's general policies and strategy; ii) definition of the business structure of the group; iii) decisions deemed strategic due to the amount, risk or special characteristics involved.
RECOMMENDATION FULLY ADOPTED – POINT 21 OF THIS REPORT
Non-delegated powers of the Board of Directors follow the rules of this recommendation.
II.1.3 The General and Supervisory Board, in addition to carrying out the supervision duties entrusted to it, shall take on full responsibility in matters of Corporate Governance. This Board should then, by provisions in the articles of association or by equivalent means, be obliged to make judgement on the strategy and main policies of the Company, the definition of the business structure of the group and the decisions deemed strategic due to the amount or risk involved. This Board shall also assess compliance with the strategic plan and implementation of the main Company policies.
RECOMMENDATION NOT APPLICABLE
The governance model adopted does not include a General and Supervisory Board.
II.1.4 Unless the company is of a reduced size and depending on the adopted model, the Board of Directors and the General and Supervisory Board shall set up the necessary Committees in order to:
a) Ensure that a competent and independent assessment of the Executive Directors' performance is carried out, as well as its own overall performance and further yet, the performance of all existing committees;
b) Study the structure and practices of the adopted governance system and verify its efficiency and propose to the competent bodies measures to be carried out with a view to its improvement.
RECOMMENDATION FULLY ADOPTED – POINTS 27 AND 29 OF THIS REPORT
The Board of Directors has set up two specialized committees, made up of non-executive members, to ensure the quality of the work performed. The Audit and Finance Committee and the Board Nomination and Remuneration Committee are in operation.
II.1.5 The Board of Directors or the General and Supervisory Board, depending on the model used, shall set objectives for risk taking and create systems to control it in order to ensure consistency between the risks actually taken and the established objectives.
RECOMMENDATION FULLY ADOPTED – POINTS 29 AND 51 OF THIS REPORT
The Board of Directors has set up internal risk control systems with the appropriate components.
II.1.6 The Board of Directors shall include a number of non-executive members to ensure an effective capacity for monitoring, supervision and assessment of the other members of the management board.
RECOMMENDATION FULLY ADOPTED – POINTS 18 AND 29 OF THIS REPORT
The Board of Directors consists of a total of seven members, of whom four are nonexecutive directors.
II.1.7 The non-executive directors shall include an adequate proportion of independent members, in accordance with the governance model, the size of the Company, its shareholder structure and free float.
The independence of the members of the General and Supervisory Board and the Audit Committee is determined under the terms of the legislation in force. In this regard, the company deems independent any member of the Board of Directors who is neither linked to any group of specific interests in the Company not under any circumstance likely to affect their objective analysis and decision making, namely by virtue of:
RECOMMENDATION FULLY ADOPTED – POINT 18 OF THIS REPORT
The Board of Directors includes two independent, non-executive directors who meet the independence criteria in this recommendation.
II.1.8 When Directors that carry out executive duties are requested by other Board Members to supply information, the former shall do so in a timely manner and the information supplied must adequately suffice the request made.
RECOMMENDATION FULLY ADOPTED – POINT 29 OF THIS REPORT
Throughout the year, the Executive Committee discloses its decisions to the Board of Directors on a timely basis. The executive members, by their own initiative or upon request, shall provide to non-executive members and other members of corporate bodies the information they need to fulfil their roles.
II.1.9 The chairman of the executive management body or executive committee shall send the notices convening meetings and minutes of the respective meetings, when applicable, to the Chairman of the Board of Directors, the Chairman of the Supervisory Board, the Chairman of the Audit Committee, the Chairman of the General and Supervisory Board and the Chairman of the Financial Matters Committee.
RECOMMENDATION FULLY ADOPTED – POINT 29 OF THIS REPORT
The Chairman of the Executive Committee has made available all information regarding the meetings held to the Chairman of the Board of Directors and to the Chairman of the Supervisory Board.
II.1.10 Should the Chairman of the Board of Directors have an executive role, the Board of Directors shall appoint an independent board director for coordinating the work of the other non-executive members and ensuring that these may decide upon, in an independent and informed manner, or for them to make independent, informed decisions, or find an equivalent mechanism to ensure such coordination.
The Chairman of the Board of Directors does not have an executive role.
II.2.1 Depending on the applicable model, the Chairman of the Supervisory Board, of the Audit Committee or of the Financial Matters Committee shall be independent, in accordance with the applicable legal criteria, and shall have the adequate skills to carry out their duties.
RECOMMENDATION FULLY ADOPTED – POINTS 32 AND ANNEX TO THIS REPORT
The Chairman of the Supervisory Board is independent, in accordance with the criteria provided for in Art. 414(5) of the Portuguese Companies Code, and has the skills and experience required to carry out his duties.
II.2.2 The supervisory body shall be the main liaison of the External Auditor and the first recipient of the reports. In particular, it is responsible for proposing the respective remuneration and ensuring that adequate conditions for the supply of the services are in place within the company.
RECOMMENDATION FULLY ADOPTED – POINT 38 OF THIS REPORT
The Supervisory Board interacts with the Statutory Auditor and the Auditor so as to supervise their activity and independence, in the exercise of its functions, and as determined by the operating rules in this Board's Regulation, and receive their reports. Concurrent submission of the reports to the Board of Directors by the Statutory Auditor and Auditor is not regarded by the Company as calling into question the compliance with this recommendation.
II.2.3 The supervisory body shall assess the External Auditor on an annual basis and provide the competent body with advice on dismissal or termination of the service agreement whenever justifiable grounds are present.
RECOMMENDATION FULLY ADOPTED – POINT 38 OF THIS REPORT AND ANNUAL REPORT AND OPINION OF THE SUPERVISORY BOARD
The Supervisory Board shall assess the Auditor on an annual basis and include the assessment in its annual report and opinion, made available along with the other accounting documents at www.sonaecapital.pt (investors tab, Corporate Governance section, General Meetings).
II.2.4 The supervisory body shall assess the operation of the internal control and risk management systems and propose the adjustments deemed necessary.
RECOMMENDATION FULLY ADOPTED – POINT 38 OF THIS REPORT
The Board of Directors proactively implements the internal control and risk management system. The Supervisory Board shall assess the effectiveness of these systems and propose the optimisation measures it deems necessary and comments on those in its annual report and opinion.
II.2.5 The Audit Committee, the General and Supervisory Board and the Supervisory Board shall comment on the work plans and resources allocated to the internal audit services and the services ensuring compliance with the rules applicable to the Company (compliance services). They shall receive reports from these services, namely when matters related to accounts, identification or resolution of conflicts of interest or alleged illegal acts are at issue.
RECOMMENDATION FULLY ADOPTED – POINTS 38 AND 51 OF THIS REPORT
The Supervisory Board shall establish with the Internal Audit the action plan to be developed, supervise its activity, receive regular activity reports, assess the results and findings, checks for the existence of any irregularities and provides the guidelines it deems appropriate.
II.3.1 All members of the Remuneration Committee or equivalent shall be independent of the executive members of the management body and shall include at least one member with knowledge of and experience in remuneration policy issues.
Duarte Paulo Teixeira de Azevedo, Chairman of the Board of Directors and non-executive member of this body was elected to these positions at the Shareholders' General Meeting, upon proposal from the majority shareholder, Efanor Investimentos, SGPS, S.A.. His participation in the Remuneration Committee corresponds to representation of the shareholder interest, acting in that capacity and not in his capacity as Chairman of the Board of Directors. The additional member of the Remuneration Committee is independent.
To ensure these duties are carried out independently, this member abstains from discussing or deciding on matters where conflict of interest exists or may exist. The adoption of this procedure ensures the necessary conditions for independence of the actions of the members and the decisions taken by this body.
II.3.2 No individual or company that provides, or has provided for the last three years, services to the management body itself or to any structure under the management body or that is in a relationship with the Company or that is a Company consultant, should be hired to assist the Remuneration Committee in the performance of its duties. This recommendation also applies to any individual or company related to the Company through contract or service provision agreement.
The Board Nomination and Remuneration Committee, which is solely composed of non-executive directors, supports the Remuneration Committee in the performance of its duties. These duties are supported by international consultants of recognised ability. Their independence is ensured by their independence from the Board of Directors, the Company and the Group and by their wide experience and recognition in the market.
II.3.3 The statement on the remuneration policy for the management and supervisory bodies referred to in article 2 of Law no. 28/2009 of 19 June, should also contain:
a) Identification and explanation of the criteria for deciding the remuneration to be attributed to the members of the governing bodies;
b) Information on the individual and aggregated maximum potential amounts payable to the members of the governing bodies and identification of the circumstances under which these amounts may be due;
c) Information as to the enforceability of the payments for the dismissal or termination of duties of directors.
RECOMMENDATION FULLY ADOPTED: POINTS 69 AND 80 OF THIS REPORT, AS WELL AS THE REMUNERATION POLICY APPROVED ON 28 APRIL 2017.
The statement on the remuneration policy was delivered at the Annual General Meeting on 28 April 2017 and includes the information referred to in this recommendation. Payments for dismissal or termination of duties of directors are not enforceable, notwithstanding the applicable legal provisions.
The statement on the remuneration policy is available at http://www.sonaecapital.pt
II.3.4 The proposal for the approval of the plans for attribution of shares and/ or stock options shall be submitted to the general meeting, or depending on the changes in share prices, to members of the governing bodies. Such proposal should contain all the necessary information for a correct assessment of the plan.
RECOMMENDATION FULLY ADOPTED – POINTS 85 AND 86 OF THIS REPORT
The medium term variable remuneration plan, including its implementation, was approved at the Annual General Meeting held on 28 April 2017 and is available at http://www.sonaecapital.pt
II.3.5 The proposal for the approval of any scheme of retirement benefits established on behalf of the members of the governing bodies should be submitted to the general meeting. Such proposal should contain all the necessary information for a correct assessment of the scheme.
The remuneration policy approved does not establish any scheme of retirement benefits.
III.1 The remuneration of the executive members of the management body shall be based on effective performance and shall discourage excessive risk taking.
RECOMMENDATION FULLY ADOPTED – POINTS 69 TO 76 OF THIS REPORT AND REMUNERATION POLICY APPROVED ON 28 APRIL 2017
The remuneration of the members of the Board of Directors carrying out executive duties shall be based on the performance of the directors, measured against predetermined criteria and designed so as to align their performance with the Company's sustainability and the stability of the interest of the shareholders, discouraging excessive risk taking.
III.2 The remuneration of the non-executive members of the management body and the remuneration of the members of the supervisory body shall not include any component the value of which depends on the Company performance or its value.
RECOMMENDATION FULLY ADOPTED – POINTS 69 TO 76 OF THIS REPORT AND REMUNERATION POLICY APPROVED ON 28 APRIL 2017
The remuneration of the non-executive members of the Board of Directors consists solely of a fixed value and is not linked to the Company performance or its value.
III.3 The variable component of the remuneration shall be globally reasonable in relation to the fixed component of the remuneration. Maximum limits shall be set for all the components.
RECOMMENDATION FULLY ADOPTED – POINTS 69 TO 76 OF THIS REPORT AND REMUNERATION POLICY APPROVED ON 28 APRIL 2017
The remuneration policy includes an explicit relationship between the fixed and variable components that is suitable to the profile of the Company and the Group, and the maximum limits established match the practices of comparable companies. The policy is therefore accepted and annually approved by the Shareholders' General Meeting.
III.4 A significant part of the variable remuneration shall be deferred for a period of no less than three years and its payment shall be dependent upon the company's steady positive performance during said period.
RECOMMENDATION FULLY ADOPTED – POINTS 71, 72 AND 86 OF THIS REPORT
In accordance with the remuneration policy approved at the Annual General Meeting held on 28 April 2017, proposed by the Remuneration Committee, a part of no less than fifty per cent of the variable remuneration shall be deferred for a period of three years and its value shall be dependent upon the Company's performance during the said period, as it is pegged to the share price.
III.5 The members of the management body shall not enter into any agreements, either with the Company, or with third parties, the effect of which is to mitigate the risk associated with the variability of the remuneration determined for them by the Company.
RECOMMENDATION FULLY ADOPTED – POINT 73 OF THIS REPORT AND REMUNERATION POLICY
The remuneration policy approved, upon proposal from the Remuneration Committee, at the Shareholders' General Meeting on 28 April 2017 adopted the principle set out in this recommendation.
III.6 Until the end of their term of office, the executive directors must not sell the company shares acquired under the attribution of the variable remuneration system up to the limit of twice the total annual remuneration value, with the exception of those that need to be sold in order to pay the taxes on the benefits from those shares.
RECOMMENDATION FULLY ADOPTED – POINT 73 OF THIS REPORT AND REMUNERATION POLICY
The remuneration policy approved at the Shareholders' General Meeting on 28 April 2017 adopted the principle set out in this recommendation.
III.7 When the variable remuneration includes the attribution of stock options, the beginning of the year shall be deferred for a period of no less than three years
The remuneration policy approved does not include the attribution of stock options.
III.8 When the dismissal of a director does not arise from serious breach of duties or unfitness to perform the normal duties but can still be attributable to inadequate performance, the Company must be equipped with the appropriate and sufficient legal instruments to ensure that any compensation or reparation, beyond that legally due, is not enforceable.
RECOMMENDATION FULLY ADOPTED – POINTS 69 TO 76 OF THIS REPORT AND REMUNERATION POLICY APPROVED ON 28 APRIL 2017
The Company policy fully complies with this recommendation.
IV.1 The External Auditor, within the scope of its powers, shall verify the implementation of the policies and remuneration systems for the governing bodies as well as the effectiveness and functioning of the internal control mechanisms reporting any deficiencies to the Company's Supervisory Body.
RECOMMENDATION FULLY ADOPTED – POINT 46 OF THIS REPORT
The Statutory Auditor shall comment on its activities in its annual audit report, which is subject to the evaluation of the Shareholders' Annual General Meeting and made available at www.sonaecapital.pt
IV.2 The Company or any entities in a control relationship with the Company shall not hire the External Auditor, or any entities in a group relationship with them or that operate in the same network, for services other than audit services. When there are reasons for contracting such services – which must be approved by the supervisory body and explained in the annual report on Corporate Governance – they shall not represent more than 30% of the total value of the services provided to the Company.
RECOMMENDATION FULLY ADOPTED – POINTS 46 AND 47 OF THIS REPORT
The services provided by the External Auditor, other than audit services, were previously approved by the Supervisory Board, thus fully complying with the CMVM recommendation. The percentage of these services over the total services provided by PricewaterhouseCoopers& Associados, SROC (PwC) to the Company is 4.4%.
IV.3 The companies shall promote the auditor rotation after two or three terms of office, depending on the length of the term of office being of four or three years, respectively. The permanence of the auditor beyond this period must be substantiated in a specific opinion from the supervisory body, expressly considering the Auditor's independence in that circumstance and the advantages and costs of its replacement;
RECOMMENDATION FULLY ADOPTED – POINT 44 OF THIS REPORT
The Auditor and the Statutory Auditor partner representing it in the performance of its duties are still on the third term of office.
V.1 Transactions between the Company and the holders of qualifying holdings or entities bound to such holders, under the terms of Art. 20 of the Portuguese Securities Code, shall be carried out under normal market conditions.
The transactions between the Company and any related parties are governed by principles of thoroughness, transparency and strict compliance with the market competition rules. These transactions are subject to specific administrative procedures that arise from regulatory requirements, in particular those related to transfer price rules or the rules on voluntary adoption of internal checks and balances, particularly processes for reporting or formal validation, according to the value of the transaction in question.
V.2 The supervisory or audit body shall establish the procedures and criteria deemed necessary for defining the relevant level of significance of the transactions with holders of qualifying holdings - or with entities with whom they are in a relationship provided for in Art. 20(1) of the Portuguese Securities Code. Transactions of significant relevance require the preliminary opinion of the above mentioned body.
RECOMMENDATION FULLY ADOPTED – POINT 38 OF THIS REPORT
The Company has approved and enforced a formal internal procedure aimed at receiving the opinion of the Supervisory Board and the Audit and Finance Committee before the Executive Committee concludes any transaction with holders of qualifying holdings or with entities with whom they are in a relationship provided for in Art. 20 of the Portuguese Securities Code, when such transactions involve an interest greater than ten million euros. All the transactions concluded with the said entities that exceed one million euros are also subject to half-yearly reporting to these two bodies.
VI.1 The companies shall provide access to information in their website, in Portuguese and English, which will enable knowledge of their progress and current situation in economic, financial and governance terms.
RECOMMENDATION FULLY ADOPTED - POINTS 59 TO 65 OF THIS REPORT
All the recommended information is available in Portuguese and in English on the Company's website – www.sonaecapital.pt.
VI.2 The companies shall ensure the existence of an investor support and market liaison office that must be able to respond in due time to the investors' requests, keeping a record of the requests received and the response thereof.
RECOMMENDATION FULLY ADOPTED – POINT 56 OF THIS REPORT
The Company has an Investor Support Office which provides regular and relevant information to the investors and the financial community, keeping a record of the relevant communication to enhance the quality of its performance.
There are no recommendations requiring subsequent reasoning for non-compliance or non-enforcement.
Maia, 02 March 2018
| The Board of Directors | |
|---|---|
| Duarte Paulo Teixeira de Azevedo | Maria Cláudia Teixeira de Azevedo |
| Chairman | CEO |
| Álvaro Carmona e Costa Portela | Ivone Pinho Teixeira |
| Member of the Board of Directors | CFO |
| Francisco de La Fuente Sánchez | Miguel Jorge Moreira da Cruz Gil Mata |
| Member of the Board of Directors | Member of the Board of Directors |
Paulo José Jubilado Soares de Pinho Member of the Board of Directors
CURRICULA VITAE OF THE MEMBERS OF THE GOVERNING BODIES
Chairman of the Board of Directors of Sonae Capital, SGPS, S.A.
Age: 52 Nationality: Portuguese
Bachelor's Degree in Chemical Engineering from École Polytechnique Fédérale de Lausanne (1986)
Master in Business Administration - MBA – Porto Business School (1989)
Chairman of the Board of Directors of Sonae Investimentos, SGPS, S.A. Chairman of the Board of Directors of Sonae MC – Modelo Continente, SGPS, S.A. Chairman of the Board of Directors of Sonae Center II, S.A. Chairman of the Board of Directors of Sonae Indústria, SGPS, S.A. Chairman of the Board of Directors of Sonae Arauco, S.A. Chairman of the Board of Directors of Sonae Sierra, S.A. Chairman of the Board of Directors and Co-CEO of Sonae, SGPS, S.A. Chairman of the Board of Directors of Migracom, SGPS, S.A. Member of the Board of Directors of Efanor Investimentos, SGPS, S.A. Member of the Board of Directors of Imparfin – Investimentos e Participações Financeiras, S.A. Member of the Board of Curators of Fundação Belmiro de Azevedo Member of the European Round Table of Industrialists (ERT) Member of International Advisory Board of Allianz SE Member of Consejo Iberoamericano para la Productividad y la Competitividad
2009-2014 - Member of the Board of Curators of AEP - Portuguese Entrepreneurship Association 2009–2015 – Chairman of the Board of Trustees of the University of Porto 2012-2015 – Member of the Board of COTEC Portugal Since 2008 – Member of ERT – European Round Table of Industrialists Since 2012 - Member of the Board of Curators of Fundação Belmiro de Azevedo Since 2013 – Member of the International Advisory Board of Allianz, SE Since 2015 – Member of the Consejo Iberoamericano para la Productividad y la Competitividad (Ibero-American Council for Productivity and Competitiveness) Since April 2015 - Chairman of the Board of Directors and Co-CEO of Sonae – SGPS, S.A.
Since 2016 - Chairman of the Board of Directors of Sonae Arauco, S.A.
Vice-chairman of the Board of Directors of Sonae Capital, SGPS, S.A.
Age: 66 Nationality: Portuguese
Bachelor's Degree in Mechanical Engineering – FEUP (1974) Master of Business Management – MBA (Universidade Nova de Lisboa – 1983) AMP / ISMP – Harvard Business School (1997)
Member of the Board of Directors of Capwatt, SGPS, S.A. Member of the Board of Directors of Race, SGPS, S.A. Member of the Board of Directors of SC, SGPS, S.A. Member of the Board of Directors of SC Hospitality, SGPS, S.A.
Non-executive Director of Casa Agrícola HMR, S.A. Non-executive Director of COPAM – Companhia Portuguesa de Amidos, S.A. Non-executive Director of SPDI – SECURE PROPERTY Development & Investment, PLC Director of the Victor e Graça Carmona e Costa Foundation Manager of Portela & Portela, Lda. Member of the Investment Committee of the ECE European Prime Shopping Centre Fund, Luxembourg Director of Belmiro de Azevedo Foundation Vice-Chairman of FPAK – Federação Portuguesa de Automobilismo e Karting (Portuguese Motoring and Karting Federation)
2010-2015 – Non-executive Director of Sonae SGPS, S.A.
2010-2014 – Chairman (until 2012) and Member of the Board of Representatives of the Faculty of Economics, University of Porto
2010-2012 – Trustee of the Urban Land Institute (USA)
2010-2012 – Director of Sonae RP
2010-2014 – Non-executive Chairman of the Board of Directors of MAF Properties, Dubai, UAE 2011-2013 – Member of the Investment Advisory Committee of PanEuropean Property Limited Partnership
Non-executive Director of Sonae Capital, SGPS, S.A.
Age: 76 Nationality: Portuguese
Bachelor's Degree in Electrical Engineering – Instituto Superior Técnico (1965)
Co-opted Member of the General Council of the University of Lisbon
Chairman of the Board of the General Meeting of APEDS – Portuguese Association of Engineers for Social Development
Chairman of the Board of the General Meeting of AAAIST – Association of Alumni of Instituto Superior Técnico
Honorary Chairman of Hidroeléctrica del Cantábrico, S.A.
Member of the Remuneration Committee of Sonae SGPS, S.A. and of Sonaecom, SGPS, S.A. Member of the Board of Trustees of the Luso-Brazilian Foundation
Member of the Board of Trustees of the Luso-Spanish Foundation
Member of the Board of Trustees of the Hidroeléctrica del Cantábrico Foundation
2012-2016 – Chairman of the Board of AAAIST 2010-2015 – Chairman of the Board of the General Meeting of Iberwind – Desenvolvimento e Projectos, S.A. 2007-2013 – Chairman of the General Board of PROFORUM 2007-2013 – Chairman of the National Council of the Engineers Association College of Electrical Engineering 2007-2012 – Guest member of the National Water Board 2007-2012 – Vice-chairman and Non-executive Chairman of the Board of Directors of EFACEC Capital 2009-2016 – Co-opted member of the Instituto Superior Técnico School Board 2005-2012 – Member of Advisory Board of the Forum for Competitiveness 2005-2009 – Chairman of EDP Foundation 2003-2006 – Chairman of the Board of directors of EDP – Energias de Portugal 2000-2003 – Chairman of the Board of Directors and Executive Committee of EDP – Energias de Portugal Since 2017 – Co-opted member of the General Council of the University of Lisbon Since 2005 – Member of the Board of Trustees of the Hidroeléctrica del Cantábrico Foundation Since 2004 – Member of the Board of Trustees of the Luso-Brazilian Foundation
Since 2002 – Member of the Board of Trustees of the Luso-Spanish Foundation
Administrador Não Executivo da Sonae Capital, SGPS, S.A.
Age: 55 Nationality: Portuguese
Bachelor's Degree in Economic – Faculty of Economics, Universidade Nova de Lisboa (1985) MBA – Master of Business Administration – Faculty of Economics, Universidade Nova de Lisboa (1989) Doctorate in Banking and Finance – City University Business School, London (1994) Negotiation Analysis – Amsterdam Institute of Finance (2005) Advanced Course – European Venture Capital and Private Equity Association (2006) Valuation Guidelines Masterclass – European Venture Capital and Private Equity Association (2007) Private Equity and Venture Capital Programme – Harvard Business School (2007)
Chairman of the General Council of the PME-IAPMAI Venture Capital Syndication Fund Chairman of the Supervisory Board of Novabase, SA Member of the Board of Directors of Change Partners, SCR, S.A. Managing Partner of Finpreneur, Ltda. Academic director of the Lisbon MBA (MIT – Católica – Nova)
Member of Strategic Advisory Board of the Fast Change Venture Capital Fund Member of the Board of Directors of Biotecnol, S.A. Director (representative in Portugal) of Venture Valuation, Switzerland Senior Consultant at New Next Moves Consultants, Portugal Associate Professor at the Faculty of Economics, Universidade Nova de Lisboa Guest Lecturer at Cass Business School, London Guest Lecturer at the University of Luxembourg
Administradora e Presidente da Comissão Executiva da Sonae Capital, SGPS, S.A.
Age: 48 Nationality: Portuguese
Bachelor's Degree in Management from Universidade Católica do Porto and MBA from INSEAD
Chairman of the Board of Directors of Capwatt, SGPS, S.A. Chairman of the Board of Directors of Race, SGPS, S.A Chairman of the Board of Directors of SC, SGPS, S.A. Chairman of the Board of Directors of SC Hospitality, SGPS, S.A Chairman of the Board of Directors of SC Industrials, SGPS, S.A. Chairman of the Board of Directors of Troiaresort, SGPS, S.A.
Chairman of the Board of Directors of Bright Development Studio, S.A. Chairman of the Board of Directors of Digitmarket – Sistemas de Informação, S.A. Chairman of the Board of Directors of GRUPO S 21 SEC GÉSTION, S.A. Chairman of the Board of Directors of S21SEC PORTUGAL – CYBERSECURITY SERVICES, S.A. Chairman of the Board of Directors of Inovretail, S.A. Chairman of the Board of Directors of Linhacom, SGPS, S.A. Chairman of the Board of Directors of PCJ – Público, Comunicação e Jornalismo, S.A. Chairman of the Board of Directors of Saphety Level – Trusted Services, S.A. Chairman of the Board of Directors of Sonaecom – Ciber Security and Intelligence Services, SGPS, S.A. Chairman of the Board of Directors of Praça Foz – Sociedade Imobiliária, S.A. Chairman of the Board of Directors of TLANTIC PORTUGAL – Sistemas de Informação, S.A. Chairman of the Board of Directors of WeDo Consulting, Sistemas de Informação, S.A. Chairman of the Board of Directors of WeDo Technologies Americas, INC. Member of the Board of Directors of Armilar Venture Partners – Sociedade de Capital de Risco, S.A. Member of the Board of Directors of BA – Business Angels SGPS, S.A. Member of the Board of Directors of BA – Capital, SGPS S.A. Member of the Board of Directors of Efanor Investimentos, SGPS, S.A. Member of the Board of Directors of Efanor – Serviços de Apoio à Gestão, S.A. Member of the Board of Directors of Imparfin, SGPS, S.A. Member of the Board of Directors of Praesidium Services Limited Member of the Board of Directors of Público – Comunicação Social, S.A. Member of the Board Directors of Setimanale – SGPS S.A. Member of the Board of Directors of Sonaecom, SGPS, S.A. Member of the Board of Directors of Sonaecom – Serviços Partilhados, S.A. Member of the Board of Directors of Sonae Investment Management – Software and Technology, SGPS, S.A. Member of the Board of Directors of WeDo Tecnologies (UK) Limited Member of the Board of Directors of WeDo Technologies Australia PTY, Limited Member of the Board of Directors of Vistas da Foz – Sociedade Imobiliária, S.A. Member of the Board of Directors of ZOPT, SGPS, S.A. Member of the Board of Directors of NOS – SGPS, S.A.
Sole Administrator of Sekiwi, SGPS, SA Director of WeDo Technologies Egypt Director of Sonaecom – Sistemas de Información Espana, S.L. Manager of WeDo Technologies Mexico, S. De R.L. de C.V. General Manager at Saphety – Transacciones Electronicas, S.A.S
Chairman of the Board Directors of WeDo Consulting, Sistemas de Informação, S.A. Executive Director of Sonaecom, SGPS, S.A. Executive Director of NOS - SGPS, S.A. Member of the Board of Directors in the following companies: Sonae Investment Management – Software and Technology, SGPS, S.A. Efanor Investimentos, SGPS, S.A. ZOPT, SGPS, S.A.
Administradora Executiva e CFO da Sonae Capital, SGPS, S.A.
Age: 45 Nationality: Portuguese
Bachelor's Degree in Economics – Porto Faculty of Economics (1995) Postgraduate Degree in Credit Analysis – ISGB, the Portuguese School of Bank Management (1996) Postgraduate Degree in International Taxation – Universidade Católica (2004)
Chairman of the Board of Directors of Acrobatic Title, S.A. Member of the Board Directors and Member of Executive Commission of Adira – Metal Forming Solutions, S.A. Member of the Board of Directors of Aqualuz Tróia – Exploração Hoteleira e Imobiliária, S.A. Member of the Board of Directors of Atlantic Ferries – Tráfego Local, Fluvial e Marítimo, S.A. Member of the Board of Directors of Bloco Q – Sociedade Imobiliária, S.A. Member of the Board of Directors of Capwatt, SGPS, S.A. Member of the Board of Directors of Capwatt ACE, S.A. Member of the Board of Directors of Capwatt – Brainpower, S.A. Member of the Board of Directors of Capwatt Colombo – Heat Power, S.A. Member of the Board of Directors of Capwatt Engenho Novo – Heat Power, S.A. Member of the Board of Directors the Complementary Grouping of Companies Capwatt Hectare – Heat Power, ACE Member of the Board of Directors of Capwatt II – Heat Power, S.A. Member of the Board of Directors of Capwatt III – Heat Power, S.A. Member of the Board of Directors of Capwatt Maia – Heat Power, S.A. Member of the Board of Directors of Capwatt Martim Longo – Solar Power, S.A. Member of the Board of Directors of Capwatt Vale do Caima – Heat Power, S.A. Member of the Board of Directors of Capwatt Vale do Tejo – Heat Power, S.A. Member of the Board of Directors of Casa da Ribeira – Sociedade Imobiliária, S.A. Member of the Board of Directors of Centro Residencial da Maia – Urbanismo, S.A. Member of the Board of Directors of Cinclus – Imobiliária, S.A. Member of the Board of Directors of Contacto Concessões, SGPS, S.A. Member of the Board of Directors of Country Club da Maia – Imobiliária, S.A. Member of the Board of Directors of Empreendimentos Imobiliários Quinta da Azenha, S.A. Member of the Board of Directors of Golf Time – Golfe e Investimentos Turísticos, S.A. Member of the Board of Directors of Imobeauty, S.A. Member of the Board of Directors of Imoclub – Serviços Imobiliários, S.A. Member of the Board of Directors of Imodivor – Sociedade Imobiliária, S.A. Member of the Board of Directors of Imohotel – Empreendimentos Turísticos, S.A. Member of the Board of Directors of Imopenínsula – Imobiliária, S.A. Member of the Board of Directors of Imoponte – Sociedade Imobiliária, S.A. Member of the Board of Directors of Imoresort – Sociedade Imobiliária, S.A. Member of the Board of Directors of Imosedas – Imobiliária e Serviços, S.A. Member of the Board of Directors of Implantação – Imobiliária, S.A. Member of the Board of Directors of Inparvi, SGPS, S.A. Member of the Board Directors of Lusobrisa – Produção de Energia Eléctrica, S.A. Member of the Board of Directors of Marina de Tróia, S.A. Member of the Board of Directors of Marmagno – Exploração Hoteleira e Imobiliária, S.A. Member of the Board of Directors of Marvero – Exploração Hoteleira e Imobiliária, S.A. Member of the Board of Directors of Porto Palácio Hotel – Exploração Hoteleira, S.A.
Member of the Board of Directors of Porturbe – Edifícios e Urbanizações, S.A. Member of the Board of Directors of Praedium – Serviços, S.A. Member of the Board of Directors of Praedium II – Imobiliária, S.A. Member of the Board of Directors of Prédios Privados – Imobiliária, S.A. Member of the Board of Directors of Predisedas – Predial das Sedas, S.A. Member of the Board of Directors of Promessa – Sociedade Imobiliária, S.A. Member of the Board of Directors of QCE – Desenvolvimento e Fabrico de Equipamentos, S.A. Member of the Board of Directors of Race - Refrigeration & Air Conditioning Engineering, S.A. Member of the Board of Directors of Race SGPS, S.A. Member of the Board Directors of SC Industrials, SGPS, S.A. Member of the Board of Directors of SC, SGPS, S.A. Member of the Board of Directors of SC – Sociedade de Consultadoria, S.A. Member of the Board of Directors of SC Assets, SGPS, S.A. Member of the Board of Directors of SC Finance, BV Member of the Board of Directors of SC Hospitality, SGPS, S.A. Member of the Board of Directors of S.I.I. – Soberana – Investimentos Imobiliários, S.A. Member of the Board of Directors of Sete e Meio Herdades – Investimentos Agrícolas e Turismo, S.A. Member of the Board of Directors of Soira – Sociedade Imobiliária de Ramalde, S.A. Member of the Board of Directors of Solinca – Health and Fitness, S.A. Member of the Board of Directors of Soltróia – Sociedade Imobiliária de Urbanização e Turismo de Tróia, S.A. Member of the Board of Directors of Sopair, S.A. Member of the Board of Directors of Sotáqua – Sociedade de Empreendimentos Turísticos de Quarteira, S.A. Member of the Board of Directors of Spinveste – Gestão Imobiliária, SGII, S.A. Member of the Board of Directors of Spinveste – Promoção Imobiliária, S.A. Member of the Board of Directors of The Artist Porto Hotel & Bistro – Actividades Hoteleiras, S.A. Member of the Board of Directors of The House Ribeira – Exploração Hoteleira, S.A. Member of the Board of Directors of Tróia Market – Supermercados, S.A. Member of the Board of Directors of Troiaresort – Investimentos Turísticos, S.A. Member of the Board of Directors of Troiaresort, SGPS, S.A. Member of the Board of Directors of Tulipamar – Exploração Hoteleira e Imobiliária, S.A. Member of the Board of Directors of UP Invest, SGPS, S.A. Member of the Board of Directors of Urbisedas – Imobiliária das Sedas, S.A. Member of the Board of Directors of Ventos da Serra – Produção de Energia, S.A. Member of the Board of Directors of Vistas do Freixo – Empreendimentos Turísticos, S.A. Member of Management at Carvemagere, Manutenção e Energias Renováveis, Lda Member of Management at Companhia Térmica Tagol, Unipessoal, Lda. Member of Management at C.T.E. – Central Termoeléctrica do Estuário, Unipessoal, Lda. Member of Management at Enerlousado – Recursos Energéticos, Unipessoal, Lda. Member of Management at Gasflow, Unipessoal, Lda Member of Management at Guimadira – Máquinas e Ferramentas, Unipessoal, Lda Member of Management at Ronfegen – Recursos Energéticos, Unipessoal, Lda. Member of Management at SC For – Serviços de Formação e Desenvolvimento de Recursos Humanos, Unipessoal, Lda.
Since 2012 – Chief Financial Officer, Sonae Capital Group 2007-2012 – Director of Corporate Finance, Sonae Capital Group
Membro do Conselho de Administração e da Comissão Executiva da Sonae Capital, SGPS, S.A.
Age: 43 anos Nationality: Portuguese
Bachelor's Degree in Mechanical Engineering – Faculty of Engineering, University of Porto (1998) Postgraduate Degree in Industrial Maintenance – Faculty of Engineering, University of Porto (1999) MBA – School of Management, University of Porto (2003)
Chairman of the Board of Directors of the Complementary Grouping of Companies Atelgen, Produção de Energia, ACE Chairman of the Board of Directors of the Complementary Grouping of Companies Capwatt Hectare – Heat Power, ACE Chairman of the Board of Directors of the Complementary Grouping of Companies Companhia Térmica do Serrado, ACE Chairman of the Board of Directors of the Complementary Grouping of Companies Soternix – Produção de Energia, ACE Chairman of the Board of Directors of Sociedade de Iniciativa e Aproveitamentos Florestais – Energia, S.A. Chairman of the Board of Sopair, S.A. Member of the Board of Directors and Chairman of Executive Commission of Adira – Metal Forming Solutions, S.A. Member of the Board of Directors of Capwatt, SGPS, S.A Member of the Board of Directors of Capwatt ACE, S.A. Member of the Board of Directors of Capwatt – Brainpower, S.A. Member of the Board of Directors of Capwatt Colombo – Heat Power, S.A. Member of the Board of Directors of Capwatt Engenho Novo – Heat Power, S.A. Member of the Board of Directors of Capwatt II – Heat Power, S.A. Member of the Board of Directors of Capwatt III – Heat Power, S.A. Member of the Board of Directors of Capwatt Maia – Heat Power, S.A. Member of the Board of Directors of Capwatt Martim Longo – Solar Power, S.A. Member of the Board of Directors of Capwatt Vale do Caima – Heat Power, S.A. Member of the Board of Directors of Capwatt Vale do Tejo – Heat Power, S.A. Member of the Board of Directors of the Complementary Grouping of Companies Feneralt – Produção de Energia, ACE Member of the Board of Directors of Lusobrisa – Produção de Energia Eléctrica, S.A. Member of the Board of Directors of QCE – Desenvolvimento e Fabrico de Equipamentos, S.A. Member of the Board of Directors of Race – Refrigeration & Air, Conditioning Engineering, S.A. Member of the Board of Directors of Race, SGPS, S.A. Member of the Board of Directors of SC SGPS, S.A. Member of the Board of Directors of SC – Sociedade de Consultadoria, S.A. Member of the Board of Directors of SC Hospitality, SGPS, S.A. Member of the Board of Directors of SC Industrials, SGPS, S.A. Member of the Board of Directors of Suncoutim – Solar Energy, S.A. Member of the Board of Directors of Ventos da Serra – Produção de Energia, S.A. Member of Management at C.T.E. – Central Termoeléctrica do Estuário, Unipessoal, Lda. Member of Management at Carvemagere, Manutenção e Energias Renováveis, Lda. Member of Management at Companhia Térmica, Tagol Unipessoal, Lda. Member of Management at Enerlousado – Recursos Energéticos, Unipessoal, Lda. Member of Management at Gasflow, Unipessoal, Lda
Member of Management at Guimadira – Máquinas e Ferramentas, Unipessoal, Lda Member of Management at Ronfegen – Recursos Energéticos, Unipessoal, Lda. Member of Management at SC For – Serviços de Formação e Desenvolvimento de Recursos Humanos, Unipessoal, Lda.
Legal Representative of Race – Refrigeration & Air Conditioning Engineering, S.A., Matosinhos "Sucursala Bucaresti"
Chairman of the Executive Committee of APGEI – Portuguese Association of Industrial Engineering and Management Chairman of the Executive Committee of COGEN Portugal – Portuguese Association of Co-generation and Energy Efficiency Member of the Board of IPES – Portuguese Solar Energy Society Member of Management at Vantipal, Lda.
Main professional activities over the last five years:
Chief Operating Officer at CapWatt (Since 2008) Chief Operating Officer at Sonae Indústria de Revestimentos (2012 – 2014) Chief Operating Officer at Euroresinas (2012 – 2014) Chief Operating Officer at Impaper (2012 – 2014
Presidente do Conselho Fiscal da Sonae Capital, SGPS, S.A.
Bachelor's Degree in Economics – Faculty of Economics, University of Porto (1969)
Partner and Director of António Magalhães & Carlos Santos – Statutory Audit Firm (Since its setup in 1989)
Member of the Supervisory Board of Cin – Corporação Industrial do Norte, S.A
Chairman of the Supreme Council of the Statutory Auditors Association in 2018/2021 Chairman of the Supreme Council of the Economists in 2018/2021 Chairman of the Supreme Council of the Statutory Auditors Association in 2012/2014 and 2015/2017
Chairman of the Board of the General Meeting of the Statutory Auditors Association in 2009/2011
Membro do Conselho Fiscal da Sonae Capital, SGPS, S.A.
Accountant, ICL, Lisbon (1964) Bachelor's Degree in Finance, ISCEF, Lisbon (1971)
Chairman of the Supervisory Board of the following companies: Sonae Indústria, SGPS, S.A. OCP Portugal – Produtos Farmacêuticos, S.A. Member of the Supervisory Board of Sonae, SGPS, S.A.
Since 2008 – Special consultant in internal audit and internal control areas
Membro do Conselho Fiscal da Sonae Capital, SGPS, S.A.
Bachelor's Degree in Economics – Faculty of Economics, University of Porto (1978)
Since 2010 – Statutory Auditor and partner at Armando Magalhães, Carlos Silva & Associados, SROC, Lda.
31 December 2017
Sonae Capital's portfolio includes a set of diverse assets grouped into Business Units and Real Estate Assets. The first block has operations in six different business segments:
The group's current real estate portfolio is divided into two blocks:
| Troia Operations |
Development and management of tourism resorts |
||
|---|---|---|---|
| Hospitality | Management of hotels with an integrated offer of services |
||
| Fitness | Management of Health Clubs |
||
| SONAE CAPITAL |
Energy | Provision of energy services to industries |
|
| Refrigeration & HVAC |
Development of engineering projects and solutions for commercial and industrial refrigeration |
||
| Industrial Engineering |
Creation of a cluster of technological based companies levered in the Portuguese engineering know-how |
||
| Real Estate Assets |
Troia Resort Developed Projects Assets in operation Macro-Plots (projects) Outros activos imobiliários Diviserfied set of real estate assets |
The Sonae Capital Group has a strong, stable shareholder structure that favours the development, implementation and execution of a strategy focused on economic and corporate value, based on a transparent governance model and best market practices, combining executive and non-executive duties with independent directors.
According to the current corporate governance structure, the Board of Directors is responsible for strategic decisions at the business portfolio level and their implementation.
The Board of Directors delegates powers for day-to-day operational management to the Executive Committee, also controlling the way in which this body functions and how the delegated powers are exercised.
The following powers of the Board of Directors may not be delegated, but all the others have been delegated:
Approval of the Annual Report and Accounts;
Provision of collateral and personal or real guarantees by the Company;
The Corporate Centre plays an instrumental role in supporting the Executive Committee and Board of Directors in the definition and control of the implementation of the defined strategies, policies and objectives. Comprising sovereign functions and shared functions, which are described below, its purpose is to provide transversal services to all Group companies:
The sovereign functions report to the Executive Committee of Sonae Capital.
As regards Shared Functions, the mission of the Financial Department, coordinated by a manager of the Corporate Centre, is:
The current organisation of the Corporate Centre of Sonae Capital also envisages the existence of the IOW and Innovation function. The responsibility of this is to, on the one hand, promote a common culture and practices of continuous improvement, within the scope of the IOW - Improving our Work model, cross-cutting all of the Group's companies and, on the other hand, to promote, facilitate and accelerate integrated innovation projects between the different areas in order to increase the Group's competitiveness. At the same time, it also has the responsibility of identifying, promoting, evaluating and exploring project financing opportunities, through incentives and subsidies, within the context of the activities carried out by the different Group companies, in order to boost the performance of each business.
Sonae Capital is divulging, for the first time in 2017, non-financial information in the environmental, social and governance areas.
This report is also intended to comply with the requirements of Decree-Law No. 89/2017, published on 28 July 2017.
With regard to the environmental area, Sonae Capital is committed to developing its business conscientiously and with respect for the environment. The main aim is to ensure that the development and area of operation of the different businesses have the least possible adverse impact on the environment, making every effort to reduce and prevent pollutant emissions and encouraging the rational use of material and energy resources.
Sonae Capital has invested significantly in the continuous improvement of its environmental management, seeking to minimise the impact of the activities carried out by its different business on the environment.
Accordingly, at Sonae Capital we care about the efficient use of resources, optimising water and energy consumption and minimising greenhouse gas emissions, without neglecting effective management of the waste generated.
Our focus on continuous improvement in environmental management also allows us to improve our infrastructures and strengthen compliance with legal obligations from an environmental standpoint.
The activity that has been underway at the TROIA RESORT and also, at the Energy segment, will be highlighted in this report. It has not been possible to report environmental information for the other businesses in Sonae Capital's portfolio this year, due to the relevance and the existence, to date, of mechanisms for collecting reliable information.
With regard to the social dimension and to employees and equality between men and women, Sonae Capital, as a benchmark employer on the national market, has proven it is very attractive to technical and young staff with high potential, succeeding in responding to the challenge to attract the new human resources necessary for expanding the activities carried out by the different businesses.
Finally, with regard to respect for human rights and combating corruption and attempted bribery, Sonae Capital's Code of Conduct is a prime example of the company's commitment to showing its stakeholders that its reputation is based on integrity, consistency and transparency.
From the outset, the TROIA RESORT has focused on environmental excellence as a source of competitive advantage and on environmental heritage as a resource capable of creating value as a differentiation factor, or capitalised in new services and products.
With this common vision, the promoter, designers and environmental consultants worked together, sharing information and integrating environmental consultancy as a decisive component in each and every one of the projects. In addition, a policy of maximum transparency was adopted, both with the government and local and regional authorities and also with non-governmental organisations, the media and the public in general.
The methodology used was developed in three stages. First, a strategic environmental study was carried out focused on the urban development plan, which defined the main restrictions and informed of the development of the concept. This was followed by environmental impact studies, which included a strategic environmental assessment of the entire project. Finally, an environmental management system (EMS) was installed and implemented successively for the project, construction and operation phases.
The TROIA RESORT EMS has been certified according to ISO 14001 since 2005 and registered on the Community Eco-Management and Audit Scheme – EMAS since 2008, the only case in Portugal for developments of this nature. In addition, the beaches and the marina have been awarded the Blue Flag.
Aware of the importance of using natural resources efficiently, the different areas in the TROIA RESORT have developed a set of initiatives aimed at continuous improvement of their environmental performance. Of note in this area are the initiatives related to the reduction of water and energy consumption, while not neglecting responsible use and protection of the natural values of the Tróia Peninsula.
Some differentiating initiatives and projects that have contributed not only to reducing the environmental impact, but also to raising awareness among employees, clients and the population in general on this theme, are indicated below.
In 2017, the total water consumption of the TROIA RESORT was 488,780 m3, representing an increase of 26% compared to 2016. This was as a result of the severe drought, which made extra watering necessary.
Given the high water consumption of the golf course, a set of measures aimed at reducing consumption by the golf course have been implemented in recent years. These measures include the implementation of a new watering system, waterproofing the lake bottom, changing the type of grass in some parts of the golf course to grass that requires less water, strict control of consumption and raising the awareness of employees. These measures permitted a 55% reduction in water consumption for watering the golf course between 2010 and 2016, corresponding to total water savings of 130,182 m3.
In 2016 (last information available), overall energy consumption in the TROIA RESORT was 6,305 MWh, associated with the emission of 2,261 tonnes of CO2. Around 95% of these emissions are indirect and are associated with the consumption of 5,880 MWh of electricity.
Along with the project to more efficiently manage the water used for watering the golf course TROIA GOLF also opted to use new management and monitoring software at the pumping station, which made it possible to achieve more stable and efficient watering, resulting in a reduction of electricity consumption and CO2 emissions.
Meu Super also implemented a set of measures aimed at improving the store's energy performance. Examples of these measures include the reformulation of the store layout and the cooling system, using more efficient lighting and the installation of an energy rectifier which, between 2010 and 2016, brought about a reduction of 40% in electricity consumption.
Of note in relation to the production of energy from renewable sources is the existence of two solar panel systems at TROIA RESORT. At the Aqualuz Suite Hotel Apartamentos, the system has 100 kW of power and, in 2017, produced around 171 MWh of clean energy. The Clubhouse system at TROIA GOLF has 40 kW of power and produced almost 69 MWh of clean energy in 2017. In 2017, the electricity produced by the photovoltaic panels allowed the emission of over 47 tonnes of CO2 to be prevented.
In the area of mobility, "soft" forms of transport are promoted at the TROIA RESORT, such as cycling, for which there is a cycle lane 5.5 km long. There are also river connections to the peninsula by ferry and catamaran, which provide for a reduction in CO2 emissions, as well as a charging station for electric vehicles.
The Roman Ruins in Tróia are one of the five pilot locations selected for the development of the STORM (Safeguarding Cultural Heritage through Technical and Organisational Resources Management) project, along with the Diocletian Baths (Italy), the Rethymno Historical Centre (Crete), the Mellor Heritage Project (the United Kingdom) and the ruins of Ephesus (Turkey).
The STORM project was one of the two winning projects in the Disaster Resilience & Climate Change Programme by Horizon 2020, promoted by the European Union. This programme is aimed at creating a communications and technological innovation platform, proposing a set of new predictive models, improved non-invasive and nondestructive methods of surveying and diagnosis for effectively predicting environmental changes and revealing threats, thus attenuating the environmental and human risk that threatens cultural heritage.
Biodiversity is a differentiation factor in the TROIA RESORT. To date more than 600 species have been identified in the area, of which 233 are flora, 152 are birds, 12 are mammals, 11 are reptiles, 4 are amphibians and 207 are organisms that live in the intertidal zone.
Even in the town, it is possible to find species of high natural value. Examples of these are the pallid swift and the European free-tailed bat, which brought about the construction of alternative structures when the tower they occupied was demolished.
Following the environmental impact assessment procedure of the marina and the new ferry terminal at the TROIA RESORT, the monitoring carried out in 2017 showed the effectiveness of the measures for preventing and minimising the impacts predicted in the environmental impact study, given that, as occurred in previous years, no impacts of a magnitude higher than that predicted, or even significant, were found in any of the target factors of the monitoring programme.
The bottlenose dolphin pod in the Sado is unique in Portugal and one of only a few in Europe that live in estuaries, which is why these dolphins have merited special attention. It is the responsibility of Tróia-Natura S.A. (Tróia Natura), a company held by Sonae Capital, to promote conservation and environmental monitoring campaigns in the Sado Estuary. These are carried out in conjunction with the Institute for Nature and Forest Conservation.
During 2017, the activities of Tróia-Natura focused on carrying out campaigns under the scope of the Action Plan for Safeguarding and Monitoring the Bottlenose Dolphin Pod in the Sado Estuary and publicising the nature assets existing in the Sado Estuary, with a view to their conservation and enhancement.
Of note is the 4th "Protect the Dolphins" campaign which, in the summer months, raised the awareness of the public in general and various people using and sailing in the Sado Estuary regarding the problems experienced by the bottlenose dolphins in the Sado and the need to safeguard and protect them. 2,419 vessels were contacted under the scope of this campaign, which was carried out by an onboard team.
In 2017, TROIA GOLF concluded the first phase of its application for certification by GEO GOLF. This official distinction is expected to be granted during 2018.
GEO Certified® is a certification system developed especially to oversee sustainability in the golf industry. This distinction acts as a credible platform for monitoring and communicating real results, based on a logic of continuous improvement in nature, the resources and in the community. Recognition is based on the results of the sustainability assessment of the facilities, according to the most recent indicators defined for golfing.
Since 2005, the TROIA RESORT has been organising environmental education activities involving national and foreign tourists, the local community and visitors, which covered a total of more than 25,000 participants. The focus of these activities has been the divulgence of a vast natural heritage in the area and raising awareness to the need to conserve and enhance it.
The 1st TROIA BIOBLITZ was held in 2017. This is an intensive inventory of the flora and fauna on the Tróia Peninsula and in the Sado Estuary, in which the public in general was invited to join the teams of researchers and become scientists for a day. Around 230 species were inventoried, the most representative groups being land plants, marine invertebrates and birds.
The TROIA RESORT took part in the international initiative by the Blue Flag Association - Global Action Days – aimed at contributing actively and positively to improving the environment, with a clean-up campaign at the Caldeira de Tróia lagoon and the surrounding area, part of the Rede Natura 2000 nature network and of high value regarding nature conservation.
In 2017, Atlantic Ferries implemented an integrated management system (IMS) for quality, the environment and occupational health and safety, which is expected to be certified in 2018 according to ISO 9002, 14001 and OHSAS 18001.
The implementation of this project involved focusing on a variety of key areas, such as customer services and the safety and efficiency of operations.
CapWatt, Sonae Capital's energy business unit holds and operates dispersed energy production projects through cogeneration, renewable sources (wind and solar) and biogas, always taking into account that natural and human resources need special care and are inseparable, as they are part of the same ecosystem environment.
The aim of minimising the environmental impact of CapWatt's activities was maintained, integrating the environmental perspective into processes and promoting awareness raising and the preservation of environmental values, with growing awareness that our natural habitat depends on a balanced relationship between human beings and nature.
With regard to cogeneration, this is a decentralised resource where electrical energy production and thermal energy production occur simultaneously. This is instead of the separate generation of these energy sources. Thus, its most visible side is the savings that occur in primary energy, which is no longer consumed, and is decisive in reducing emissions of pollutant gases with a greenhouse effect, particularly CO2, NOX and TSP. The cogeneration plants held by CapWatt have engines or turbines that are fuelled mainly by natural gas and that are known for their high overall efficiency.
With regard to prevention and control of pollutant emissions to the atmosphere and according to the law in force, gaseous emissions are monitored and the results are reported to the responsible government body. As a result of the attention paid to preserving operating conditions and respect for the man-environment relationship, the gaseous pollutant emissions arising from energy production meet legal requirements as to the limits of concentration and emission of gases to the atmosphere. This fact is also related to the constant concern about selecting the use of the best available techniques at all times, aimed at developing an integrated prevention policy for controlling atmospheric pollution, as well as avoiding transfers of pollutant discharges from one receiving environment to another.
Despite being the core business, the scope of CapWatt's assets is quite wide-reaching and, at the moment, it has other types of assets based on production through wholly domestic fuels.
Bearing in mind also the scourge of wildfires and in accordance with the legislation in force and under the scope of the system for protecting the forest from fire, fuel break management has been provided for.
Although less publicised in the media, the scope of the renewable energy production facilities is not limited to solar and wind energy projects. Proof of this is Cap-Watt's focus on two differentiating projects that are based on using biofuels to their full advantage. Thus, CapWatt's first focus on the biofuels area began in 2017, when an electricity production facility based on the use of biogas became part of the company's asset portfolio. This project has total power of 1 MW and is located at the landfill in Chamusca. Using a system to capture the biogas produced in the landfill, the gas is recovered using a motor similar to those used in cogeneration facilities, thus producing electricity in a completely renewable manner. It is also associated with a significant reduction in the amount of greenhouse gases emitted to the atmosphere.
2017 was also a landmark year for CapWatt, as it began the development of the first biomass recovery project. The biomass plant will use waste from wood processing industries as fuel.
The highly efficient energy production processes of the assets operated by CapWatt during 2017 made it possible to prevent the emission of around 30,000 equivalent tonnes of CO2.
Another environmental aspect that is still being duly monitored is the management and treatment of waste, inevitably generated by the business, with the minimisation of its production and careful management of its storage and disposal a main principle. The waste generated is sent to entities licensed for this purpose and the amounts generated are reported to the Portuguese Environment Agency every year.
The optimisation of all the resources and the corresponding minimisation of waste has made all the employees aware and motivated towards ecological practices in order to achieve rational utilisation of natural resources. Several awareness campaigns have been developed for the employees, particularly towards effective implementation and maintenance of selective sorting at source in order to encourage waste recovery through flows and sectors, as well as the efficient use of resources, thus maximising the benefit and minimising the impact.
With regard to Fluorinated Greenhouse Gases (F-gases) and according to the legislation in force, maintenance and leak detection are carried out and the data for the previous calendar year is reported annually to the Portuguese Environment Agency. An inventory of the existing equipment is also kept.
CapWatt is aware that any business has risks and that professional risks are certainly the most important. Their prevention is based on constant assessment, information, training, promotion and healthcare.
CapWatt is a company that, although still a newcomer to Sonae Capital, has always based its activity on the focus on excellence and continuous improvement. Thus, so that this focus can be globally recognised, the company is in the process of obtaining certification in the areas of the Environment, Occupational Health and Safety and Quality according to ISO 14001, ISO 45001 and ISO 9001, which is expected to be granted in 2018.
At Sonae Capital, we scrupulously follow national legislation in terms of Human and Workers' Rights, as well as the guidelines of the United Nations and the International Labour Organisation, assuring the elimination of any form of discrimination and promoting a healthy and balanced working environment.
In compliance with the principles defended in the Code of Conduct, at Sonae Capital, we are committed to promoting diversity in all its dimensions, particularly with regard to age, gender, qualifications and professional backgrounds.
At Sonae Capital, we value diversity in qualifications and professional backgrounds. We believe that the work of the teams is enriched through the complementary nature of each individual, so we continue to focus on a corporate culture that promotes innovation and continuous learning, with a strong focus on internal mobility as an instrument of personal development and enhancement. We value the differences in the careers and profiles of our employees.
At Sonae Capital, we encourage a culture of sharing, cooperation and active dialogue that is open to dissenting voices and that is propitious to the appearance of new disruptive ideas. We believe that strengthening the culture of diversity and inclusion should serve as a reference for the employees and their alignment with corporate values and, at the same time, contribute to continuous renewal of the business in line with the expectations of our different stakeholders.
We defend equal opportunities and we do not accept any kind of discrimination in the workplace, whether this is related to age, gender, race, social origin, religion, sexual orientation or physical capacity.
With regard to gender diversity, Sonae Capital seeks to promote this actively throughout the lifecycle of our employees. During recruitment processes, we recommend that the recruiters present a list of candidates that is balanced in terms of representativeness of both genders. We recommend that at all levels in the company, as well as in all the businesses, the teams should be made up of members of both sexes in a balanced fashion. We monitor the performance appraisals, promotions and salary reviews by gender in order to ensure correct and balanced management in all the teams.
At Sonae Capital, we are committed to ensuring our employees a fair salary and personal and professional development based on merit.
In order to ensure a sustained growth rate, Sonae Capital focuses on continuous training for its employees. As a benchmark employer on the national market, Sonae Capital has continued with its campaigns to attract talent at universities. Examples of this are its job fairs, open days and workshops.
In 2017, investment in training resulted in an increase of 8% in the total number of training courses held, recording growth of 28% in the training volume compared to the same period last year. 472 training courses were held, corresponding to a training volume of 35,766 hours.
Occupational Health and Safety is a fundamental part of the management of Sonae Capital.
Our concern with improving occupational health and safety conditions is always present and in line with our broader commitment to provide for the well-being of our employees. Therefore, we focus on a culture of zero accidents and we ensure the necessary conditions for the workplaces to be safe environments propitious to collective well-being.
Sonae Capital respects freedom of association and collective bargaining, as well as union activity, under the terms established by the applicable legislation and in accordance with the Code of Conduct.
Collective bargaining agreements are in place in all of Sonae Capital's business segments:
| Company | Applicable collective bargaining |
|---|---|
| Adira | Collective bargaining agreement between AIMMAP and SINDEL |
| Aqualuz Troia | Company agreement between Aqualuz Troia and Fesaht |
| Atlantic Ferries | Company agreement between Atlantic Ferries and SIMAMEVIP |
| PPH The House The Artist Golftime |
Collective bargaining agreement between APHORT e a FESAHT |
Every year, Sonae Capital has been reinforcing its role in the surrounding community and took part in several social responsibility initiatives during 2017. The following are some examples:
Sonae Capital has a Code of Conduct ("Code") that includes a set of rules and principles of an ethical nature that govern the activity of the Sonae Capital Group companies, the operation of the governing bodies, their staff and business partners.
Due to the particular nature of each business area, the existence of specific codes of conduct in the different companies of the Sonae Capital Group may be justified, as well as regulations, procedures or documents giving guidance on matters of an ethical nature.
In these cases, the principles of this Code of Conduct will apply to everything that is not covered by the applicable legal regulations.
However, if there are conflicts between the principles and the rules described in this Code and the principles established in specific Codes of Conduct, the rules of an ethical nature described in the latter shall prevail.
The Code is aimed at two groups of people, one internal and one external. Thus, internally, the Code applies to all the members of the governing boards of any company that is part of the Sonae Capital Group, to all employees and service providers and to all who represent Sonae Capital in some way in their relations which clients, suppliers and partners.
The Code is also a guide for the operation of all the entities that have an economic, institutional or social relationship with the Sonae Capital Group. These include, in particular, shareholders, investors, suppliers, clients and business partners.
The Code was created with the fundamental aim of:
This Code is disseminated to all employees and partners and is published on the group's website and intranet. When an employment contract or service agreement is signed, each employee or supplier also signs a statement saying they have received the code and stating their individual commitment to comply with it.
Sonae Capital also undertakes to divulge the Code to all its partners and suppliers, who should act in accordance with the rules described here.
We have a fundamental commitment to the creation of economic value based on principles of ethics and sustainable development, in the long term, and based on relationships of trust with our stakeholders.
We promote the development of the abilities and skills of everyone through constant challenges, a predisposition towards change and teamwork.
We believe that all of these, supported by an internal culture that encourages meritocracy, are crucial factors for attracting, keeping and developing employees with high capacity and potential.
This is our driving force, embodied through the continuous setting of goals which, keeping the resilient and courageous attitude of the organisation constant, stimulate and challenge our skills and add value for our clients.
This is at the core and in the origin of our businesses.
We systematically break from the conventional and we have the capacity to surprise the market.
We believe that you also learn through mistakes and failures, but we are aware of the importance of knowing how to balance this factor within normal risk parameters.
We have an active sense of social responsibility, contributing to improving our society and we are deeply concerned about the environment and the development of human knowledge.
We value efficiency and healthy competition, seeking to optimise the use of our resources and maximise their return.
We take a position of independence and autonomy in relation to central and local powers, but always open and willing to cooperate with the government, with the aim of improving the regulatory, legislative and social framework.
with regard to prevention of and reaction to harassment in the workplace. This applies to all the companies in the group and is aimed at identifying "harassment" and contributing actively to preventing it, fighting against it and eliminating it;
• Privacy and Personal Data Protection: We undertake to comply and ensure compliance with the data protection legislation in force at any time in the different places we operate in and to assure the effectiveness of the rights arising from it for our employees.
ii. Gender: gender diversity is aimed at promoting the existence of different perspectives and styles, bringing innovation and creativity to the body in question;
iii. Qualifications: the diversity of professional qualifications puts the skills needed for developing its activities and the defined strategy at the disposal of the group, bearing in mind the complexity involved. The inclusion of different areas like engineering, economics, management, law and others promotes the diversity of technical knowledge, which will permit a clearer understanding of the issues, risks and opportunities inherent to the group's activity; and
• We ensure that our suppliers comply with the ethical, environmental and social standards established in this Code;
• We promote and take part in initiatives aimed at stimulating the social conscience of all and whose goal is to promote corporate responsibility in the companies and, particularly, in those that contribute to the sustainable development of the Information Society.
• We encourage honesty, respect, cooperation and clear communication with the other employees and stakeholders, thus contributing to maintaining a good working environment.
All employees must be loyal to Sonae Capital, and therefore must:
We do not accept for our own benefit goods, services or any advantages (including Christmas presents) with an individual value of over 100 euros from clients, suppliers, service providers or any other individual or collective entities that have or wish to have a commercial relationship with Sonae Capital. However, if non-acceptance or return is inviable or unadvisable, these goods and services will be assigned to Sonae Capital and be handed over to Sonae Capital's Community Intervention Programme and used for the purposes the managers deem suitable;
This restriction does not apply to offers or payments of goods or services, such as trips, meals, accommodation or shows that are given by third parties to employees in the course of their duties, under the scope of their duties of representation and in the interest of Sonae Capital;
31 December 2017
| Amounts expressed in euro | Notes | 31/12/2017 | 31/12/2016 | ||
|---|---|---|---|---|---|
| ASSETS | |||||
| NON-CURRENT ASSETS | |||||
| Tangible assets | 10 | 265.431.974 | 238.784.870 | ||
| Intangible assets | 11 | 9.822.521 | 7.615.431 | ||
| Goodwill | 12 | 47.376.371 | 37.841.090 | ||
| Investments in associated companies and joint ventures | 6 | 1.419.028 | 1.234.900 | ||
| Other investments | 7 | 578.430 | 478.855 | ||
| Deferred tax assets | 19 | 27.774.060 | 27.380.258 | ||
| Other non-current debtors | 13 | 6.601.994 | 2.036.474 | ||
| Total non-current assets | 359.004.378 | 315.371.878 | |||
| CURRENT ASSETS: | |||||
| Inventories | 14 | 94.396.634 | 104.511.954 | ||
| Trade account receivables | 15 | 24.799.640 | 18.030.267 | ||
| Other debtors | 16 | 10.047.909 | 7.327.649 | ||
| Income tax receivable | 17 | 3.896.136 | 4.685.068 | ||
| Other taxes receivable | 17 | 4.932.769 | 5.855.313 | ||
| Other current assets | 18 | 9.326.244 | 11.848.239 | ||
| Cash and cash equivalents | 20 | 7.307.069 | 32.747.208 | ||
| Total Current Assets | 154.706.401 | 185.005.698 | |||
| Assets held for sale | 48 | 2.415.830 | - | ||
| TOTAL ASSETS | 47 | 516.126.609 | 500.377.576 | ||
EQUITY AND LIABILITIES
| EQUITY | |
|---|---|
| -------- | -- |
| Share capital | 21 | 250.000.000 | 250.000.000 |
|---|---|---|---|
| Own Shares | 21 | (1.305.839) | (1.404.226) |
| Reserves | 21 | 34.815.731 | 40.784.083 |
| Retained earnings | 21 | 3.457.708 | 3.457.708 |
| Profit/(Loss) for the year attributable to the equity holders of Sonae Capital | (6.513.485) | 17.594.199 | |
| Equity attributable to the equity holders of Sonae Capital | 280.454.113 | 310.431.764 | |
| Equity attributable to non-controlling interests | 22 | 10.915.176 | 9.925.965 |
| TOTAL EQUITY | 291.369.289 | 320.357.729 |
| Non-current liabilities | |||
|---|---|---|---|
| Bank Loans | 23 | 17.218.216 | 20.532.367 |
| Bonds | 23 | 57.245.810 | 57.107.711 |
| Obligation under finance leases | 24 | 13.807.082 | 16.375.972 |
| Other loans | 23 | 197.389 | 246.178 |
| Other non-current liabilities | 26 | 3.015.213 | 3.751.701 |
| Deferred tax liabilities | 19 | 21.638.983 | 19.635.287 |
| Provisions | 31 | 3.079.824 | 3.079.824 |
| Total non-current liabilities | 116.202.517 | 120.729.040 | |
| Current liabilities | |||
| Bank Loans | 23 | 24.740.268 | 1.137.237 |
| Obligation under finance leases | 24 | 3.422.578 | 3.214.278 |
| Other loans | 23 | 48.788 | 121.930 |
| Trade creditors | 28 | 25.369.800 | 16.479.554 |
| Other creditors | 29 | 17.625.496 | 4.690.071 |
| Income tax payable | 17 | 1.443.550 | 1.288.312 |
| Other taxes payable | 17 | 3.025.841 | 3.430.692 |
| Other current liabilities | 30 | 23.681.508 | 24.989.717 |
| Provisions | 31 | 4.403.401 | 3.939.016 |
| Total Current Liabilities | 103.761.230 | 59.290.807 | |
| TOTAL LIABILITIES | 219.963.747 | 180.019.847 | |
| Liabilities associated with assets held for sale | 48 | 4.793.573 | - |
| TOTAL EQUITY AND LIABILITIES | 47 | 516.126.609 | 500.377.576 |
The accompanying notes are part of these financial statements. .
| Amounts expressed in euro | Notes | 31/12/2017 | 31/12/2016 (Restated) |
|---|---|---|---|
| Sales | 34 | 109.513.964 | 127.069.320 |
| Services rendered | 34 | 67.642.801 | 57.970.341 |
| Other operating income | 35 | 6.595.430 | 41.347.525 |
| Cost of sales | 14 | (72.750.494) | (64.441.769) |
| Changes in stocks of finished goods and work in progress | 36 | (6.483.266) | (17.961.863) |
| External supplies and services | 37 | (55.737.160) | (58.539.273) |
| Staff costs | 38 | (34.963.322) | (31.624.447) |
| Depreciation and amortisation | 10 and 11 | (19.441.636) | (15.787.515) |
| Provisions and impairment losses (Increases)/Decreases | 31 | (388.874) | 124.707 |
| Impairment losses | 31 | 12.947.179 | (18.903.397) |
| Other operating expenses | 39 | (5.671.948) | (3.330.830) |
| Operational profit/(loss) | 1.262.675 | 15.922.799 | |
| Financial Expenses | 40 | 118.840 | 456.645 |
| Financial Income | 40 | (4.366.919) | (6.737.832) |
| Net financial income / (expenses) | (4.248.079) | (6.281.187) | |
| Profit/(Loss) in associated and jointly controlled companies measured using the equity method |
6 | 391.017 | 350.193 |
| Investment income | 41 | 2.017.071 | 16.329.928 |
| Profit/(Loss) before taxation | (577.317) | 26.321.733 | |
| Taxation | 42 | 1.904.800 | (5.802.076) |
| Profit/(Loss) for the year - continued operations | (2.482.116) | 20.519.657 | |
| Profit/(Loss) for the year - discontinued operations | (2.919.288) | (1.826.762) | |
| Profit/(Loss) for the year | 43 | (5.401.404) | 18.692.895 |
| Attributable to: | |||
| Equity holders of Sonae Capital | (6.513.485) | 17.594.199 | |
| Non-controlling interests | 22 | 1.112.088 | 1.098.695 |
| Profit/(Loss) per share - continued operations | |||
| Basic | 45 | (0,014527) | 0.078710 |
| Diluted | 45 | (0,014527) | 0.078710 |
| Profit/(Loss) per share - discontinued operations | |||
| Basic | 45 | (0,011799) | (0.007404) |
| Diluted | 45 | (0,011799) | (0.007404) |
The accompanying notes are part of these financial statements.
| Amounts expressed in euro Notes |
4th Quarter 2017 1 |
4th Quarter 2016 1 |
|---|---|---|
| Sales | 34.938.378 | 47.249.879 |
| Services rendered | 10.656.361 | 10.911.223 |
| Other operating income | 2.323.994 | 37.739.581 |
| Cost of sales | (17.129.853) | (22.624.570) |
| Changes in stocks of finished goods and work in progress | (6.480.343) | (12.189.519) |
| External supplies and services | (13.968.273) | (15.656.794) |
| Staff costs | (7.767.900) | (8.658.027) |
| Depreciation and amortisation | (5.718.982) | (3.955.452) |
| Provisions and impairment losses (Increases)/Decreases | 2.058.939 | (18.161.628) |
| Other operating expenses | (1.929.973) | (838.431) |
| Operational profit/(loss) | (3.017.652) | 13.816.262 |
| Financial Expenses | 117.427 | 40.755 |
| Financial Income | (962.514) | (1.220.671) |
| Net financial income / (expenses) | (845.087) | (1.179.916) |
| Profit/(Loss) in associated and jointly controlled companies measured using the equity method |
128.020 | 167.414 |
| Investment income | 285.953 | (1.665.185) |
| Profit/(Loss) before taxation | (3.448.766) | 11.138.575 |
| Taxation | 504.218 | 4.990.336 |
| Profit/(Loss) for the year - continued operations | (3.952.983) | 6.148.239 |
| Profit/(Loss) for the year - discontinued operations | (1.938.635) | (652.349) |
| Profit/(Loss) for the year | (5.891.618) | 5.495.890 |
| Attributable to: | ||
| Equity holders of Sonae Capital | (6.014.951) | 5.331.611 |
| Non-controlling interests | 123.338 | 164.278 |
| Profit/(Loss) per share - continued operations | ||
| Basic | (0,016476) | 0,024252 |
| Diluted | (0,016476) | 0,024252 |
| Profit/(Loss) per share - discontinued operations | ||
| Basic | (0,007835) | (0,002644) |
| Diluted | (0,007835) | (0,002644) |
The accompanying notes are part of these financial statements.
1 Prepared in accordance with IAS 34 - Interim Financial Reporting and unaudited
| Amounts expressed in euro | 31/12/2017 | 31/12/2016 |
|---|---|---|
| Consolidated net profit/(loss) for the period | (5.401.404) | 18.692.895 |
| Items that may be reclassified subsequently to net profit / (loss): | ||
| Changes in the currency translation differences | 160.485 | 36.226 |
| Share of other comprehensive income of associates and joint ventures accounted for by the equity method (Note 5) |
- | 7.380.000 |
| Change in the fair value of assets available for sale | - | - |
| Change in the fair value of cash flow hedging derivatives | 1.366 | 16.960 |
| Tax related to other comprehensive income captions | - | (3.562) |
| Other comprehensive income for the period - continued operations | (20.891) | 7.429.624 |
| Other comprehensive income for the period - discontinued operations |
182.742 | - |
| Total comprehensive income for the period | (5.239.553) | 26.122.519 |
| Attributable to: | ||
| Equity holders of Sonae Capital | (6.378.650) | 25.024.303 |
| Non-controlling interests | 1.139.097 | 1.098.216 |
The accompanying notes are part of these financial statements.
| Amounts expressed in euro | 4th Quarter 2017 1 |
4th Quarter 2016 1 |
|---|---|---|
| Consolidated net profit/(loss) for the period | (5.891.618) | 5.495.890 |
| Items that may be reclassified subsequently to net profit / (loss): | ||
| Changes in the currency translation differences | 171.459 | (65.479) |
| Share of other comprehensive income of associates and joint ventures accounted for by the equity method (Note 5) |
- | (1.842) |
| Change in the fair value of assets available for sale | - | - |
| Change in the fair value of cash flow hedging derivatives | - | 3.070 |
| Tax related to other comprehensive income captions | - | (645) |
| Other comprehensive income for the period - continued operations |
(123.179) | 140.069 |
| Other comprehensive income for the period - discontinued operations |
230.722 | (204.965) |
| Total comprehensive income for the period | (5.784.075) | 5.430.994 |
| Attributable to: | ||
| Equity holders of Sonae Capital | (5.944.027) | 8.430.306 |
| Non-controlling interests | 159.952 | 422.477 |
The accompanying notes are part of these financial statements.
1 Prepared in accordance with IAS 34 - Interim Financial Reporting and unaudited
Amounts expressed in euro
| Attributable to Equity Holders of Sonae Capital | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Notes | Share Capital |
Own Shares |
Demerger Reserve (Note 15) |
Translation Reserves |
Fair Value Reserves |
Hedging Reserves |
Others Reserves |
Sub-Total | Retained Earnings |
Subtotal Reserves and Retained Earnings |
Net Profit/ (Loss) |
Total | Non Controlling Interests |
Total Equity |
|
| Balance as at 1 January 2016 | 250.000.000 (1.426.791) 132.638.253 | (23.350) | - | (11.956) (84.451.461) | 48.151.486 | 3.457.708 | 51.609.194 | (294.678) 299.887.725 | 10.247.125 310.134.850 | ||||||
| Total consolidated comprehensive income for the period |
- | - | - | 36.226 | - | 16.960 | 7.375.957 | 7.429.143 | - | 7.429.143 | 17.594.199 25.023.342 | 1.099.177 | 26.122.519 | ||
| Appropriation of profit of 2015: | |||||||||||||||
| Transfer to legal reserves and retained earnings |
- | - | - | - | - | - | (294.678) | (294.678) | - | (294.678) | 294.678 | - | - | - | |
| Dividends paid | - | - | - | - | - | - (14.669.026) (14.669.026) | - (14.669.026) | - (14.669.026) | (1.441.468) | (16.110.494) | |||||
| (Acquisition)/Sales of own shares | - | 22.565 | - | - | - | - | - | - | - | - | 22.565 | - | 22.565 | ||
| Changes in the percentage of capital held in affiliated companies |
- | - | - | - | - | - | 122.230 | 122.230 | - | 122.230 | - | 122.230 | (24.782) | 97.448 | |
| Other changes | - | - | - | - | - | - | 44.928 | 44.928 | - | 44.928 | - | 44.928 | 45.913 | 90.841 | |
| Balance as at 31 December 2016 | 21 | 22 250.000.000 (1.404.226) 132.638.253 | 12.876 | - | 5.004 (91.872.050) 40.784.083 | 3.457.708 | 44.241.791 | 17.594.199 310.431.764 | 9.925.965 320.357.729 | ||||||
| Balance as at 1 January 2017 | 250.000.000 (1.404.226) 132.638.253 | 12.876 | - | 5.004 (91.872.050) 40.784.083 | 3.457.708 | 44.241.791 | 17.594.199 310.431.764 | 9.925.965 320.357.729 | |||||||
| Total consolidated comprehensive income for the period |
- | - | - | 133.476 | - | 1.366 | 134.842 | - | 134.842 (6.513.485) | (6.378.645) | 1.139.097 (5.239.548) | ||||
| Appropriation of profit of 2016: | |||||||||||||||
| Transfer to legal reserves and retained earnings |
- | - | - | - | - | - | 17.594.199 | 17.594.199 | - | 17.594.199 (17.594.199) | - | - | - | ||
| Dividends paid | - | - | - | - | - | - (24.521.567) (24.521.567) | - (24.521.567) | - (24.521.567) | (926.710) (25.448.277) | ||||||
| (Acquisition)/Sales of own shares | - | 98.387 | - | - | - | - | - | - | - | - | 98.387 | - | 98.387 | ||
| Changes in the percentage of capital held in affiliated companies |
- | - | - | - | - | - | - | - | - | - | - | 776.824 | 776.824 | ||
| Other changes | - | - | - | - | - | - | 824.174 | 824.174 | - | 824.174 | - | 824.174 | - | 824.174 | |
| Balance as at 31 December 2017 | 21 | 22 250.000.000 (1.305.839) 132.638.253 | 146.352 | - | 6.370 (97.975.244) | 34.815.731 | 3.457.708 38.273.439 (6.513.485) 280.454.115 | 10.915.176 291.369.289 |
The accompanying notes are part of these financial statements.
| Amounts expressed in euro Notes |
31/12/2017 | 31/12/2016 | 4th quarter 17 1 | 4th quarter 16 1 |
|---|---|---|---|---|
| OPERATING ACTIVITIES | ||||
| Cash receipts from trade debtors | 173.262.850 | 170.970.202 | 50.171.297 | 25.876.821 |
| Cash receipts from trade creditors | (112.288.882) | (115.549.643) | (29.428.050) | (16.742.318) |
| Cash paid to employees | (33.275.063) | (30.477.923) | (3.512.028) | (6.189.578) |
| Cash flow generated by operations | 27.698.905 | 24.942.636 | 17.231.219 | 2.944.925 |
| Income taxes (paid) / received | (335.924) | (1.309.580) | (1.159.983) | (491.727) |
| Other cash receipts and (payments) relating to 20 operating activities |
2.045.103 | (283.212) | (2.042.846) | (794.337) |
| Discontinued operations | (1.021.073) | 913.036 | (10.277.979) | 1.110.266 |
| Net cash from operating activities (1) | 28.387.011 | 24.262.880 | 3.750.411 | 2.769.127 |
| INVESTMENT ACTIVITIES | ||||
| Cash receipts arising from: | ||||
| Investments 46 |
812.469 | 37.684.157 | 76.373 | (664.981) |
| Tangible assets | 9.795.270 | 50.245.367 | 2.188.592 | 48.295.078 |
| Intangible assets | 242.675 | - | 242.664 | |
| Subsidies | 44.209 | 226.089 | - | - |
| Interest and similar income | 187.197 | 420.370 | 87.410 | 2.437 |
| Loans granted | 754.955 | 5.911.400 | 100.000 | |
| Dividends 6 |
280.461 | 332.859 | - | |
| Others | 43.241 | - | 36.848 | |
| Changes in consolidation perimeter (companies in) 8 |
3.025.803 | 478.496 | 153.969 | |
| 15.186.278 | 95.298.738 | 2.885.856 | 47.632.534 | |
| Cash Payments arising from: | ||||
| Investments 46 |
(40.751.829) | (3.250.546) | (3.462.050) | (3.102.100) |
| Tangible assets | (9.422.548) | (8.658.364) | (3.949.409) | (4.297.019) |
| Intangible assets | (1.322.472) | (1.090.723) | (521.187) | (662.731) |
| Loans granted | (33.042) | (62.007) | 810 | (4.000) |
| (51.529.891) | (13.061.640) | (7.931.836) | (8.065.850) | |
| Discontinued operations | (3.117) | 3.092 | (3.117) | (3.092) |
| Net cash used in investment activities (2) | (36.343.613) | 82.234.006 | (5.043.683) | 39.563.592 |
| FINANCING ACTIVITIES | ||||
| Cash receipts arising from: | ||||
| Loans obtained 23 |
57.811.852 | 99.120.884 | 8.205.325 | 66.288 |
| Sale of own shares | 98.387 | 144.043 | - | - |
| Others | - | - | ||
| 57.910.239 | 99.264.927 | 8.205.325 | 66.288 | |
| Cash Payments arising from: | ||||
| Loans obtained 24 |
(44.071.769) | (184.622.318) | (3.138.114) | (57.284.089) |
| Interest and similar charges | (4.969.782) | (7.122.133) | (1.479.122) | (1.291.863) |
| Reimbursement of capital and paid in capital | - | - | 1.658.113 | - |
| Dividends | (25.088.995) | (16.247.196) | (180.349) | (259.491) |
| (74.130.546) | (207.991.647) | (3.139.472) | (58.835.443) | |
| Discontinued operations | (1.254.189) | 104.241 | (1.254.189) | (85.459) |
| Net cash used in financing activities (3) Net increase in cash and cash equivalents |
(17.474.496) | (108.830.961) | 3.811.664 | (58.683.696) |
| (4) = (1) + (2) + (3) | (25.427.981) | (2.334.074) | 2.519.212 | (16.350.977) |
| Effect of foreign exchange rate | 69.959 | 252.737 | (475) | (32.434) |
| Cash and cash equivalents at the beginning 20 of the period |
32.731.439 | 35.318.251 | - | - |
| Caixa e equivalentes cindidos | - | - | ||
| Cash and cash equivalents at the end of the period 20 |
7.233.499 | 32.731.439 | 2.519.687 | (16.318.544) |
The accompanying notes are part of these financial statements.
1 Prepared in accordance with IAS 34 - Interim Financial Reporting and unaudited
(TRANSLATION FROM THE PORTUGUESE ORIGINAL) (AMOUNTS EXPRESSED IN EURO)
SONAE CAPITAL, SGPS, SA ("Company", "Group" or "Sonae Capital") whose headoffice is at Lugar do Espido, Via Norte, Apartado 3053, 4471-907 Maia, Portugal, is the parent company of a group of companies, as detailed in Notes 5 to 7 ("Sonae Capital Group") and was set up on 14 December 2007 as a result of the demerger of the shareholding in SC, SGPS, SA (previously named Sonae Capital, SGPS, SA) from Sonae, SGPS, SA, which was approved by the Board of Directors on 8 November 2007 and by the Shareholder's General Meeting held on 14 December 2007.
Reflecting the current management structure, the reporting segments were revised, addressing the strategic business areas identified in the Group:
The non-strategic assets (including non-tourism real estate assets and financial shareholdings) are included in the segment "Other assets".
The Shares of Sonae Capital are traded in Lisbon Euronext Stock Exchange.
Shareholders have the ability to change the Financial Statements after they have been approved for issue.
The main accounting policies adopted in preparing the accompanying consolidated financial statements are as follows:
The accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS" – previously named International Accounting Standards – "IAS") adopted by the European Union, issued by the International Accounting Standards Board ("IASB") and Interpretations issued by the "International Financial Reporting Interpretations Committee" ("IFRIC"), previously named "Standing Interpretations Committee" ("SIC"), beginning on 1 January 2017.
Interim financial statements were presented quarterly, in accordance with IAS 34 – "Interim Financial Reporting".
The accompanying consolidated financial statements have been prepared from the books and accounting records of the Company and of its subsidiaries on a going concern basis and under the historical cost convention, except for derivative financial instruments which are stated at fair value.
As at the date of the approval of these consolidated financial statements, the following standards have been endorsed by the European Union
| Accounting standards | Effective Date (Started on or after) |
|---|---|
| IAS 7 (amendment), 'Cashflow statement – Disclosure initiative' | 1 January 2017 |
| IAS 12 (amendment),'Income taxes – Recognition of deferred tax assets for unrealised losses' |
1 January 2017 |
| Accounting standards | Effective Date (Started on or after) |
|---|---|
| IFRS 9 (new), 'Financial instruments' | 1 January 2018 |
| IFRS 15 (new), 'Revenue from contracts with customers | 1 January 2018 |
| IFRS 16 (new), 'Leases | 1 January 2018 |
| IFRS 4 (amendment), 'Insurance contracts (Applying IFRS 4 with IFRS 9)' transactions' |
1 January 2019 |
There will be no material impacts on future financial statements of the Group when these standards are enforced.
| Accounting standards | Effective Date (Started on or after) |
|---|---|
| IFRS 17 (new), 'Insurance contracts' | 1 January 2021 |
| IFRIC 23 (new), 'Uncertainty over income tax treatment' | 1 January 2019 |
| IAS 40 – Investment property | 1 January 2018 |
| IFRS 2 – Share-based payment | 1 January 2018 |
| Annual amendments to International Financial Reporting Standards – 2014 – 2016 | 1 January 2017 and 2018 |
| IFRIC 22 – Foreign currency transactions and advance consideration | 1 January 2018 |
| IFRS 9 (amendment), 'Prepayment features with negative compensation' | 1 January 2019 |
| IAS 28 (amendment), 'Long-term interests in Associates and Joint Ventures' | 1 January 2019 |
| Annual amendments to International Financial Reporting Standards – 2014 – 2016 | 1 January 2019 |
IFRS 9 addresses the classification, measurement and derecognition of financial instruments, introducing changes at the level:
i) The classification of financial assets;
In the scope of the evaluation of the impacts of adopting IFRS 9, the Company / Group evaluated the nature of the financial assets recorded in order to identify the measurement impacts. The financial assets of the Company / Group refer mainly to Loans and accounts receivable. From the analysis carried out, it is clear that the category of customers should be segregated into 3 categories, which will correspond to the model "hold to collect", "hold to collect and sell" and "hold to sell.
The Group already carried out similar analysis by client rating, and impacts were already recognized according to the risk of each individual customer
Thus, this additional segmentation will not result in additional relevant amounts of losses to be recorded, and changes in the timing of impairment records are not expected to generate significant impacts.
IFRS 15 is based on the principle that revenue is recognized on the date of transfer of control to the customer, the transaction value being allocated to the different performance obligations assumed to the client and subject to adjustment in the measurement whenever the consideration is variable or subject to a significant financial effect.
With regard to IFRS 15 - Revenue from contracts with customers, the Company / Group analyzed the transactions that give rise to the revenue registration in the Company / Group as follows:
And evaluated the potential impact of adopting IFRS 15 on the future revenue record in terms of amount and period. From the analysis performed, the following situations were identified:
The Company / Group estimates that the allocation of the transaction price to the different services offered does not differ from the allocation made under IAS 18, since all services have a determinable sale price;
ii) Deferred income associated with expiring points:
The Company / Group does not estimate any additional revenue
iii) Recognition of advances received from real estate customers due to non-compliance by the client:
The Company / Group does not estimate any additional revenue
From this analysis it is concluded that the impact of the adoption of IFRS 15 in the Company / Group financial statements is not significant.
The consolidation methods adopted by the Group are as follows:
The Group controls an entity when it is exposed to, or has rights to, the variable returns from its involvement with the Entity, and has the ability to affect those returns through the power exercised over the Entity (definition of control normally used by the Group), are included in the consolidated financial statements using the full consolidation method. Equity and net profit attributable to minority shareholders are shown separately, under the caption non-controlling interests, in the consolidated balance sheet and in the consolidated income statement, respectively. Companies included in the consolidated financial statements are listed in Note 5.
Comprehensive income and other components of equity are attributable to non-controlling interests, even if these captions show negative values.
The acquisition of subsidiaries is recorded using the purchase method. The cost of an acquisition is measured at the fair value of the delivered assets, equity instruments issued and liabilities incurred or assumed at the acquisition date. The costs directly attributable to the acquisition are recorded in the income statement when incurred.
Assets and liabilities of each Group company are measured at their fair value at the date of acquisition and this measurement may be adjusted within 12 months from the date of acquisition. When the Group starts to have control on a subsidiary and already holds a previously acquired shareholding, the fair value of such shareholding
contributes to the calculation of goodwill or bad will. Any excess of the cost of acquisition over the Group's interest in the fair value of the identifiable net assets acquired is recognised as goodwill (Note 2.2.c). Any excess of the Group's share in the fair value of the identifiable net assets acquired over cost is recognized as income in profit or loss for the period of acquisition, after reassessment of the estimated fair value of net assets acquired. Non-controlling interests include their proportion of the fair value of net identifiable assets and liabilities recognised on acquisition of Group companies.
The results of its subsidiaries companies acquired/sold during the period are included in the income statement since the date of acquisition or until the date of sale.
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. Unrealized losses are also eliminated, but are considered as an impairment indicator for the transferred asset.
Financial investments in companies excluded from consolidation are recorded at acquisition cost net of impairment losses (Note 7).
Whenever the Group has, in substance, control over other entities created for a specific purpose, even if no share capital interest is directly held in those entities, these are consolidated by the full consolidation method. Such entities, when applicable, are disclosed in Note 5.
Subsequent transactions in the disposal or acquisition of shareholding to non-controlling interests, and not involving any change in control, don't generate recognition of gains, losses or goodwill. Any difference between the transaction value and the book value of the traded shareholding is recognized in Equity, in other equity instruments.
Investments in associated companies (companies where the Group exercises significant influence but does not establish financial and operational policies – usually corresponding to holdings between 20% and 50% in a company's share capital) and in jointly controlled companies are accounted for in accordance with the equity method.
Under the equity method, investments are recorded at cost value, adjusted by the amount corresponding to the Group's share of changes in equity (including net profit) of associated and jointly controlled companies and by dividends received.
Any excess of the cost of acquisition over the Group's share in the fair value of the identifiable net assets acquired is recognised as goodwill (Note 2.2.c), which is included in the caption Investment in associated and jointly controlled companies. Any excess of the Group's share in the fair value of the identifiable net assets acquired over cost is recognised as income in the profit or loss for the period of acquisition, after reassessment of the estimated fair value of the net assets acquired.
An assessment of the investment in associated and jointly controlled companies is performed when there is an indication that the asset might be impaired and any impairment loss is disclosed in the income statement whenever the shareholding includes goodwill and / or implicit loans / financing.
Impairment losses recorded in prior years that are no longer justifiable are reversed.
When the Group's share of losses exceeds the carrying amount of the investment, this is reported at nil value and recognition of losses is discontinued, unless the Group is committed beyond the value of its investment, or in case it has made payments in favour of the subsidiaries, with the Group recording additional losses.
The Group's share in unrealized gains arising from transactions with associated and jointly controlled companies is eliminated. Unrealized losses are eliminated, but only to the extent that there is no evidence of impairment of the asset transferred.
Investments in associated and jointly controlled companies are disclosed in Note 6.
The accounting policies of the joint ventures are amended, where necessary, to ensure that they are applied consistently with those of the Group.
The excess of the cost of acquisition of investments in group companies, jointly controlled companies and associated companies over the Group's share in the fair value of the assets and liabilities of those companies at the date of acquisition is shown as Goodwill (Note 12) or as Investments in associated and jointly controlled companies (Note 6).
The excess of the cost of acquisition of investments in foreign companies over the fair value of their identifiable assets and liabilities at the date of acquisition is calculated using the functional currency of each of those companies. Translation to the Group's currency (Euro) is made using the closing exchange rate. Exchange rate differences arising from this translation are disclosed in Currency Translation Reserves.
Goodwill is not amortised, but is subject to impairment tests on an annual basis.
For impairment testing purposes, Goodwill is allocated to the cash generating units to which it belongs, the latter being the smallest identifiable group of assets that generates independent cash flows among themselves. The recoverable amount is determined based on the business plans used in the management of the Group or on valuation reports prepared by independent entities.
Impairment losses identified in the period are disclosed in the income statement under Provisions and impairment losses, and may not be reversed.
Any excess of the Group's share in the fair value of identifiable assets and liabilities in Group companies over costs is recognised as income in the profit and loss for the period, at the date of acquisition, after reassessment of the fair value of the identifiable assets and liabilities acquired.
When the Group reorganizes its activity, implying a change in the composition of its cash-generating units to which goodwill has been allocated, a review of Goodwill's allocation to the new cash-generating units is carried out when appropriate. The reallocation is done through a relative value approach, of the new cash-generating units that are created from the reorganization.
The items included in the consolidated financial statements are measured using the currency of the economic environment in which the Group operates (functional currency). The Consolidated Financial Statements of the Group and the notes thereto are presented in euros, the functional and disclosure currency of the Group, unless otherwise stated.
Exchange gains or losses resulting from the payment / receipt of transactions, as well as the translation of assets and liabilities in foreign currency at the exchange rate at the reporting date, are recognized in the income statement under Financial Expenses or Financial Income if the transactions are related with loans, and Other Income or Other Expenses for all other balances / transactions.
Assets and liabilities denominated in foreign currencies in the individual financial statements of foreign companies are translated to euro using exchange rates at the balance sheet date. Profit and loss and cash flows are converted to euro using the average exchange rate for the period. Exchange rate differences originated after 1 January 2004 are recorded as equity under Currency Translation Reserves. Exchange rate differences that originated prior to 1 January 2004 (date of transition to IFRS) were written-off through Retained earnings.
Goodwill and fair value adjustments arising from the acquisition of foreign companies are recorded as assets and liabilities of those companies and translated to euro using exchange rates at the balance sheet date.
Whenever a foreign company is sold (in whole or in part), the share of the corresponding accumulated exchange rate differences is recorded in the income statement as a gain or loss on the disposal, in the caption Investment income.
Whenever a subsidiary in foreign currency is fully disposed of, the accumulated exchange difference is recognized in the income statement as a gain or loss on disposal. If the subsidiary is partially disposed, without loss of control, the accumulated exchange difference is derecognised in its share and transferred to non-controlling interests. If the subsidiary company is partially disposed, with loss of control, the exchange difference is recorded in the income statement.
Exchange rates used on translation of foreign group, jointly controlled and associated companies are listed below:
| 31 December 2017 | 31 December 2016 | ||||||
|---|---|---|---|---|---|---|---|
| End of the Period | Average of Period | End of the Period | Average of Period | ||||
| Mozambican Metical | 0,01418 | 0,01399 | 0,01327 | 0,01489 | |||
| Brazilian Real | 0,25171 | 0,278340 | 0,29150 | 0,26105 | |||
| Angolan Kwanza | 0,0053 | 0,00567 | 0,00545 |
Source: Bloomberg
Tangible 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 acquired after those dates are recorded at acquisition cost, net of depreciation and accumulated impairment losses.
The acquisition cost includes the purchase price of the asset, the expenses directly attributable to its acquisition and the costs incurred with the preparation of the asset so that it is placed in condition of use. Financial costs incurred on loans obtained for the construction of tangible assets are recognized as part of the construction cost of the asset.
Depreciation is calculated on a straight line basis, once the asset is available for use, over the expected useful life for each class of assets and disclosed in "Amortisation and depreciation" in the consolidated profit and loss account.
Impairment losses in tangible assets are accounted for in the year when they are estimated, and are disclosed in Impairment losses in the consolidated profit and loss account, except for those relating to Inventories whose impairment is recorded in Cost of goods sold and materials consumed.
Impairment losses are recorded in the year in which they are estimated and booked in Provisions and impairment losses in the Consolidated Income Statement.
Depreciation rates used correspond to the following estimated useful lives:
| Years |
|---|
| 10 to 50 |
| 10 to 20 |
| 4 to 5 |
| 4 to 8 |
| 3 to 10 |
| 4 to 8 |
The useful lives of the assets are reviewed in each financial report so that the depreciation practiced is in accordance with the useful life of the assets. The land is not depreciated. Changes to useful lives are treated as a change in accounting estimates and are applied prospectively.
Subsequent costs incurred with renewals and major repairs resulting in an increase in the useful life or the ability to generate economic benefits from an asset, are added to the carrying amount of that asset. Maintenance and repair costs related to tangible assets are recorded directly as expenses in the year they are incurred.
Tangible assets in progress represent fixed assets still under construction/development and are stated at acquisition cost net of impairment losses. These assets are depreciated from the date they are completed or start being used.
Gains or losses on a sale or a disposal of tangible assets are calculated as the difference between the selling price and the carrying amount of the asset at the date of its sale/disposal. These are recorded in the income statement under either "Other operational income" or "Other operational expenses".
Expenses incurred with the dismantling or removals of assets installed in third-party property are considered as part of the initial cost of the respective assets, when they constitute significant amounts.
When individually acquired, intangible assets are stated at acquisition cost, which comprises: i) the purchase price, including intellectual property costs and fees after deduction of any discounts; and ii) any costs directly attributable to the preparation of the asset to be placed in condition of use.
After the initial accounting, the Group measures its intangible assets according to the cost model.
When acquired within the scope of a business combination, separable from goodwill, intangible assets are initially valued at fair value determined in the application of the purchase method, as stated by IFRS 3 - Business Combinations.
Intangible assets are stated at acquisition cost, net of depreciation and accumulated impairment losses. Intangible assets are only recognised if they are identifiable, if it is probable that future economic benefits will flow from them, if they are controlled by the Group and if their cost can be reliably measured.
Expenditure on research associated with new technical know-how is recognised as an expense recorded in the income statement when it is incurred.
Expenditure on development is recognised as an intangible asset if the Group demonstrates the technical feasibility and its intention to complete the asset, its ability to sell or use it and the probability that the asset will generate future economic benefits. Expenditure on development which does not fulfil these conditions is recorded as an expense in the period in which it is incurred.
Internal costs associated with maintenance and development of software is recorded as an expense in the period in which they are incurred. Only costs directly attributable to projects for which the generation of future economic benefits is probable are capitalized as intangible assets.
The Group adopted IFRIC 12 – Service Concession Arrangements from 2009 onwards whenever a Group company enters into a service concession arrangement with a public sector entity to provide services to the public. The Troia Marina is the sole service concession arrangement to which this interpretation is applicable. In this case, costs incurred with building the infrastructure for the marina were recorded as an intangible asset which is amortised, on a straight line, over the period of the arrangement, because rights were given to this company to charge users of the public service but has no unconditional contractual right to receive cash from the grantor and bearing the risk of demand. These Intangible Assets are added to the amounts agreed with the grantor for the construction / acquisition of assets for the commercial use of the concession, when these are translated in investments of expansion or requalification in the infrastructures.
Amortisation is calculated on a straight line basis, once the asset is available for use, over the expected useful life which normally is between 3 and 6 years, and are disclosed in Amortisation and Depreciation in the consolidated profit and loss account, except for Troia Marina assets, recorded as Intangible assets under IFRIC 12 - Service Concession Arrangements, which are amortised over the period of the arrangement (50 years).
Whenever there is evidence of impairment of intangible assets, impairment tests are performed in order to estimate the recoverable value of the asset and, when necessary, to record an impairment loss.
The useful lives of the assets are reviewed in each financial report so that the amortization practiced is in accordance with the useful life of the assets. Changes to useful lives are treated as a change in accounting estimates and are applied prospectively.
Lease contracts are classified as (i) a finance lease if the risks and rewards incidental to ownership lie with the lessee and (ii) as an operating lease if the risks and rewards incidental to ownership do not lie with the lessee.
Whether a lease is classified as finance or an operating lease depends on the substance of the transaction rather than the form of the contract.
Tangible assets acquired through finance lease contracts are recorded as assets and corresponding obligations as liabilities in the balance sheet. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability, at the lower of fair value and present value of minimum lease payments up to the end of the lease. Both the finance charge and the depreciation expense for depreciable assets are taken to the income statement in the period in which they are incurred.
Tangible fixed assets acquired through finance leases are depreciated by the lower of the two criteria - useful life of the asset or the period of the lease (when the Group has no option to purchase at the end of the lease), or estimated useful life (when the Group Intends to acquire the assets at the end of the contract).
Lease payments under operating lease contracts are recognised as an expense on a straight line basis over the lease term.
Where the Group acts as a lessor in operating leases, the value of assets leased is maintained in the Group's balance sheet and related rents (net of any incentives granted to the lessee) are taken to the profit and loss account on a straight line basis over the period of the lease.
Government grants are recognised 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.
Investment subsidies related to the acquisition of fixed assets are recognised as deferred income under other current liabilities that are taken to the income statement, under other operating profit, on a systematic basis over the estimated useful life of the asset.
Assets are assessed for impairment at each balance sheet date whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in the income statement under Provisions and impairment losses.
The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm's length transaction less the costs of disposal. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if this is not possible, for the cash-generating unit to which the asset belongs.
Reversal of impairment losses recognised in prior years is only recorded when it is concluded that the impairment losses recognised for the asset no longer exist or have decreased. This analysis is performed whenever there is an indication that the impairment loss previously recognised has been reversed. The reversal is recorded in the
income statement in provisions and impairment losses (increases/decreases). However, the increased carrying amount of an asset due to a reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised for that asset in prior years.
Borrowing costs are normally recognised as an expense in the period in which they are incurred.
Borrowing costs directly or indirectly attributable to the acquisition, construction or production of tangible and real estate projects included under Inventories are capitalised as part of the cost of the qualifying asset. The capitalization of these charges begins after the start of the preparation or construction of the asset and is discontinued when those assets are available for use or when the project concerned is suspended. Borrowing costs are capitalised from the time of preparation of the activities to construct or develop the asset up to the time the production or construction is complete or when asset development is interrupted. Any income earned on funds temporarily invested pending their expenditure on the qualifying asset, is deducted from the borrowing costs that qualify for capitalisation.
Non-current assets (or disposal groups) are classified as held for sale if the carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case the sale must be highly probable and the asset or disposal group is available for immediate sale in its present condition. In addition, the sale should be expected to occur within 12 months from the date of classification.
Non-current assets (or disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value, less costs to sell. These assets are not depreciated since the date they were classified as available for sale, and will remain so until the sale happens or the sale is not likely to happen.
When non-current assets (or disposal groups) no longer meet the conditions to be classified as held for sale, these assets (or disposal groups) will be reclassified according to the nature of the underlying assets and will be remeasured at the lower of: i) The carrying amount before they have been classified as held for sale, adjusted for any depreciation / amortization, or revaluation amounts that have been recognized had
those assets not been classified as held for sale ii) by the recoverable amounts of these assets at the date when they are reclassified according to their underlying nature. These adjustments will be recognized in the net income of the year.
Goods for sale and raw materials are stated at the lower of cost, net of discounts obtained or estimated, and net realisable value. Cost is determined on a weighted average basis. Goods for sale include mostly land for real estate developments.
Finished goods and work in progress are stated at the lower of the weighted average production cost or net realisable value. Production cost includes cost of raw materials, labour costs and overheads (including depreciation of production equipment based on normal levels of activity). Work in progress includes mostly resorts and real estate developments for sale in the normal course of business. Changes in the inventories of finished goods and work in progress during the year are stated in caption Changes in stocks of finished goods and work in progress in the income statement.
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 Inventories of finished goods and work in progress, depending on whether they refer to goods for sale and raw materials or finished goods and work in progress.
Provisions are recognised when, and only when, the Group has an obligation (legal or constructive) resulting from a past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of that obligation. Provisions are reviewed and adjusted at the balance sheet date to reflect the best estimate as of that date.
Provisions are measured at the present value of estimated expense to pay the obligation, using a pre-tax interest rate, which reflects the market valuation for the discount period and the risk of the provision in question.
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.
Provisions related to lawsuits in which the Group is a defendant. The Group recognizes this provision when it estimates, based on information provided by legal counsel on the progress of the process, that it is likely the Group will have to pay for an indemnity.
Provision for guaranteed income
Provisions regarding the estimation of the current value of the potential charges for the total Guaranteed Income in real estate sales of Troia Resort.
Financial instruments were classified in the categories presented in the consolidated balance sheet as detailed in Note 9.
Investments are classified into the following categories:
Held to maturity investments are classified as non-current assets unless they mature within 12 months of the balance sheet date. Investments classified as held to maturity have defined maturities and the Group has the intention and ability to hold them until the maturity date.
Investments measured at fair value through profit or loss includes investments held for negotiation, which the Group acquires with a view to their disposal within a short time period. They are shown in the consolidated balance sheet as Current Investments.
The Group classifies as investments available for sale, those which are not considered as investments measured at fair value through profit or loss nor as investments held to maturity. These assets are classified as non-current assets, unless there is an intention to dispose of them in a period of less than 12 months from the balance sheet date.
All purchases and sales of investments are recognised on the trade date, independently of the settlement date.
Investments are initially measured at cost, which is the fair value of the consideration paid for them, including transaction costs, with the exception of the investments measured at fair value through profit or loss.
Available-for-sale investments and investments measured at fair value through profit or loss are subsequently carried at fair value, without any deduction for transaction costs which may be incurred on sale, by reference to their quoted market price at the balance sheet date. Investments in equity instruments that do not have a quoted market price and whose fair value cannot be reliably measured are stated at cost, less impairment losses.
Gains or losses arising from a change in fair value of available-for-sale investments are recognised directly in equity, under Fair value reserve, included in Reserves and retained earnings until the investment is sold or otherwise disposed of, or until it is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is transferred to net profit or loss for the period.
Changes in the fair value of investments measured at fair value through profit or loss are included in the consolidated income statement for the period. Impairment losses associated with debt instruments recognized in the consolidated income statement are reversible through profit or loss and impairment losses associated with equity instruments recognized in the consolidated income statement are not reversible through profit or loss.
Held to maturity investments are carried at amortised cost using the effective interest rate, net of capital reimbursements and interest income received.
Investments are derecognised when the rights to receive the cash flows arising from the said investments expire or are transferred, as well as all the risks and benefits associated with their possession.
Loans and accounts receivable are booked at amortised cost using the effective interest method less any impairment losses.
Financial income is calculated using the effective interest rate, except for amounts receivable within a very short time period, for which the income receivable is immaterial.
These financial investments arise when the Group supplies money, goods or services directly to a debtor without the intention to negotiate the debt involved.
Loans and accounts receivable are classified as current assets, expect in cases where the maturity date is more than 12 months from the date of the balance sheet, when they are classified as non-current assets. These financial investments are included in the classes identified in Note 9.
Amounts owing from Customers and other third party debts are booked at their nominal value and are subsequently measured at amortized cost and shown in the consolidated balance sheet net of any impairment losses, recognised in the caption Losses due to impairment in receivables in order to reflect their net realisable value. These captions, when current, do not include interest, since the discount impact is considered immaterial.
Impairment losses are booked following the events that have taken place, which indicate objectively and in a quantifiable manner that the whole or a part of the debt will not be received. For this, each Group company takes into consideration market information which demonstrates that:
Recognised impairment losses equal the difference between the amount receivable in the accounts and the present value of future estimated cash flows, discounted at the initial effective interest rate, which is considered to be zero. The discount is considered immaterial in those cases where a receipt is expected within less than a year.
Financial liabilities and equity instruments are classified and accounted for based on their contractual substance, independently from the legal form they assume.
Loans are recorded as liabilities at their nominal value, net of commissions and other financing expenses 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 2.16. The portion of the effective interest charge relating to commissions and other financing expenses, if not paid in the period, is added to the book value of the loan.
Loans will be classified as current liabilities if the payment is due within 12 months or less, otherwise they will be classified as non-current liabilities.
Accounts payable and other creditors are stated at their nominal value, subsequent to their initial recognition these items are measured at amortized cost using the effective interest rate method.
The Group uses derivatives in the management of its financial risks, only to hedge such risks and/or to optimise funding costs.
Derivatives classified as cash flow hedge instruments are used by the Group mainly to hedge interest rate risks on loans obtained. Conditions established for these cash flow hedge instruments are identical to those of the corresponding loans in terms of base rates, calculation rules, rate setting dates and repayment schedules of the loans and for these reasons they qualify as perfect hedges. Inefficiencies that may exist are shown in the caption Net Financial Income/Expenses in the consolidated income statement.
The Group's criteria for classifying a derivative instrument as a cash-flow hedge instrument include:
Cash-flow hedge instruments used by the Group to hedge the exposure to changes in interest rate of its loans are accounted by its fair value. Changes in fair value of these cash flow hedge instruments are recorded in equity under the caption Hedging reserves, and then recognised in net financial income/expenses 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, to the extent that the hedged instrument affects profit and loss. Subsequent changes in fair value are recorded in the income statement.
In those cases in which derivative instruments, in spite of having been negotiated with the abovementioned objectives (essentially derivatives in the form of interest rate options), in relation to which the company did not apply hedge accounting, are initially recorded at cost, if any, and subsequently measured at fair value. The changes in value resulting from the measurement at fair value, calculated using especially designed software tools are included in Net financial charges in the consolidated income statement.
When embedded derivatives exist, they are accounted for as separate derivatives when the risks and the characteristics are not closely related to economic risks and characteristics of the host contract, and this is not stated at fair value, and unrealised gains or losses recorded in the consolidated income statement.
In specific situations, the Group may use interest rate derivatives with the goal of obtaining fair value cover. In these situations, derivatives are booked at their fair value in the consolidated financial statements. If this hedge no longer meets the criteria for hedge accounting, changes in the fair value of the hedged instrument for which the effective interest rate method is used are amortized through profit and loss over the maturity period of the hedge instrument. In the cases in which the derivative involved is not measured at fair value (in particular borrowings that are measured at amortised cost), the effective share of cover will be adjusted to the accounting value of the derivative covered through the profit and loss account.
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.
Cash and cash equivalents include cash on hand, cash at banks, term deposits and other treasury applications which mature in less than three months and are subject to insignificant risk of change in value.
In the consolidated statement of cash flows, cash and cash equivalents also include bank overdrafts, which are included in the balance sheet caption current bank loans.
Share-based payments result from Deferred Performance Bonus Plans that are referenced to the Sonae Capital, SGPS, SA share price and vest within a period of 3 years after being granted.
Share-based payment liabilities are measured at fair value on the date they are granted (after the Annual General Meeting) and are subsequently remeasured at the end of each reporting period, based on the number of shares or share options granted and the corresponding fair value at the closing date (adjusted for the distribution of dividends or movements in capital stock). These obligations are stated as Staff costs and other liabilities, and are recorded on a straight-line basis, between the date the shares are granted and their vesting date, taking into consideration the time elapsed between these dates, when the Group has the choice to settle the transaction in cash to its market value at the date of its exercise.
Whenever one of the criteria for recognition of provisions is not complied with or the existence of the obligation is conditional on the occurrence (or non-occurrence) of a future event, there is a contingent liability. 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 "possible" assets generated by past events whose existence derives from the confirmation of the future occurrence of one or more uncertain events over which the Group has no control. Contingent assets are not recorded in the consolidated financial statements but disclosed when future economic benefits are probable.
The tax charge for the year is determined based on the taxable income of companies included in the consolidation perimeter and considers deferred taxation. Current tax is calculated in accordance with the tax rules in force, or with the tax rules substantially considered as being in force at the balance sheet date.
Current income tax is determined based on the taxable income of the companies included in the consolidation perimeter, or optionally, in the groups of companies included in tax consolidations perimeters, in accordance with the tax rules in force in the respective country.
Deferred taxes are calculated using the balance sheet liability method, reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are calculated and annually remeasured using the tax rates that have been enacted or substantively enacted and therefore are expected to apply in the periods when the temporary differences are expected to reverse.
Deferred tax assets are recognised only when it is probable that sufficient taxable profits will be available against which the deferred tax assets can be used, or when taxable temporary differences are recognised and expected to reverse in the same period. At each balance sheet date a review is made of the deferred tax assets recognised, which are reduced whenever their future use is no longer probable.
Deferred tax liabilities are recognized on all taxable temporary differences, except those related with: i) initial recognition of the goodwill; ii) The initial recognition of assets and liabilities, that are not from a concentration of activities, and that at the date of the transaction do not affect the accounting or tax result. However, there are no taxable temporary differences related to investments in subsidiaries, since; i) the parent company has the ability to control the reversal period of the temporary difference: ii) It is likely that the temporary difference will not reverse in the near future.
Deferred taxes are recorded in the income statement, except if they relate to items directly recorded in equity. In these cases the corresponding deferred tax is recorded in equity.
Under current legislation, tax returns are subject to review and correction by the tax authorities for a period of four years (five years for Social Security), except if there have been tax losses or tax benefits, or ongoing tax inspections or claims. In these cases, and depending on the circumstances, the time limits are extended or suspended. In this way the Company tax return, from the years 2014 to 2017, could still be subject to review. However, in the opinion of the Company's Board of Directors, it is not expected that any correction relating to the said financial years will be significant for the consolidated financial statements as at 31 December 2017.
In the fiscal year 2017, the Company is subject to taxation on Corporate Income Tax at the normal rate of 21%, plus municipal taxes at a maximum rate of 1.5%.
In addition, on the part of the taxable profit of more than 1,500,000 euros subject to and not exempt from Corporate Income Tax, the following state levy fees are levied: 3% over 1,500,000 euros and less than 7,500,000 euros; 5% on the upper part to 7,500,000 euros and up to 35,000,000 euros; and 7% that is levied on the part of the taxable income that exceeds 35,000,000 euros.
Under the terms of Article 88 of the Portuguese Income Tax Code, the company is also subject to separate taxation on a set of charges at the rates provided for in the mentioned article.
The Corporate income tax rate in force for 2018 is 21%.
The Revenue is the fair value of the amount received or receivable earned from the sale of products and rendering of services by the Group.
Revenue from the sale of goods is recognised in the income statement when the risks and benefits have been transferred to the buyer and the amount of the revenue can be measured reasonably. Sales are recognised net of sales taxes and discounts and other expenses arising from the sale, and are measured as the fair value of the amount received or receivable.
Revenue from services rendered is recognised in the income statement taking into consideration the stage of completion of the transaction at the balance sheet date.
Revenue from work in progress is recognized at the end of each year as follows: when total amounts invoiced are higher than the corresponding expenses, the excess is recorded in other current liabilities, and when expenses are higher than the corresponding amounts invoiced the excess is recorded in work in progress.
Revenues arising from contract variations, claims and completion premiums are recorded when these are agreed with the customer, or when negotiations are at an advanced stage and it is probable that these will be favourable to the Group.
Income and expenses are recorded in the year to which they relate, independently of the date of the corresponding payment or receipt. Income and expenses for which their real amount is not known are estimated.
Other current assets and other current liabilities include income and expenses of the reporting year which will only be invoiced in the future. Those captions also include receipts and payments that have already occurred but will only correspond to income or expenses of future years, when they will be booked in the income statement.
Income and expenses are booked in accordance with the accrual basis of accounting, whereby they are recognized as they are earned, regardless of when the cash is received or paid. The differences between the amounts received and paid and the corresponding income and expenses, are recorded under the captions "Other current assets" and "Other current liabilities".
Dividends are recognised as income in the year they are attributed to the shareholders.
Transactions in currencies other than the Euro are translated to Euro using the exchange rate as at the transaction date.
At each balance sheet date, all monetary assets and liabilities expressed in foreign currencies are translated to the functional currency of each foreign company at the exchange rates as at that date. All non-monetary assets and liabilities recorded at fair value and stated in foreign currencies are converted to the functional currency of each company, using the exchange rate at the date the fair value was determined.
Exchange gains and losses arising from differences between historical exchange rates and those prevailing at the date of collection, payment or the date of the balance sheet, are recorded as income or expenses of the period, except for those related to non-monetary assets or liabilities, for which adjustments to fair value are directly recorded under equity.
Events after the balance sheet date and before the financial statements are issued that provide additional information about conditions that existed at the balance sheet date (adjusting events), are reflected in the consolidated financial statements. Events after the balance sheet date and before the financial statements are issued that are nonadjusting events are disclosed in the notes when material.
The most significant accounting estimates reflected in the financial statements are as follows:
• Useful lives of tangible and intangible assets;
The main sources of uncertainty resulting from the period in which the assets will be able to use the forecasts of cash flows, estimates of recoverable amounts, obtain market comparable growth rates, discount rates and sensitivity assumptions.
• Analysis of the impairment of goodwill and other tangible and intangible assets;
The complexity and level of judgment inherent in the model adopted for the calculation of impairment and the identification and aggregation of cash-generating units (CGUs) implies considering this issue as a significant accounting estimate;
• Adjustments to the values of assets and provisions;
Relevant estimates given the complexity and the degree of judgment inherent to the contingencies, as well as the level of uncertainty associated with the outcome of course proceedings.
• Estimates of future income tax;
The degree of judgment associated with the assessment of the recoverability of deferred tax assets requires the use of estimates in the projection of future taxable income and in determining the amounts required for its recovery, the event of which always presents a degree of uncertainty.
• Percentage of completion of revenue recognition.
The map of works that supports the recognition of revenue based on the percentage of completion of construction contracts has several assumptions, essentially as regards the overall budget for construction expenses, expenses already incurred and expenses to be incurred. The degree of uncertainty inherent in estimates of this nature, and the inherent assumptions, implies that these estimates are relevant.
Estimates were based on the best information available at the date of the preparation of the financial statements and on the best knowledge and experience of past and/ or current events. These estimates may, however, be affected by subsequent events which are not foreseeable at the present date. Changes to these estimates, which take place after the date of the financial statements, will be recognised prospectively in the income statement, in accordance with IAS 8.
The main estimates and assumptions used relating to future events included in the consolidated financial statements are described in the corresponding notes attached.
Financial information regarding business segments is included in Note 47.
The ultimate purpose of financial risk management is to support Sonae Capital in the achievement of its long term strategy, reducing unwanted financial risk and volatility and mitigate any negative impacts in the income statement arising from such risks. Sonae Capital's attitude towards financial risk management is conservative and cautious. Derivatives are used to hedge certain exposures related to its operating business and, as a rule, Sonae Capital does not enter into derivatives or other financial instruments that are unrelated to its operating business or for speculative purposes.
The Corporate Finance Department of Sonae Capital is responsible for consolidating and measuring the group's financial risk exposure for reporting and monitoring purposes, being also responsible for submit proposal and implementation of hedging instruments to managing their own currency, interest rate, liquidity and refinancing risks. Exposures are recorded in a main system (Treasury Management System). Risk control and reporting is carried out both at each business level and on a consolidated.
In what concerns to customer and partner´s credit risk management, the Department of Counterparty Risk, as part of the Finance Services, is responsible for assessing and monitoring the clients and partners' risk profile for all the business units as well as the implementation of instruments to mitigate such risks and reporting of exposures and credit quality.
As a result of maintaining its debt in the consolidated balance sheet at variable rates, and the resulting cash flows from interest payments, the Group is exposed to a Euro interest rate risk.
In view of the fact that:
• The setting up of any form of risk cover structure has an implicit opportunity cost associated with it, the Group policy concerning the mitigation of this risk does not establish the maintenance of any minimum proportion of fixed interest rate debt (converted to fixed rate through use of derivatives), but rather has opted for a dynamic approach to monitoring exposure, which aligns market conditions to the real exposure of the Group, in order to avoid the possibility of exposure that could have a real impact on the consolidated results of the Group.
In view of the above, the Group policy concerning this issue defines a case by case review of each potential transaction, such that any contract for derivatives must follow the following principles:
Interest rate sensitivity is based on the following assumptions:
Given the above mentioned assumptions, if interest rates of financial instruments denominated in euro had been 0.75 percentage points higher/lower, the consolidated net profit before tax of the Group as at 31 December 2017 would have been higher/ lower by 466,166 euro (as at 31 December 2016 they would have been higher/lower by 773,310 euro). The impact in equity (excluding the impact on net profit) of the interest rate sensitivity analysis as at 31 December 2017 would have been lower/higher by around 0 euro (as at 31 December 2016 the impact would have been lower/higher by around 0 euro).
The Sonae Capital Group, as an all, has an immaterial exposure to exchange rate risk.
However, the refrigeration and air conditioning business has international operations with subsidiaries operating in different jurisdictions and therefore it is exposed to the exchange rate risk.
The Consolidated Statements of Financial Position and Income Statement are exposed to the risk of a change in exchange rates (risk relative to the value of capital invested in subsidiaries outside the Eurozone) and Group's subsidiaries are exposed to the risk of a change in both exchange and transaction rates (risk associated with commercial transactions made in currencies other than the euro). Transaction risk arises when there is exchange risk related to a cash flow in other than a subsidiary local currency. The Group company cash flows are largely denominated in the 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. In line with this reasoning, Group's subsidiaries only contract debt that is denominated in the respective local currency. In turn, the 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.
As a rule, whenever it is possible and economically viable, subsidiaries aim to offset assets and liabilities denominated in the same foreign currency, thus mitigating foreign exchange risks. Also as a general rule, in situations where there is significant exchange rate risk resulting from operating activities involving currencies other than the local currency of each subsidiary, the foreign exchange risk should be mitigated through the use of short-term foreign exchange derivatives contracted by the subsidiary exposed to that risk. Sonae Capital's subsidiaries do not contract exchange rate derivatives for trading, profit making or speculative purposes. As policy, the translation risk as a result of conversion of equity investments in subsidiaries different from Euro is not hedged, since these investments are considered long-term. Gains and losses related to the translation at different exchange rates of Equity investments in foreign non Euro subsidiaries are accounted under the Conversion Reserve, included in Other Reserves and Accumulated Earnings, on the Consolidated Balance Sheet.
In view of the low volume of balances in foreign currency, no exchange rate sensitivity analysis was carried out.
The Group is exposed to risks arising from the value of investments made in financial shareholdings. However, these investments are in general made with strategic objectives in mind and not for current trading.
Credit risks at Sonae Capital arise mainly from (i) debts from customers relating to operational activity, (ii) its relationships with financial institutions in the course of its day to day business activity, and (iii) the risk of noncompliance by business counterparts in portfolio transactions.
Customer Credit: Sonae Capital's credit management is structured according to the particular needs of the businesses that are part of the Group, always taking in consideration:
The implementation of all these mechanisms has allowed a strict fulfilment of the credit risk policy and also an under the average rate of clients' unfulfillment.
Sonae Capital has established a credit risk management process based on company scoring methodology. The credit risk management policy and its classification methodology enabled Sonae Capital to obtain, in 2017, an average default rate of 0,103%, substantially lower than the average customer default in Portugal, which according to an Intrum Justitia study, turnover of 1,700%. Thus, there is no risk of material non-compliance with the amounts recorded in accounts receivable as at 31 December 2017.
In the normal course of activity collection risk may arise in trade debtors. The amounts presented on the face of the balance sheet are net of impairment losses, which were estimated based on the Group's experience and on the assessment of present economic conditions. As a result, amounts disclosed in Trade debtors reflect their fair value.
Financial Institutions: The credit risk is linked to possible noncompliance by financial institutions, to which the Group is contractually bound, in its normal operational activity, term deposits, cash balances and derivatives.
To mitigate this risk, the Group:
Shareholding Buy/Sale transactions: In the course of its business, the Group is exposed to the credit risk of counterparts with whom it agrees transactions concerning investments in shareholdings. In these cases, the means used to mitigate risks are determined on a one on one basis, in order to take into account the specifics of the transaction, with the constant supervision of the Board of Directors. Despite the variability of the means used, there exists always the possibility of using normal market methods, namely carrying out due diligences, obtaining financial information concerning the counterpart in question, or the pledging of an asset which is released when the financial transaction has been completed, requesting bank guarantees, setting up escrow accounts, obtaining collateral, among others.
Sonae Capital Group's available cash mainly includes bank deposits resulting from cash generated by operations. By geography, bank deposits and short-term investments are distributed as follows:
| Deposits and short term investments: | |||||||
|---|---|---|---|---|---|---|---|
| Portugal | 96,57% | ||||||
| Spain | 0,23% | ||||||
| Brazil | 3,18% | ||||||
| Netherlands | 0,01% | ||||||
| Mozambique | 0,01% |
Presented below the ratings (S&P rating, except in the case of Montepio Geral - Fitch) of the main financial institutions in which Sonae Capital Group had deposits and other investments as at 31 December 2017:
| Rating | % of deposits |
|---|---|
| BBB | 90,97% |
| BB | 7,56% |
| CCC | 1,29% |
| n.d. | 0,18% |
In accordance with established policy, Sonae Capital Group only carry out bank deposits and other short-term investments with counterparties that have a high national and international prestige based on their respective rating notations and preference should be given to financial institutions that form part of Sonae Capital's relationship banks that have a credit position equal or greater that the amount of the short term investment that Sonae Capital aims to do.
Sonae Capital has the need, regularly, to raise external funds to finance its activities and investing plans. It holds a long term diversified portfolio, essentially made of, loan´s and structured facilities, but which also includes a variety of other short-term financing facilities in the form of commercial paper and credit lines.
The objective of liquidity risk management is to ensure at any given moment that the Group has the financial capability under favourable market conditions to: (i) comply with its payment obligations when these fall due and (ii) ensure in a timely manner the appropriate financing for the development of its businesses and strategy.
To that end, the Group aims at maintaining a flexible financial structure, so that the process of managing liquidity within the Group includes the following key aspects:
Short and long term financial control systems (based on Treasury and Cash Management systems), which allow in a timely manner to identify variances, anticipate financing needs and identify refinancing opportunities;
Diversification of sources of financing and counterparts;
A liquidity reserve in form of credit lines with its relationship banks is maintained by Sonae Capital, to ensure the ability to meet its commitments without having to refinance itself in unfavourable terms.
Consequentially, Sonae Capital expects to meet all its obligations by means of its operating cash flows and its financial assets as well as from drawing existing available credit lines or contracting new, if needed.
Changes in international accounting standards that took effect on or after 1 January 2017 (note 2.1), had no significant impact on the financial statements at 31 December 2017.
International operations (Angola, Mozambique and Brazil) in the Refrigeration & HVAC segment are now considered as held for sale and therefore their contribution to the consolidated results are discontinued operations. In order to maintain the comparability of the information, the 2016 figures are attached in the light of this new reality.
Group companies included in the consolidated financial statements, their head offices and percentage of the share capital held by the Group as at 31 December 2017 and 2016, are as follows:
| Percentage of capital held | ||||||||
|---|---|---|---|---|---|---|---|---|
| 31 December 2017 | 31 December 2016 | |||||||
| Company | Head Office | Direct | Total | Direct | Total | |||
| Sonae Capital SGPS, SA | Maia | Holding | Holding | Holding | Holding | |||
| Hotels | ||||||||
| Porto Palácio Hotel, SA | a) | Porto | 100,00% | 100,00% | 100,00% | 100,00% | ||
| SC Hospitality, SGPS, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| The Artist Porto Hotel & Bistrô - Actividades Hoteleiras, SA |
a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| The House Ribeira Hotel – Exploração Hoteleira, SA |
a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Aqualuz Tróia, SA | a) | Grândola | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Resorts | ||||||||
| Atlantic Ferries-Tráf.Loc,Flu.e Marít,SA | a) | Grândola | 95,77% | 95,77% | 95,77% | 95,77% | ||
| Golf Time-Golfe e Invest. Turísticos, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Imopenínsula - Sociedade Imobiliária, SA | a) | Grândola | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Imoresort - Sociedade Imobiliária, S.A. | a) | Grândola | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Marina de Tróia, SA. | a) | Grândola | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Marmagno-Expl.Hoteleira Imob.,SA | a) | Grândola | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Marvero-Expl.Hotel.Im.,SA | a) | Grândola | 100,00% | 100,00% | 100,00% | 100,00% | ||
| SII - Soberana Invest. Imobiliários, SA | a) | Grândola | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Soltroia-Imob.de Urb.Turismo de Tróia,SA | a) | Lisbon | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Tróia Market, S.A. | a) | Grândola | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Tróia Natura, S.A. | a) | Grândola | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Troiaresort-Investimentos Turísticos, SA | a) | Grândola | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Troiaresort, SGPS, SA | a) | Matosinhos | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Tulipamar-Expl.Hoteleira Imob.,SA Fitness |
a) | Grândola | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Acrobatic Tittle, SA. | a) | Lisbon | 10,00% | 10,00% | 10,00% | 10,00% | ||
| Solinca - Health & Fitness, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Energy | ||||||||
| Atelgen - Produção Energia,. ACE | a) | Barcelos | 51,00% | 51,00% | 51,00% | 51,00% | ||
| CAPWATT – Brainpower, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| CAPWATT – ACE, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Capwatt Colombo - Heat Power, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Capwatt Engenho Novo - Heat Power, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Capwatt Hectare - Heat Power, ACE | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Capwatt II - Heat Power, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Capwatt III - Heat Power, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Capwatt Maia - Heat Power, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Capwatt Martim Longo - Solar Power, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Capwatt Vale do Caima - Heat Power, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Capwatt Vale do Tejo - Heat Power, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| CAPWATT – SGPS, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Carvemagere - Manutenção e Energias | a) | Barcelos | 65,00% | 65,00% | 65,00% | 65,00% | ||
| Renováveis, Lda | ||||||||
| Companhia Térmica SERRADO, ACE | a) | Maia | 70,00% | 70,00% | 70,00% | 70,00% | ||
| Companhia Térmica Tagol, Lda. | a) | Oeiras | 100,00% | 100,00% | 100,00% | 100,00% | ||
| CTE - Central Termoeléctrica do Estuário, Lda | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Enerlousado - Recursos Energéticos, Lda. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Ronfegen - Recursos Energéticos, Lda. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | ||
| Lusobrisa - Produção de Energia Eléctrica, S.A. | a) | Maia | 100,00% | 100,00% | - | - | ||
| Gasflow. Unipessoal, Lda | a) | Maia | 100,00% | 100,00% | - | - | ||
| Soternix - Produção de Energia, ACE | a) | Barcelos | 51,00% | 51,00% | 51,00% | 51,00% | ||
| Suncoutim - Solar Energy, SA | a) | Faro | 85,00% | 85,00% | 85,00% | 85,00% | ||
| Ventos da Serra - Produção de Energia S.A. | a) | Maia | 100,00% | 100,00% | - | - | ||
| Sociedade de Iniciativa e Aproveitamentos 1) Florestais - Energia, S.A. |
a) | Mangualde | 90,00% | 90,00% | - | - |
| Refrigeration and HVAC | |||||||
|---|---|---|---|---|---|---|---|
| QCE - Desenvolvimento e fabrico de Equipamentos, SA | a) | Matosinhos | 100,00% | 70,00% | 100,00% | 70,00% | |
| 6) | RACE - Refrigeration & Air Conditioning Engineering, S.A. | a) | Matosinhos | 100,00% | 70,00% | 100,00% | 70,00% |
| 5) | RACE. SGPS, SA | a) | Matosinhos | 70,00% | 70,00% | 70,00% | 70,00% |
| 2) | Sistavac Sistemas HVAC-R do Brasil, Ltda | a) | São Paulo | 100,00% | 70,00% | 100,00% | 70,00% |
| Sopair, S.A. | a) | Madrid | 100,00% | 70,00% | 100,00% | 70,00% | |
| 2) | Spinarq Moçambique, Lda | a) | Maputo | 70,00% | 70,00% | 70,00% | 70,00% |
| 3) | Spinarq-Engenharia.Energia e Ambiente, SA | a) | Luanda | 0% | 0% | 99,90% | 99,90% |
| Other Assets | |||||||
| Bloco Q-Soc.Imobil,SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Casa da Ribeira-Sociedade Imobiliária, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Centro Residencial da Maia.Urban, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Cinclus Imobiliária, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Contacto Concessões, SGPS, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Contry Club da Maia-Imobiliaria, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Empreend.Imob.Quinta da Azenha, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Fundo Esp.Inv.Imo.Fec. WTC | a) | Maia | 100,00% | 100,00% | 99,82% | 99,82% | |
| Imoclub-Serviços Imobilários, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Imodivor - Sociedade Imobiliária, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Imohotel-Emp.Turist.Imobiliários, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Imoponte - Sociedade Imobiliária, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Imosedas-Imobiliária e Seviços, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Implantação – Imobiliária, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Inparvi SGPS. SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Interlog-SGPS, SA | a) | Lisbon | 98,98% | 98,98% | 98,98% | 98,98% | |
| Porturbe-Edifícios e Urbanizações, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Praedium – Serviços, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Praedium II-Imobiliária, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Prédios Privados Imobiliária, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Predisedas-Predial das Sedas, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Promessa Sociedade Imobiliária, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| SC Assets, SGPS, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Sete e Meio Herdades-Inv. Agr. e Tur.,SA | a) | Grândola | 100,00% | 100,00% | 100,00% | 100,00% | |
| Société de Tranchage Isoroy SAS, | a) | Honfleur | 100,00% | 100,00% | 100,00% | 100,00% | |
| Soira - Soc. Imobiliária de Ramalde, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Sótaqua - Soc. de Empreend. Turisticos | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Spinveste-Promoção Imobiliária, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Spinveste-Gestão Imobiliária SGII, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Urbisedas-Imobiliária das Sedas, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Vistas do Freixo-Emp.Tur.Imobiliários, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Industrial Engeneering | |||||||
| 4) 7) SC, INDUSTRIALS, SGPS, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| 1) | Adira - Metal Forming Solutions, S.A. | a) | Porto | 100,00% | 100,00% | - | - |
| 1) | Guimadira - Máquinas e Ferramentas, Lda. | a) | Vila Nova de Gaia | 100,00% | 100,00% | - | - |
| Others | |||||||
| Imobeauty, S.A. | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| SC - Sociedade de Consultadoria, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| SC Finance BV | a) | Amesterdam | 100,00% | 100,00% | 100,00% | 100,00% | |
| SC For - Ser.Formação e Desenvolv.Recursos Humanos, SA |
a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| UP Invest. SGPS, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| SC. SGPS, SA | a) | Maia | 100,00% | 100,00% | 100,00% | 100,00% | |
| Solinfitness - Club Málaga. S.L. | a) | Málaga | 100,00% | 100,00% | 100,00% | 100,00% | |
| 3) | Spred. SGPS, SA | a) | Maia | - | - | 100,00% | 100,00% |
1) Company acquired in the year. 2) Discontinued operations 3) Company sell in the year; 4) Transfer of Other Assets;
5) Ex- Sistavac SGPS SA;
6) Ex- Sistavac, SA;
7) Ex – SC Eng.e Promoção Imobiliária SGPS, SA.
a) Majority of voting rights
These group companies are consolidated using the full consolidation method as described in Note 2.2.a).
Associated and jointly controlled companies included in the consolidated financial statements, their head offices and the percentage of share capital held by the Group as at 31 December 2017 and 2016 are as follows:
| Percentage of Capital Held | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 31 December 2017 | ||||||||||||
| C ompany name | Head Office |
Direct | Total | Total Assets |
Total Liabilities |
Total Costs |
Total incomes |
Shared Capital |
Net income |
Balance Value |
||
| Jointly Controlled Companies |
||||||||||||
| Other Assets | ||||||||||||
| Andar – Sociedade Imobiliária. SA |
Maia | 50,00% | 50,00% | 16.583.257 | 16.878.185 | 123.856 | 1.102 | (294.928) | (122.754) | |||
| 1) | Sociedade de Construções do Chile. SA |
Maia | 100,00% | 50,00% | 16.548.484 | 326.238 | 110.974 | 2.423.166 | 16.222.246 | 2.312.192 | - | |
| 1) | Vastgoed One – Sociedade Imobiliária. SA |
Maia | 100,00% | 50,00% | 12.037.856 | 976 | 1.084 | - | 12.036.880 | (1.084) | - | |
| 1) | Vastgoed Sun – Sociedade Imobiliária. SA |
Maia | 100,00% | 50,00% | 12.042.540 | 976 | 1.079 | - | 12.041.564 | (1.079) | - | |
| Associated Companies | ||||||||||||
| Other Assets | ||||||||||||
| Lidergraf - Artes Gráficas. Lda | Vila do Conde |
24,50% | 24,50% | 18.533.396 | 10.335.157 20.515.836 | 21.812.819 | 8.198.240 | 1.296.983 | 1.276.788 | |||
| Energy | ||||||||||||
| Feneralt - Produção de Energia. ACE |
Barcelos | 25,00% | 25,00% | 818.220 | 167.923 | 107.770 | 2.053.857 | 650.297 | 646.087 | 142.240 | ||
| 76.563.753 27.709.455 20.860.599 26.290.944 48.854.299 4.130.345 | 1.419.028 |
| Percentage of Capital Held | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 31 December 2016 | ||||||||||||
| Head Total Total Total Total Shared Net Balance C ompany name Direct Total Office Assets Liabilities Costs incomes Capital income Value |
||||||||||||
| Jointly Controlled Companies |
||||||||||||
| Other Assets | ||||||||||||
| Andar - Sociedade Imobiliária, SA |
Maia | 50,00% | 50,00% | 16.604.641 | 16.776.815 | 917.743 | - | (172.174) | (917.743) | - | ||
| 1) | Sociedade de Construções do Chile, SA |
Maia | 100,00% | 50,00% | 14.746.910 | 810.256 | 63.685 | 166 | 13.936.655 | (63.520) | - | |
| 1) | Vastgoed One - Sociedade Imobiliária, SA |
Maia | 100,00% | 50,00% | 12.050.074 | 610 | 1.389 | 135 | 12.049.464 | (1.254) | - | |
| 1) | Vastgoed Sun - Sociedade Imobiliária, SA |
Maia | 100,00% | 50,00% | 12.054.754 | 610 | 1.297 | 135 | 12.054.143 | (1.162) | - | |
| Associated Companies | ||||||||||||
| Other Assets | ||||||||||||
| Lidergraf - Artes Gráficas, Lda |
Vila do Conde |
24,50% | 24,50% | 17.937.039 | 10.378.691 | 21.305.990 22.539.972 | 7.558.348 | 1.233.982 | 1.138.099 | |||
| 2) | Norscut - Concessionária de Scut Interior Norte, SA |
Lisboa | - | - | - | - | - | - | - | - | - | |
| 2) | Operscut - Operação e Manu tenção de Auto-estradas, SA |
Lisboa | - | - | - | - | - | - | - | - | - | |
| Energy | ||||||||||||
| Feneralt - Produção de Energia, ACE |
Barcelos | 25,00% | 25,00% | 1.036.916 | 522.770 | 1.404.866 | 1.910.592 | 442.562 | 438.352 | 96.801 | ||
| 74.430.334 28.489.752 23.694.970 24.451.000 45.868.998 | 688.655 | 1.234.900 |
1) Null investment values arise from the adoption of the equity method in Andar – Sociedade Imobiliária, SA, holder of all of these investments; 2) Company sold in 30 September 2016.
The sale value and the transaction net income for the companies sold in caption 2) are as follows:
| Company | Sale value (Note 46) |
Transaction net income (Note 41) |
|---|---|---|
| Norscut - Concessionária de Scut Interior Norte, SA | 42.516.000 | 16.082.072 |
| Operscut - Operação e Manutenção de Auto-estradas, SA | 1.750.000 | 1.726.000 |
| 44.266.000 | 17.808.072 |
Associated and jointly controlled companies are consolidated using the equity method.
Nil balances shown result from the reduction to acquisition cost of amounts determined by the equity method, discontinuing the recognition of its part of additional losses under the terms of IAS 28.
During the periods ended 31 December 2017 and 2016, movements in investments of associated and jointly controlled companies may be summarized as follows:
| Company | 31 December 2017 | 31 December 2016 |
|---|---|---|
| Opening balance as at 1 January | 1.266.842 | 12.992.457 |
| Acquisitions in the period | - | - |
| Disposals in the period | (31.948) | (19.168.575) |
| Equity method | 391.017 | 7.730.200 |
| Dividends received | (206.883) | (287.240) |
| Change in the consolidation method | - | - |
| Closing balance as at 31 December | 1.419.028 | 1.266.842 |
| Accumulated impairment losses (Note 31) | - | (31.943) |
| 1.419.028 | 1.234.900 |
The use of the equity method had the following impacts: 391,017 euro recorded on share of results of associated undertakings (350,193 euro at 31 December 2016), and 0 euro in changes in reserves (7,375,957 euro at 31 December 2016).
During the year ended 31 December 2017 dividends were received totalling 206,900 euros (290,000 at 31 December 2016) paid by the companies Lidergraf-graphic arts, Lda and Feneralt-Energy Production, ACE.
Dividends received during the year 2017 differ from those shown in the Statement of Cash Flows due to the receipt of amounts referring to prior years.
There are no contingent liability commitments or significant restrictions on the ability to transfer funds in favour of Sonae Capital by associates and joint ventures.
The head offices, percentage of share capital held and book value of Other Investments as at 31 December 2017 and 2016 are made up as follows::
| Percentage of capital held | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 31 December 2017 | 31 December 2016 | Book value | |||||||
| Company | Head Office |
Direct | Total | Direct | Total | 31 December 2017 |
31 December 2016 |
||
| Resorts | |||||||||
| Infratróia - Infraestruras de Tróia, E.M. | Grândola | 25,90% | 25,90% | 25,90% | 25,90% | 64.747 | 64.747 | ||
| Other Assets | |||||||||
| Fundo de Investimento Imobiliário Imosonae Dois |
Maia | - | - | 0,06% | 0,06% | - | - | ||
| Net, SA | Lisbon | 0,98% | 0,98% | 0,98% | 0,98% | 23.034 | 23.034 | ||
| Fundo de Capital de Risco F-HITEC | Lisbon | 6,48% | 6,48% | 6,48% | 6,48% | 250.950 | 250.950 | ||
| Outros Investments | 239.699 | 140.124 | |||||||
| Total (Note 9) | 578.430 | 478.855 |
As at 31 December 2017 and 2016, movements in investments were as follows:
| 31 December 2017 | 31 December 2016 | |||
|---|---|---|---|---|
| Non-current | Current | Non-current | Current | |
| Investments at acquisition cost | ||||
| Opening balance as at 1 January | 770.693 | - | 889.353 | - |
| Acquisitions in the period | 71.601 | - | 23.752 | - |
| Changes in consolidation perimeter | 94.187 | - | - | - |
| Disposals in the period | (66.213) | - | (142.412) | - |
| Closing balance as at 31 December | 870.268 | - | 770.693 | - |
| Accumulated impairment losses (Note 31) | (291.838) | - | (291.838) | - |
| 578.430 | - | 478.855 | - | |
| Other Investments | 578.430 | - | 478.855 | - |
During the period ended 31 December 2017 the following companies were acquired:
| Percentage of capital held | |||
|---|---|---|---|
| Company | Head Office | Direct | Total |
| Gasflow Unipessoal. Lda | Maia | 100.00% | 100.00% |
| Lusobrisa - Produção de Energia Eléctrica. S.A. | Maia | 100.00% | 100.00% |
| Ventos da Serra - Produção de Energia S.A. | Maia | 100.00% | 100.00% |
| Adira - Metal Forming Solutions, S.A. | Porto | 100.00% | 100.00% |
| Guimadira - Máquinas e Ferramentas, Lda. | Vila Nova de Gaia | 100.00% | 100.00% |
| Sociedade de Iniciativa e Aproveitamentos Florestais - Energia, S.A. |
Mangualde | 90.00% | 90.00% |
Impacts in the consolidated financial statements at the inclusion date were as follows:
| Company | Acquisition date | 31 December 2017 | ||
|---|---|---|---|---|
| Net assets acquired | ||||
| Tangible and intangible assets (Notes 10 and 11) | 47.333.340 | 44.752.472 | ||
| Financial investments | 446.520 | 436.608 | ||
| Other assets | 16.312.080 | 15.853.106 | ||
| Cash and cash equivalents | 3.025.803 | 209.174 | ||
| Other liabilities | (47.310.063) | (38.153.604) | ||
| 19.807.680 | 23.097.756 |
| Acquisition date | Since acquisition date to 31 December 2017 |
|
|---|---|---|
| Cost of sales | 5.212.374 | 3.028.792 |
| Changes in stocks of finished goods and work in progress | 885.588 | (246.003) |
| External supplies and services | 2.673.630 | 2.072.299 |
| Staff costs | 1.565.102 | 1.359.779 |
| Depreciation and amortisation | 1.826.435 | 3.807.981 |
| Provisions and impairment losses | 3.083.126 | (15.327) |
| Other operating expenses | 278.418 | 147.041 |
| Operational expenses | 15.524.673 | 10.154.562 |
| Sales | 11.189.692 | 9.180.182 |
| Services rendered | 644.046 | 221.091 |
| Other operating income | 528.276 | 497.915 |
| Operational income | 12.362.014 | 9.899.188 |
| Operational profit/(loss) | (3.162.659) | (255.374) |
| Financial income | 56.943 | 4.990 |
| Financial expenses | 593.811 | 339.704 |
| Net financial income / (expenses) | (536.868) | (334.714) |
| Investment income | 1.073.179 | - |
| Investment income | (1.073.179) | - |
| Profit/(Loss) before taxation | (4.772.706) | (590.088) |
| Taxation | (449.112) | (120.467) |
| Profit/(Loss) for the year | (5.221.818) | (710.555) |
| Gain/(Loss) on acquisition (Note 41) | 2.414.496 | |
| Acquisition price | 26.702.225 | |
| Payments made | 25.724.183 | |
| Net cash flow from the acquisition | ||
| Payments made | 25.724.183 | |
| Cash and equivalents acquired | (3.025.803) | |
| 22.698.380 |
Financial Instruments, in accordance with the policies described in Note 2.1, were classified as follows:
| Financial Instruments | |||||||
|---|---|---|---|---|---|---|---|
| Financial Assets | Note | Borrowings and accounts receivable |
Available for sale |
Investments held to maturity |
Sub-Total | Assets not covered by IFRS 7 |
Total |
| As at 31 de December 2017 | |||||||
| Non-current assets | |||||||
| Other Investments | 7 | 578.430 | - | - | 578.430 | - | 578.430 |
| Other non-current assets | 13 | 6.601.994 | - | - | 6.601.994 | - | 6.601.994 |
| 7.180.424 | - | 7.180.424 | - | 7.180.424 | |||
| Current Assets | |||||||
| Trade account receivables | 15 | 24.799.640 | - | - | 24.799.640 | - | 24.799.640 |
| Other debtors | 16 | 10.047.909 | - | - | 10.047.909 | - | 10.047.909 |
| Cash and cash equivalents | 20 | 7.307.070 | - | - | 7.307.070 | - | 7.307.070 |
| 42.154.619 | - | - | 42.154.619 | - | 42.154.619 | ||
| 49.335.043 | - | - 49.335.043 | - 49.335.043 | ||||
| As at 31 de December 2016 | |||||||
| Non-current Assets | |||||||
| Other Investments | 7 | 478.855 | - | - | 478.855 | - | 478.855 |
| Other non-current assets | 13 | 2.036.474 | - | - | 2.036.474 | - | 2.036.474 |
| 2.515.329 | - | - | 2.515.329 | - | 2.515.329 | ||
| Current Assets | |||||||
| Trade account receivables | 15 | 18.030.267 | - | - | 18.030.267 | - | 18.030.267 |
| Other debtors | 16 | 7.327.649 | - | - | 7.327.649 | - | 7.327.649 |
| Cash and cash equivalents | 20 | 32.747.208 | - | - | 32.747.208 | - | 32.747.208 |
| 58.105.124 | - | - | 58.105.124 | - | 58.105.124 | ||
| 60.620.453 | - | - 60.620.453 | - 60.620.453 |
| Financial Liabilities | Note | Financial liabilities recorded at amortised cost |
Available for sale |
Financial liabilities recorded at amortised cost |
Sub-Total | Liabilities not covered by IFRS 7 |
Total |
|---|---|---|---|---|---|---|---|
| As at 31 de December 2017 | |||||||
| Non-current liabilities | |||||||
| Bank Loans | 20 and 23 |
17.218.216 | - | - | 17.218.216 | - | 17.218.216 |
| Bonds | 23 | 57.245.810 | - | - | 57.245.810 | - | 57.245.810 |
| Other loans | 23 and 24 |
14.004.471 | - | - | 14.004.471 | - | 14.004.471 |
| Other non-current liabilities | 26 | 2.598.398 | - | - | 2.598.398 | 416.815 | 3.015.213 |
| 91.066.895 | - | - | 91.066.895 | 416.815 | 91.483.710 | ||
| Current Liabilities | |||||||
| Bank Loans | 20 and 23 |
24.740.268 | - | - | 24.740.268 | - | 24.740.268 |
| Other loans | 23 | - | - | - | - | - | - |
| Bonds | 23 and 24 |
3.471.366 | - | - | 3.471.366 | - | 3.471.366 |
| Trade Creditors | 28 | 25.369.800 | - | - | 25.369.800 | - | 25.369.800 |
| Other current liabilities | 29 | 15.136.329 | - | - | 15.136.329 | 2.489.167 | 17.625.496 |
| 68.717.763 | - | - | 68.717.763 | 2.489.167 | 71.206.930 | ||
| 159.784.658 | - | - | 159.784.658 | 2.905.982 | 162.690.640 | ||
| As at 31 de December 2016 | |||||||
| Non-current liabilities | |||||||
| Bank Loans | 20 and 23 |
20.532.367 | - | - | 20.532.367 | - | 20.532.367 |
| Bonds | 23 | 57.107.711 | - | - | 57.107.711 | - | 57.107.711 |
| Other loans | 23 and 24 |
16.622.150 | - | - | 16.622.150 | - | 16.622.150 |
| Other non-current liabilities | 26 | 2.681.126 | - | - | 2.681.126 | 1.070.575 | 3.751.701 |
| 96.943.354 | - | - | 96.943.354 | 1.070.575 | 98.013.928 | ||
| Current Liabilities | |||||||
| Bank Loans | 20 and 23 |
1.137.237 | - | - | 1.137.237 | - | 1.137.237 |
| Other loans | 23 | - | - | - | - | - | - |
| Bonds | 23 and 24 |
3.336.208 | - | - | 3.336.208 | - | 3.336.208 |
| Trade Creditors | 28 | 16.479.554 | - | - | 16.479.554 | - | 16.479.554 |
| Other current liabilities | 29 | 3.647.289 | - | - | 3.647.289 | 1.042.782 | 4.690.071 |
| 24.600.288 | - | - | 24.600.288 | 1.042.782 | 25.643.070 | ||
| 121.543.642 | - | - | 121.543.642 | 2.113.357 | 123.656.998 |
During the periods ended 31 December 2017 and 2016, movements in tangible assets as well as in amortisation and accumulated impairment losses, are made up as follows:
| Tangible Assets | ||||||||
|---|---|---|---|---|---|---|---|---|
| Land and Natural Resources |
Buildings and Other Constructions |
Plant and Machinery |
Vehicles | Fixtures and Fittings |
Others | Tangible Assets in progress |
Total Tangible Assets |
|
| Gross Cost | ||||||||
| Opening balance as at 1 January 2016 |
53.832.685 170.603.037 187.369.698 | 1.219.505 | 4.177.053 | 2.081.623 | 14.715.753 433.999.354 | |||
| Changes in consolidation perimeter (companies in) -Note 8 |
- | - | 3.541.005 | - | - | 7.875 | - | 3.548.880 |
| Capital expenditure | - | 349.771 | 2.402.980 | 8.414 | 7.450 | 2.331 | 5.587.580 | 8.358.526 |
| Disposals | (11.249.688) | (940.854) (6.030.400) | (174.977) | (320.662) | (46.132) | (150.754) | (18.913.467) | |
| Exchange rate effect | - | - | (13.955) | (78.710) | 2.920 | 8.930 | - | (80.815) |
| Transfers | 6.694.025 | (6.869.314) | 16.609.042 | 14.139 | 250.440 | 184.655 (17.533.330) | (650.343) | |
| Opening balance as at 1 January 2017 |
49.277.022 163.142.640 203.878.370 | 988.371 | 4.117.201 | 2.239.282 | 2.619.249 426.262.135 | |||
| Changes in consolidation perimeter (companies in) -Note 8 |
1.202.850 | 5.147.730 | 77.012.467 | 707.476 | 108.320 | 2.632.743 | 1.231.370 | 88.042.956 |
| Changes in consolidation perimeter (companies out) - Note 8 |
- | - | (81.991) | (338.989) | (30.458) | (3.824) | - | (455.262) |
| Capital expenditure | - | - | (22.308) | (9.693) | (44.381) | (47.951) | - | (124.333) |
| Capital expenditure | 71.449 | 577.659 | 911.603 | - | 4.544 | 1.730 | 9.846.816 | 11.413.801 |
| Disposals | (1.254.450) | (13.222.993) | (4.694.349) | (54.535) | (349.220) | (63.630) | (12.037) | (19.651.214) |
| Exchange rate effect | - | - | (11.737) | (48.524) | (4.245) | (547) | - | (65.053) |
| Transfers | 562.302 | 43.558 | 8.709.449 | - | 253.304 | 37.991 | (7.136.568) | 2.470.036 |
| Closing balance as at 31 December 2017 |
49.859.173 155.688.594 | 285.701.504 | 1.244.106 | 4.055.065 | 4.795.794 | 6.548.830 507.893.066 | ||
| Accumulated depreciation | ||||||||
| Opening balance as at 1 January 2016 |
- | 45.239.482 | 91.840.939 | 1.088.202 | 3.524.015 | 1.680.948 | - 143.373.586 | |
| Changes in consolidation perimeter (companies in) – Note 8 |
- | - | 785.898 | - | - | 1.421 | - | 787.319 |
| Charges for the period | - | 2.746.894 | 12.067.024 | 72.506 | 180.487 | 79.890 | - | 15.146.801 |
| Disposals | - | (131.879) | (5.534.674) | (172.980) | (313.778) | (43.816) | - | (6.197.127) |
| Exchange rate effect | - | - | (2.318) | (57.469) | 4.416 | 7.663 | - | (47.709) |
| Transfers | - | (6.263.893) | 6.013.748 | 453 | 13.973 | 16.045 | - | (219.675) |
| Opening balance as at 1 January 2017 |
- | 41.590.603 | 105.170.616 | 930.711 | 3.409.113 | 1.742.151 | - 152.843.194 | |
| Changes in consolidation perimeter (companies in) – Note 8 |
- | 2.493.165 | 38.579.732 | 526.652 | 102.427 | 537.930 | - | 42.239.906 |
| Changes in consolidation perimeter (companies out) - Note 8 |
- | (36.542) | (309.005) | (19.883) | (2.943) | (368.372) | ||
| Charges for the period | - | (16.714) | (6.058) | (39.854) | (40.649) | (103.275) | ||
| Charges for the period | - | 2.696.520 | 15.212.674 | 27.887 | 191.883 | 98.968 | - | 18.227932 |
| Disposals | - | (3.382.773) | (2.076.306) | (54.535) | (337.412) | (60.477) | - | (5.911.503) |
| Exchange rate effect | - | - | (5.764) | (45.406) | (3.013) | (439) | - | (54.622) |
| Transfers | - | 183.459 | 769.483 | 2 | 40 | - | - | 952.983 |
| Closing balance as at 31 December 2017 |
- | 43.580.974 | 157.597.180 | 1.070.248 | 3.303.301 | 2.274.540 | - 207.826.243 |
| Accumulated impairment losses | ||||||||
|---|---|---|---|---|---|---|---|---|
| Opening balance as at 1 January 2016 |
7.918.403 | 30.356.898 | 854.496 | - | - | - | - | 39.129.797 |
| Charges for the period | 1.218.065 | 1.315.411 | 472.540 | - | - | - | - | 3.006.016 |
| Reversals for the period | (1.533.656) | (5.968.088) | - | (7.501.744) | ||||
| Opening balance as at 1 January 2017 |
7.602.812 | 25.704.221 | 1.327.036 | - | - | - | - | 34.634.071 |
| Changes in consolidation perimeter (companies in) – Note 8 |
- | - | 3.376.858 | - | - | - | - | 3.376.858 |
| Changes in consolidation perimeter (companies out) |
- | - | - | - | - | - | - | - |
| Charges for the period | 472.911 | 95.492 | 11.840 | - | - | - | - | 580.243 |
| Reversals for the period | (2.075.332) | (1.841.028) | (39.963) | - | - | - | - | (3.956.323) |
| Transfers | - | (543.918) | 543.918 | - | - | - | - | - |
| Closing balance as at 31 December 2017 (Note 31) |
6.000.391 | 23.414.767 | 5.219.689 | - | - | - | - | 34.634.847 |
| Carrying amount | ||||||||
| As at 31 December 2016 | 41.674.209 | 95.847.815 | 97.380.717 | 57.660 | 708.088 | 497.131 | 2.619.249 238.784.870 | |
| As at 31 December 2017 | 43.858.782 | 88.692.852 122.884.635 | 173.857 | 751.764 | 2.521.253 | 6.548.830 265.431.974 |
The disposals carried out during the year ended on 31 December, 2017 refer mainly to the sale of the health clubs of Braga and Vasco da Gama belonging to the Real Estate Company Casa da Ribeira.
The main acquisitions carried out during 2017 are essentially associated with the Fitness segment with the opening of new gymnasiums and remodelling of other existing ones.
Impairment losses and reversals of impairment losses for the year 2017 and 2016 are calculated from the assessments of the property assets of Sonae Capital Group, carried out by "Cushman & Wakefield – Consultoria Imobiliária, Unipessoal, Lda.". The evaluation was performed according to the Professional Standards contained in the RICS Valuation January 2014, published by The Royal Institution of Chartered Surveyors.
The assessments were intended to determine the fair value of the assets concerned, in accordance with the following rules:
The simulation of the valuation, for the year 2017, taking into account a variation in the Market Value of +- 10% and +- 15% for the Opinion of Value is as follows:
| VALUATION C&W | ||||||||
|---|---|---|---|---|---|---|---|---|
| 31 Dec. 2017 | 31 Dec. 2017 (VM) | 31 Dec. 2017 (OV) | 31 Dec. 2017 (Book value) |
|||||
| Tourism Assets | 74.094.000 | 74.094.000 | - | 59.022.930 | ||||
| Hotels | 74.094.000 | - | 59.022.930 | |||||
| Troia Resort | 85.377.374 | 58.010.364 | 27.367.010 | 60.323.287 | ||||
| Assets for sale | 63.833.374 | 36.466.364 | 27.367.010 | 42.128.237 | ||||
| Real estate projects | 21.544.000 | 21.544.000 | - | 18.195.050 | ||||
| Other Assets | 12.599.900 | 6.905.000 | 5.694.900 | 11.246.030 | ||||
| Assets for sale | 6.684.900 | 4.840.000 | 1.844.900 | 5.340.507 | ||||
| Real estate projects | 5.915.000 | 2.065.000 | 3.850.000 | 5.905.522 | ||||
| Total | 172.071.274 | 139.009.364 | 33.061.910 | 130.592.247 | ||||
| Valuation Simulation | ||||||||
| Market Value | +/- 15% | 13.900.936 | ||||||
| Opinion of Value | +/- 15% | 4.959.287 | ||||||
| Total | 18.860.223 | 13.900.936 | 4.959.287 |
The evaluations comprised the total of 85 properties held by the Group, of which 50 using the Market value rules, these being the most relevant in terms of net value at 31 December 2017 and 2016. This portfolio consists of number of properties for residential, hotel, retail, office and warehouse use as well as plots of urban and rural land.
The acquisition cost of Tangible assets held by the Group under finance lease contracts amounted as at 31 December 2017 to euro 35,930,642 (35,650,252 euro at 31 December 2016) and their net book value as of those dates amounted to 18,572,598 euro and 20,168,568 euro, respectively (Note 24).
Major amounts included in the caption Tangible assets in progress, refer to the following projects:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Troiaresort | 1.671.835 | 1.657.460 |
| Cogeneration Project | 2.240.148 | - |
| Health Clubs Refurbishment | 1.280.759 | 300.884 |
| Industrial Engennering | 1.112.976 | - |
| Others | 243.112 | 660.905 |
| 6.548.830 | 2.619.249 |
During the periods ended 31 December 2017 and 2016, movements in intangible assets as well as in amortisation and accumulated impairment losses, are made up as follows:
| Intangible Assets | |||||||
|---|---|---|---|---|---|---|---|
| Patents and other similar rights |
Software | Others | Intangible Assets in progress |
Total Intangible Assets |
|||
| Gross Cost | |||||||
| Opening balance as at 1 January 2016 | 7.789.237 | 3.281.292 | 155.474 | 225.546 | 11.451.549 | ||
| Changes in consolidation perimeter (companies in) | - | - | 242.000 | - | 242.000 | ||
| Capital expenditure | 393.800 | - | 1.154 | 695.980 | 1.090.935 | ||
| Disposals | - | (31.461) | - | - | (31.461) | ||
| Exchange rate effect | - | 3.922 | - | - | 3.922 | ||
| Transfers | 6.915 | 524.516 | (114.847) | (538.700) | (122.116) | ||
| Opening balance as at 1 January 2017 | 8.189.952 | 3.778.269 | 283.781 | 382.826 | 12.634.829 | ||
| Changes in consolidation perimeter (companies in) – Note 8 |
4.868.797 | 52.042 | 3.600.331 | 1.128.122 | 9.649.292 | ||
| Changes in consolidation perimeter (companies out) | - | (4.880) | - | - | (4.880) | ||
| Capital expenditure | - | (24.584) | - | - | (24.584) | ||
| Capital expenditure | (21.900) | 95.998 | 345.038 | 890.365 | 1.309.501 | ||
| Disposals | (332.831) | (183) | - | - | (333.014) | ||
| Exchange rate effect | - | (699) | - | - | (699) | ||
| Transfers | (3.367.845) | 923.249 | (225.059) | (881.629) | (3.551.284) | ||
| Closing balance as at 31 December 2017 | 9.336.173 | 4.819.212 | 4.004.091 | 1.519.684 | 19.679.160 | ||
| Accumulated amortization | |||||||
| Opening balance as at 1 January 2016 | 1.522.646 | 2.581.146 | 9.421 | - | 4.113.212 | ||
| Charges for the period | - | - | 208.146 | - | 208.146 | ||
| Disposals | 178.329 | 541.678 | 6.722 | - | 726.729 | ||
| Exchange rate effect | - | (31.461) | - | - | (31.461) | ||
| Transfers | - | 2.772 | - | - | 2.772 | ||
| Opening balance as at 1 January 2017 | 1.700.975 | 3.094.135 | 224.289 | - | 5.019.398 | ||
| Changes in consolidation perimeter (companies in) – Note 8 |
1.570.467 | 29.000 | 2.453.146 | - | 4.052.613 | ||
| Changes in consolidation perimeter (companies out) | - | (4.880) | - | - | (4.880) | ||
| Charges for the period | - | (19.998) | - | (19.998) | |||
| Charges for the period | 475.163 | 585.349 | 153.192 | - | 1.213.704 | ||
| Disposals | (88.719) | (1.114) | - | - | (89.833) | ||
| Exchange rate effect | - | (699) | - | - | (699) | ||
| Transfers | (1.001.524) | - | (1.676) | - | (1.003.200) | ||
| Closing balance as at 31 December 2017 | 2.656.362 | 3.681.793 | 2.828.951 | - | 9.167.105 | ||
| Accumulated amortization | |||||||
| Opening balance as at 1 January 2017 | - | - | - | - | - | ||
| Changes in consolidation perimeter (companies in) – Notes 8 and 31 |
89.536 | - | 600.000 | - | 689.536 | ||
| Closing balance as at 31 December 2017 (Note 31) | 89.536 | - | 600.000 | - | 689.536 | ||
| Carrying amount | |||||||
| As at 31 December 2016 | 6.488.977 | 684.134 | 59.492 | 382.826 | 7.615.431 | ||
| As at 31 December 2017 | 6.590.275 | 1.137.419 | 575.140 | 1.519.684 | 9.822.521 |
At 31 December 2017 and 2016, there are no impairment losses relating to Intangible Assets.
As at December 2017 net assets of Marina de Troia amount to 5,261,284 euro (5,701,558 euro at December 2016) recorded in "Industrial property and other rights".
"APSS – Administração dos Portos de Setubal e Sesimbra, SA" (APSS) signed in 2007 with an Group company a service concession arrangement to build and operate, in the public interest, a marina and support services in Troia, during a period of 50 years from the date of entry into operation. This period may be extended a maximum of 10 years if agreed between the parties. At the end of the service concession arrangement the concession will revert to APSS at no consideration, with some exceptions in the arrangement.
The Group has the right to charge fees for services to be provided under the concession. Maximum fee limits must be approved by the grantor based on a proposal submitted by the Group.
During the concession period the Group has a contractual obligation to maintain the infrastructure in a specific level of serviceability and pays the grantor a fixed fee and a variable fee, the latter based on revenues charged for the service provided.
The grantor may cancel the service concession arrangement whenever public interest is affected, provided that at least the contractual period is over and with at least 1 year notice, in which case the Group is entitled to compensation equal to the net book value of the infrastructure plus lost revenue calculated in accordance with the terms of the contract.
The Group carried out a sensitivity analysis of the recoverable value of the assets of "Marina de Tróia".
The use of a five-year period for projecting cash flows has taken into consideration the extension and intensity of economic cycles to which the Group's activity is subject to.
Calculation of recoverable amounts consisted in projecting operating cash flows over a five year period, thereafter extrapolated using perpetuity and discounted to 31 December 2016. Weighted Average Cost of Capital, before tax, calculated using CAPM (Capital Asset Pricing Model) methodology for this cash generating unit, was used as discount rate. These rates include specific market features and include different risk factors as well as risk-free interest rates for ten-year bonds.
The use of a five-year period for projecting cash flows takes into account the extension and intensity of economic cycles to which "Marina de Tróia" activity is subject to.
Projected cash flows are based on the Group's business plan and are updated annually so as to include changes in the economic outlook of each market where the Group is conducting business.
The impairment tests did not show any impairment loss to be recognized under Intangible Assets at 31 December 2017.
During the periods ended 31 December 2017 and 2016, movements in goodwill, as well as in corresponding impairment losses, are as follows:
| 31 December 2017 | 31 December 2016 | ||
|---|---|---|---|
| Gross amount: | |||
| Opening balance | 62.194.124 | 62.194.124 | |
| Increases - acquisition of affiliated companies (Note 8) | 10.449.890 | - | |
| Decreases - disposals of affiliated companies | 563.932 | - | |
| Closing balance | 72.080.082 | 62.194.124 | |
| Accumulated impairment losses (Note 31): | |||
| Opening balance | 24.353.034 | 1.301.596 | |
| Increases | 350.677 | 23.051.438 | |
| Closing balance (Note 31) | 24.703.711 | 24.353.034 | |
| Total | 47.376.371 | 37.841.090 |
The increase in impairment losses in 2017 is due to the sale of real estate assets located in Troia.
The Impairment tests to Goodwill were calculated by projecting operating cash flows over a five-year period, thereafter extrapolated using perpetuity and discounted to 31 December 2017. The Sistavac business plan reports an average growth rate of 6,2% with a rate of 17.7% for increase in sales and EBITDA (it is assumed a growth on industrial refrigeration - a strategic focus - on building efficiency and after-sales services). The average growth rate for uFCF is -6.3%, achieved by economies of scale and focus in the business segments with better profitability. The discount rates used are the average rates of the Weighted Average Cost of Capital (WACC).
The WACC rates used were calculated on the specific nature of each business and its respective target capital structures, as follows:
| Real Estate | 9,12% | Refrigeration & HVAC- Portugal | 10,12% |
|---|---|---|---|
| Operational Resorts | 7,64% | Hotels | 9,24% |
| Energy | [7,17% - 8,33%] | Metal Portugal | 9,89% |
| Fitness | 8,40% |
The Goodwill remains without impairment in the sensitivity tests performed, through assessments by discounted cash flow, making WACC vary 1 p.p.
As at 31 December 2017 and 2016, Goodwill may be split as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Resorts | 1.223.235 | 1.223.234 |
| Hotels | - | - |
| Fitness | - | - |
| Energy | 3.075.415 | 622.829 |
| Refrigeration and HVAC | 9.619.730 | 9.619.730 |
| Industrial Engeneering | 7.997.303 | |
| Real estate assets | 8.031.597 | 8.031.597 |
| Other Assets | 17.429.092 | 18.343.701 |
| 47.376.371 | 37.841.090 |
As at 31 December 2017 and 2016, other non-current assets are detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Loans granted to related parties | ||
| Others | 907.655 | 874.613 |
| 907.655 | 874.613 | |
| Impairment losses (Note 31) | (34.916) | (34.916) |
| 872.739 | 839.697 | |
| Trade accounts receivable and other debtors | ||
| Sale of financial investments | 505.000 | - |
| Others | 4.947.709 | 1.196.779 |
| 5.452.709 | 1.196.779 | |
| Deferred costs | ||
| Financing charges | 276.547 | - |
| 276.547 | - | |
| Other non-current debtors | 6.601.994 | 2.036.476 |
Generally, values included in other non-current debtors bear interest at market rates, and it is estimated that their fair value does not significantly differ from amounts in the balance sheet.
The amount in others, loans granted to related parties, is a loan to the company Andar - Soc. Imobiliária S.A. (note 44).
The amounts considered in others, Trade accounts receivable and other debtors, are essentially related with (i) amount receivable related to the sale of real estate held during the current year and (ii) payment to the State to benefit from a 2002 tax amnesty.
At 31 December 2017 and 2016 the caption Clients and other debtors includes loans granted to related parties and do not have a defined maturity, and therefore are not due. These loans bear interests.
O detalhe dos Inventários em 31 de December de 2017 e de 2016 é o seguinte, explicitando os valores correspondentes a empreendimentos imobiliários:
| 31 December 2017 | 31 December 2016 | ||||
|---|---|---|---|---|---|
| Total | of which Real Estate Developments |
Total | of which Real Estate Developments |
||
| Goods for sale | 14.765.873 | 13.282.113 | 30.621.892 | 29.396.542 | |
| Goods for resale held by third parties | 1.731 | - | - | - | |
| Raw materials, by-products and consumables |
4.677.862 | - | 1.416.846 | - | |
| Finished goods | 13.281.182 | 12.613.221 | 16.227.654 | 16.227.654 | |
| Sub-products, waste, residues and scrapWork in progress |
67.372.682 | 62.728.774 | 71.597.057 | 67.573.121 | |
| 100.099.330 | 88.624.108 | 119.863.449 | 113.197.317 | ||
| Accumulated impairment losses on stocks (Note 31) |
(5.702.697) | (5.240.945) | (15.351.494) | (15.340.458) | |
| Total Operations | 94.396.634 | 83.383.163 | 104.511.954 | 97.856.859 |
Cost of goods sold as at 31 December 2017 and 2016 amounted to 72,750,494 euro and 64,835,617 respectively, and may be detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Opening Stocks | 32.038.738 | 31.828.075 |
| Exchange rate effect | (79.286) | (156.777) |
| Changes in consolidation perimeter | 1.133.291 | (1.647) |
| Purchases | 57.210.904 | 61.428.800 |
| Adjustments | 1.891.710 | 327.963 |
| Closing Stocks | 19.445.466 | 32.038.738 |
| 72.749.891 | 61.395.533 | |
| Impairment losses increases (Note 31) | 604 | 3.440.084 |
| Impairment losses decreases (Note 31) | - | (393.848) |
| Continued Operations | 72.750.494 | 64.441.769 |
| Discontinued Operations | 631.454 | 1.113.572 |
| Total Operations | 73.381.948 | 65.555.341 |
Impairment losses and reversals of impairment losses for the years 2017 and 2016 are calculated from the assessments of the property assets of Sonae Capital Group, carried out by "Cushman & Wakefield – Consultoria Imobiliária, Unipessoal, Lda". (Note 10) and from the real estate disposals that occurred during the current year.
The assessments were intended to determine the fair value of the assets concerned, in accordance with the following rules:
The simulation of the valuation, for the year 2017, taking into account a variation in the Market Value of +- 10% and +- 15% for the Opinion of Value is as follows:
| VALUATION C&W | |||||||
|---|---|---|---|---|---|---|---|
| 31 Dec. 2017 | 31 Dec. 2017 (VM) | 31 Dec. 2017 (OV) | 31 Dec. 2017 Book value |
||||
| Tourism Assets | - | - | - | - | |||
| Hotels | - | - | - | ||||
| Fitness | - | - | - | ||||
| Troia Resort | 57.753.036 | 31.802.000 | 29.664.005 | ||||
| Assets for sale | 31.802.000 | - | 31.802.000 | 12.999.078 | |||
| Real estate projects | 57.753.036 | 57.753.036 | - | 16.664.927 | |||
| Other Assets | 101.096.100 | 97.638.050 | 3.458.050 | 55.844.795 | |||
| Assets for sale | 15.755.900 | 12.297.850 | 3.458.050 | 12.932.354 | |||
| Real estate projects | 85.340.200 | 85.340.200 | - | 42.912.441 | |||
| Total | 190.651.136 | 155.391.086 | 35.260.050 | 85 508.800 | |||
| Valuation Simulation | |||||||
| Market Value | +/- 15% | 15.539.109 | |||||
| Opinion of Value | +/- 15% | 5.289.008 | |||||
| Total variaton | 20.828.116 | 15.539.109 | 5.289.008 |
As at 31 December 2017 and 2016, trade accounts receivable and other current assets are detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Trade accounts receivable | ||
| Resorts | 1.961.426 | 1.653.662 |
| Hotels | 851.832 | 758.049 |
| Fitness | 318.278 | 170.149 |
| Energy | 8.522.609 | 4.683.723 |
| Refrigeration and HVAC | 14.372.081 | 13.255.090 |
| Other Assets | 278.388 | 361.050 |
| Metal | 1.176.944 | - |
| 27.481.558 | 20.881.723 | |
| Trade Debtors, bills receivable | 74.410 | - |
| Doubtful debtors | 3.452.519 | 1.407.753 |
| 31.008.486 | 22.289.475 | |
| Accumulated impairment losses on Trade Debtors (Note 31) | (6.208.847) | (4.259.208) |
| Total Operations | 24.799.640 | 18.030.267 |
In the normal course of activity collection risk may arise in Trade debtors. The amounts presented on the face of the balance sheet are net of impairment losses, which were estimated based on the Group's experience and on the assessment of present economic conditions. As a result, amounts disclosed in Trade debtors reflect their fair value.
As at 31 December 2017 we do not have any reason to believe that normal collection times regarding trade accounts receivable not due for which there are no impairment losses will not be met.
As at 31 December 2017 and 2016, the ageing of Trade Accounts Receivables can be detailed as follows:
| Trade Accounts Receivables | ||||||||
|---|---|---|---|---|---|---|---|---|
| 31 December 2017 | Resorts | Hotels | Fitness | Energy | Refrigeration and HVAC |
Holding and Others |
Metal | Total |
| Not Due | 318.446 | 307.590 | 109.346 | 4.309.041 | 8.422.356 | 154.067 | 66.058 13.686.904 | |
| Due but not impaired | ||||||||
| 0 - 30 days | 110.801 | 144.648 | 18.882 | 3.496.385 | 465.300 | 17.274 | 948.326 | 4.253.290 |
| 30 - 90 days | 153.385 | 88.823 | 129.593 | 249.435 | 1.415.019 | 1.667 | 176.727 | 2.037.922 |
| + 90 days | 636.491 | 27.203 | 4.740 | 451.561 | 2.507.172 | 24.849 | 38.101 | 3.652.016 |
| Total | 900.677 | 260.674 | 153.215 | 4.197.381 | 4.387.491 | 43.790 | 1.163.154 | 11.106.382 |
| Due and impaired | ||||||||
| 0 - 90 days | 12.356 | 4.767 | - | - | - | 3.016 | - | 20.139 |
| 90 - 180 days | 166.485 | 2.488 | 137 | - | - | - | - | 169.110 |
| 180 - 360 days | 14.060 | 4.499 | 1.154 | - | 43.953 | - | 88.642 | 63.666 |
| + 360 days | 727.533 | 447.850 | 56.374 | 18.366 | 2.174.580 | 445.591 | 2.003.350 | 3.870.294 |
| Total | 920.434 | 459.604 | 57.665 | 18.366 | 2.218.533 | 448.607 | 2.091.992 | 6.215.201 |
| Total accumulated before impairments |
2.139.557 | 1.027.868 | 320.226 | 8.524.788 | 15.028.380 | 646.464 | 3.321.204 31.008.486 | |
| 31 December 2016 | Resorts | Hotels | Fitness | Energy | Refrigeration and HVAC |
Holding and Others |
Metal | Total |
| Not Due | 347.424 | 218.663 | 50.908 | 4.365.253 | 9.149.389 | 110.443 | - 14.242.080 | |
| Due but not impaired | ||||||||
| 0 - 30 days | 97.712 | 111.751 | 8.756 | 300.424 | 965.274 | 75.846 | - | 1.559.763 |
| 30 - 90 days | 112.922 | 115.067 | 73.804 | 1.859 | 795.927 | 69.939 | - | 1.169.518 |
| + 90 days | 301.117 | 28.396 | 5.689 | 812 | 694.642 | 26.054 | - | 1.056.710 |
| Total | 511.751 | 255.214 | 88.249 | 303.095 | 2.455.843 | 171.839 | - | 3.785.991 |
| Due and impaired | ||||||||
| 0 - 90 days | 2.226 | 873 | - | - | 2.430 | 2.351 | - | 7.880 |
| 90 - 180 days | 17.518 | 685 | - | - | 1.132 | 2.276 | - | 21.611 |
| 180 - 360 days | 62.894 | 19.015 | - | - | 342.346 | 15.357 | - | 439.612 |
| + 360 days | 889.979 | 439.633 | 59.414 | 15.375 | 1.961.041 | 426.859 | - | 3.792.301 |
| Total | 972.617 | 460.206 | 59.414 | 15.375 | 2.306.949 | 446.843 | - | 4.261.404 |
| Total accumulated before impairments |
1.831.792 | 934.083 | 198.571 | 4.683.723 | 13.912.181 | 729.125 | - 22.289.475 |
To determine the recoverability of Trade accounts receivable, the Group reviews all changes to the credit quality of its counterparties since the date of the credit to the date of reporting consolidated financial statements. Credit risk is not concentrated because of the significant number of trade debtors. The Group thus believes that credit risk does not exceed recorded impairment losses for trade accounts receivable doubtful accounts.
As at 31 December 2017 and 2016, other debtors are made up as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Loans granted to and other amounts to be received from related parties |
||
| Suppliers with a debtor balance (Note 44) | 38.897 | 139.309 |
| 38.897 | 139.309 | |
| Other current assets | ||
| Suppliers with a debtor balance | 1.153.208 | 1.222.273 |
| Accounts receivable from the sale of tangible assets | 2.859.253 | 5.920 |
| Accounts receivable from the sale of financial investments | 2.862.642 | 4.088.126 |
| Other debtors | 5.129.832 | 3.875.438 |
| 12.004.935 | 9.191.757 | |
| Other debtors | 12.043.832 | 9.331.066 |
| Accumulated impairment losses on other current assets (Note 31) |
(1.995.925) | (2.003.417) |
| Other debtors | 10.047.909 | 7.327.649 |
Loans granted to relate parties bear interest at market rates.
At December 2017, the amounts included in Other Debtors – tangible assets are related to the amount receivable related to the sale of real estate held during the current year.
At December 2017 the sale of financial Investments includes (i) balance receivable for which impairment loss was recorded during the year (ii) balance receivable from the sale of "UPK – Gestão de Facilities e Manutenção S.A." and "BoxLines Navegação S.A."
The caption "Others" is made up of the balances receivable from the WTC fund (559,000 euros), taxes recoverable overseas (2,438,000 euros), amount to be received from Prédios Privados relating to the sale of lots of land (496,000 euros, among others. As at 31 December 2017 and 2016, ageing of other debtors can be summarised as follows:
| Other Debtors | ||||
|---|---|---|---|---|
| 31 December 2017 | 31 December 2016 | |||
| Not Due | 7.596.457 | 4.213.419 | ||
| Due but not impaired | ||||
| 0 – 30 days | 313.358 | 1.047.581 | ||
| 30 – 90 days | 265.496 | 91.291 | ||
| + 90 days | 1.866.537 | 3.336.908 | ||
| Total | 2.445.391 | 4.475.780 | ||
| Due and impaired | ||||
| 0 - 90 days | - | - | ||
| 90 - 180 days | - | - | ||
| 180 - 360 days | - | 112 | ||
| + 360 days | 1.963.086 | 502.446 | ||
| Total | 1.963.086 | 502.558 | ||
| Total accumulated before impairments | 12.004.935 | 9.191.757 |
As at 31 December 2017, we do not have any reason to believe that normal collection times regarding other debtors not due, and for which there are no impairment losses, will not be met.
Values included in other debtors are close to their fair value.
As at 31 December 2017 and 2016, taxes recoverable, taxes, and contributions payable are made up as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Tax recoverable | ||
| Income tax receivable | ||
| Amounts withheld | 862.380 | 1.346.472 |
| Payments on account | 2.973.835 | 2.944.835 |
| Income taxation | 59.921 | 393.761 |
| 3.896.136 | 4.685.068 | |
| Other taxes receivable | ||
| VAT | 1.943.269 | 1.768.735 |
| Other taxes | 2.989.500 | 4.086.578 |
| 4.932.769 | 5.855.313 | |
| Total Operations | 8.828.905 | 10.540.381 |
| Taxes and contributions payable | ||
| Income tax payable | ||
| Income taxation | 1.443.550 | 1.288.312 |
| 1.443.550 | 1.288.312 | |
| Other taxes payable | ||
| VAT | 1.612.514 | 1.350.223 |
| Income taxation - amounts withheld | 758.544 | 983.539 |
| Social security contributions | 654.784 | 737.082 |
| Other taxes | - | 359.848 |
| 3.025.841 | 3.430.692 | |
| Total Operations | 4.469.391 | 4.719.004 |
The amount in "Other taxes receivable" respects to additional payments of taxes, appeals and complaints to the Portuguese Tax Services.
The 2017 variation results essentially from the discontinuity of the Brazilian operation.
As at 31 December 2017 and 2016, other current assets are made up as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Interest receivable | 15.434 | 28.246 |
| Invoicing to be issued for services rendered | 1.484.839 | 899.787 |
| Other income accruals | 3.286.306 | 8.645.817 |
| Deferred costs - External supplies and services | 1.382.160 | 1.155.795 |
| Deferred costs - Rents | 627.096 | 373.360 |
| Deferred costs - Finantial charges | 199.521 | 365.904 |
| Other current assets | 2.330.888 | 379.330 |
| Total Accumulated | 9.326.244 | 11.848.239 |
"Other current assets" at 31 December 2017 includes income accruals of works in progress at the end of the year.
Deferred tax assets and liabilities as at 31 December 2017 and 2016 can be detailed as follows, split between the different types of temporary differences:
| Deferred tax assets | Deferred tax liabilities | |||
|---|---|---|---|---|
| 31 December 2017 |
31 December 2016 |
31 December 2017 |
31 December 2016 |
|
| Amortisation and Depreciation harmonisation adjustments |
267.271 | 566.662 | 4.618.137 | 4.068.443 |
| Provisions and impairment losses of non-tax deductible |
5.238.117 | 5.320.494 | - | - |
| Write off of tangible and intangible assets | 71.250 | 71.250 | - | |
| Write off of accruals | - | - | - | |
| Revaluation of tangible assets | - | 93.355 | 93.307 | |
| Tax losses carried forward | 21.414.207 | - | - | |
| Financial instruments | - | - | - | |
| Write off of stocks | - | 393.996 | 462.815 | |
| Taxable temporary differences arising from the fair value of non-current liabilities |
- | - | 6.544.704 | 6.529.266 |
| Others | 7.644 | 9.988.792 | 8.481.456 | |
| 27.774.060 | 27.380.258 | 21.638.983 | 19.635.287 |
The amount considered in other deferred tax liabilities refers to the difference between the tax and accounting gain arising from the sale of Unops 7, 8 and 9 and the revaluation of tangible assets of companies acquired in the year.
During the periods ended 31 December 2017 and 2016, movements in deferred tax are as follows:
| Deferred tax assets | Deferred tax liabilities | ||||
|---|---|---|---|---|---|
| 31 December 2017 |
31 December 2016 |
31 December 2017 |
31 December 2016 |
||
| Opening balance | 27.380.258 | 23.620.310 | 19.635.287 | 10.948.548 | |
| Effect in results (Note 42): | |||||
| Amortisation and Depreciation harmonisation adjust ments |
(299.391) | (25.683) | 321.017 | 314.004 | |
| Provisions and impairment losses of non-tax deductible | - | - | - | - | |
| Write off of tangible and intangible assets | - | - | - | - | |
| Write off of accruals | - | - | - | - | |
| Revaluation of tangible assets | - | - | - | - | |
| Tax losses carried forward | (703.369) | 5.161.816 | - | - | |
| Impairment of Assets | (131.659) | (1.361.839) | - | - | |
| Financial Instruments | - | - | - | - | |
| Changes in tax rates | - | - | - | - | |
| Others | (19.998) | (10.784) | (104.253) | 8.372.735 | |
| (1.154.417) | 3.763.510 | 216.764 | 8.686.739 | ||
| Effect in reserves: | |||||
| Financial Intruments | - | - | - | - | |
| Others | (363) | (3.562) | (678) | - | |
| (363) | (3.562) | (678) | - | ||
| Changes in consolidation perimeter (Note 8) | 1.548.583 | - | 1.787.611 | - | |
| Others | - | - | - | ||
| Closing balance | 27.774.060 | 27.380.258 | 21.638.983 | 19.635.287 |
In accordance with the tax statements presented by companies that recorded deferred tax assets arising from tax losses carried forward, as at 31 December 2017 and 2016, and using exchange rates effective at that time, tax losses carried forward can be summarized as follows:
| 31 December 2017 | 31 December 2016 | |||||
|---|---|---|---|---|---|---|
| Tax losses carried forward |
Deferred tax assets |
Time limit | Tax losses carried forward |
Deferred tax assets |
Time limit | |
| With limited time use | ||||||
| Generated in 2012 | - | - | 2017 | 15.843.716 | 3.327.180 | 2017 |
| Generated in 2013 | 18.852.311 | 3.958.985 | 2018 | 18.024.639 | 3.785.174 | 2018 |
| Generated in 2014 | 13.536.168 | 2.842.595 | 2026 | 13.536.168 | 2.842.595 | 2026 |
| Generated in 2015 | 45.035.288 | 9.457.411 | 2027 | 47.663.128 | 10.009.257 | 2027 |
| Generated in 2016 | 12.025.566 | 2.525.369 | 2028 | 6.904.762 | 1.450.000 | 2028 |
| Generated in 2017 | 9.173.702 | 1.926.477 | 2022 | - | - | |
| 98.623.036 | 18.784.361 | 101.972.414 | 21.414.207 | |||
| With a time limit different from the above mentioned |
- | - | - | - | ||
| 98.623.036 | 20.710.838 | 101.972.414 | 21.414.207 |
An analysis was made on the relevance of the recognition of deferred taxes, taking into account the possibility of them to be recovered in accordance with the medium and long term prospects of the Group.
Deferred tax assets and liabilities are calculated and annually evaluated using the tax rates in effect, at the date of reversal of the temporary differences.
Deferred tax assets arising from tax losses have been recorded only when it is likely to occur taxable income in the future.
Deferred tax assets were re-assessed against each company's business plans, which are regularly updated.
Since fiscal year 2014, most of the Group's subsidiaries based in Portugal belong to the perimeter of the group of companies that are taxed in accordance with the special taxation regime for company groups ("RETGS"), being Sonae Capital, SGPS, S.A. the dominant company.
Of the analysis made at 31 December 2017, it is concluded that there is a reasonable expectation on the recovery of the recorded deferred tax assets before their date expires.
As at 31 December 2017, tax losses carried forward amounting to 43,912,619 euro (54,752,193 euro as at 31 December 2016), have not originated deferred tax assets for prudential reasons and are detailed as follows:
| 31 December 2017 | 31 December 2016 | |||||
|---|---|---|---|---|---|---|
| Tax losses carried forward |
Tax Credit | Time limit | Tax losses carried forward |
Tax Credit | Time limit | |
| With limited time use | ||||||
| Generated in 2012 | - | - | 2017 | 13.872.225 | 2.913.167 | 2017 |
| Generated in 2013 | 25.043.382 | 5.259.110 | 2018 | 25.870.105 | 5.432.722 | 2018 |
| Generated in 2014 | 49.633 | 10.423 | 2026 | 22.249 | 4.672 | 2026 |
| Generated in 2015 | 4.751 | 998 | 2027 | 29.058 | 6.102 | 2027 |
| Generated in 2016 | 19.292 | 4.051 | 2028 | 2.892.333 | 607.390 | 2028 |
| Generated in 2017 | 6.368.844 | 1.337.457 | 2022 | - | - | |
| 31.485.902 | 6.612.039 | 42.685.969 | 8.964.054 | |||
| Without limited time use | 12.001.155 | 3.000.289 | 11.658.674 | 2.914.669 | ||
| With a time limit different from the above mentioned |
425.562 | 95.258 | 407.549 | 94.305 | ||
| 12.426.717 | 3.095.547 | 12.066.224 | 3.008.973 | |||
| 43.912.619 | 9.707.586 | 54.752.193 | 11.973.027 |
As at 31 December 2017 and 2016, cash and cash equivalents can be detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Cash at hand | 30.132 | 133.923 |
| Bank deposits | 7.276.938 | 32.604.013 |
| Treasury applications | - | 9.272 |
| Cash and cash equivalents on the balance sheet | 7.307.069 | 32.747.208 |
| Bank overdrafts (Note 23) | (73.571) | (15.769) |
| Guarantee deposit | - | - |
| Cash and cash equivalents in the statement of cash-flows |
7.233.499 | 32.731.439 |
Bank overdrafts include creditor balances of current accounts in financial institutions, and are disclosed in the balance sheet under current bank loans (Note 23).
The caption of other receipts / payments in the Cash Flow Statement includes mainly payments and receipts from other taxes, and settlements and receipts of other operating expenses or income.
Credit risk analysis is in accordance with caption 3.2.
The share capital of Sonae Capital SGPS, SA is represented by 250,000,000 ordinary shares, which do not have the right to a fixed remuneration, with a nominal value of 1 euro each.
As at 31 December 2017, Sonae Capital SGPS, S.A. owns 4,783,433 own shares (5,516,226 own shares at 31 December 2016) booked for 1,305,829 euro (1,404,226 euro at 31 December 2016).
Other reserves includes amounts equal to the value of own shares held by the Group's parent company. This reserve should be unavailable while these shares are kept by the company.
The Reserves and retained earnings of Sonae Capital Group in the periods ended 31 December 2017 and 2016 are as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Demerger reserve | 132.638.253 | 132.638.253 |
| Translation reserves | 146.352 | 12.876 |
| Fair value reserves | - | - |
| Hedging reserves | 6.370 | 5.004 |
| Others | (94.517.536) | (88.414.342) |
| Other reserves and retained earnings | 38.273.439 | 44.241.791 |
The demerger originated a reserve in the amount of 132,638,253 euro, which has a treatment similar to that of a Legal Reserve. According to Company Law, it cannot be distributed to shareholders, unless the company is liquidated, but can be used to make good prior year losses, once other reserves have been used fully, or for capital increases.
These reserves are comprised by the conversion into euro of the financial statements of the subsidiaries that have other functional currency.
In this caption is the fair value of the assets available for sale.
This caption is comprised by the fair value of hedging derivatives and the accrued interest of that derivative. The amounts in this reserve are transferred to the income statement when subsidiaries are sold or liquidated.
Changes in Equity are detailed in the Consolidated Statements of Changes in Equity.
Movements in non-controlling interests in the periods ended 31 December 2017 and 2016 are as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Opening balance as at 1 January | 9.925.965 | 10.247.125 |
| Changes in the percentage of capital held in affiliated companies |
776.824 | (24.782) |
| Changes resulting from currency translation | 27.009 | 482 |
| Dividends paid | (926.710) | (1.441.468) |
| Others | - | 45.913 |
| Profit for the period attributable to minority interests | 1.112.088 | 1.098.695 |
| Closing balance | 10.915.176 | 9.925.965 |
The non-controlling interests are primarily from companies in the refrigeration and HVAC segment.
As at 31 December 2017 and 2016, Borrowings are made up as follows:
| 31 December 2017 | 31 December 2016 | ||||
|---|---|---|---|---|---|
| Outstanding amount | Outstanding amount | Repayable on | |||
| Current | Non-Current | Current | Non-Current | ||
| Bank loans | |||||
| Sonae Capital SGPS - commercial paper a) | 4.500.000 | - | - | - | Jun/2021 |
| Sonae Capital SGPS - commercial paper b) | - | 4.000.000 | - | - | Out/2021 |
| Sonae Capital SGPS - commercial paper c) | 3.200.000 | - | - | - | Mar/2018 |
| Sonae Capital SGPS - commercial paper d) | 10.000.000 | - | - | - | Jun/2018 |
| Sonae Capital SGPS - commercial paper e) | - | 10.000.000 | - | - | Fev/2023 |
| Sonae Capital SGPS - commercial paper f) | 5.000.000 | - | |||
| Sonae Capital SGPS - commercial paper g) | - | - | - | 20.000.000 | Jun/2021 |
| Up-front fees | - | (16.867) | - | (445.544) | |
| Others | 1.966.697 | 3.235.083 | 1.121.468 | 977.912 | |
| 24.666.697 | 17.218.216 | 1.121.468 | 20.532.367 | ||
| Bank overdrafts (Note 20) | 73.571 | - | 15.769 | - | |
| Bank loans | 24.740.268 | 17.218.216 | 1.137.237 | 20.532.367 | |
| Bond Loans | |||||
| Sonae Capital 2014/2019 Bonds h) | - | 15.000.000 | - | 15.000.000 | Jul/2021 |
| Sonae Capital 2016/2021 Bonds i) | - | 42.500.000 | - | 42.500.000 | Mai/2019 |
| Up-front fees | - | (254.190) | - | (392.289) | |
| Bond Loans | - | 57.245.810 | - | 57.107.711 | |
| Other loans | 48.788 | 197.389 | 117.400 | 246.177 | |
| Derivatives | - | - | 4.530 | - | |
| Obligations under finance leases | 3.422.578 | 13.867.519 | 3.214.278 | 16.449.963 | |
| Up-front fees on finance leases | - | (60.437) | - | (73.991) | |
| 28.211.634 | 88.468.497 | 4.473.445 | 94.262.228 |
a) Commercial paper programme, with subscription guarantee, issued on 31 December 2013, with automatic annual renewals up to seven years and six months, unless denunciated by either party.
b) Commercial paper programme, with subscription guarantee, issued on 29 September 2017 and valid to October 2021.
c) Short-term commercial paper programme, issued on 28 March 2008 and valid for a 10-year period, which may be extended at the option of Sonae Capital. Placed in investors or financial institutions and guaranteed by credit lines, with commitment of at least six months to a year, placed in relationship banks.
d) Commercial paper programme, with subscription guarantee, issued on 30 June 2017 with annual payments, unless denounced by either party. e) Commercial paper programme, with subscription guarantee, issued on 24 February 2017 and valid until February 2023, with semi-annual payments starting in 2019.
f) Commercial paper programme, without subscription guarantee, issued on 20 December 2017 with annual payments, issued to investors. g) Commercial paper programme, with subscription guarantee, issued on 23 June 2016 and valid up to five years, with annual payments and grace period for one year.
h) Sonae Capital SGPS - 2016/2021 bond loan in the amount of 15,000,000 euro, with a 5 year maturity, and a sole reimbursement on 29 July 2021, unless the issuer requests a full or partial refund (call option). This bond loan bears interest every six months. i) Sonae Capital SGPS, SA, 2014/2019 bond loan in the amount of 42,500,000 euro, with a five year maturity, and a sole reimbursement on 28 May 2019. This
bond loan bears interest every six months
The interest rate on bonds and bank loans in force on 31 December 2017 was on average 2.27% (2.69% in 31 December 2016)
Bank loans pay interest rates that are indexed to the Euribor market rates of the period, and its fair value is considered close to its book value.
Other non-current loans include government reimbursable grants to Group companies, which do not bear interest. Fair value was not calculated for these subsidies due to their low values.
The repayment schedule of the nominal value of borrowings may be summarised as follows:
31 December 2017 31 December 2016 Nominal value Interest Nominal value Interest N+1 22.700.000 (2.112.847) 4.468.915 2.557.645 N+2 52.500.000 (1.255.768) 8.786.986 2.280.282 N+3 - (427.135) 51.245.074 1.368.522 N+4 19.000.000 (410.573) 8.466.613 482.773 N+5 - (46.667) 22.619.129 422.525 After N+5 - (2.917) 4.056.251 62.467 Total 94.200.000 (4.255.907) 99.642.967 7.174.215
As at 31 December 2017 and 2016, the credit lines available and the amount of contracted lines, can be summarized as follows:
| 31 December 2017 | 31 December 2016 | |||
|---|---|---|---|---|
| Commitments < 1 year |
Commitments > 1 year |
Commitments < 1 year |
Commitments > 1 year |
|
| Value of available lines | 43.650.000 | 68.500.000 | 64.462.766 | 30.000.000 |
| Value of contracted lines | 61.350.000 | 82.500.000 | 64.946.405 | 50.000.000 |
As at 31 December 2017 the reconciliation of the liabilities whose flows affect the financing activities are detailed as follows:
| 31 December 2016 |
Cash | Non Cash | 31 December 2017 |
|||
|---|---|---|---|---|---|---|
| Acquisitions | Up front fees | Changes in Consolidation perimeter |
||||
| Non-Current Loans (Note 23 and 26) |
96.319.652 | (9.576.494) | - | 442.231 | 3.225.679 | 90.411.068 |
| Current Loans | 4.473.445 | 19.528.358 | 4.209.831 | 28.211.634 | ||
| 100.793.097 | 9.951.864 | 442.231 | 7.435.510 | 118.622.702 |
As at 31 December 2017 and 2016, Obligations under finance leases are made up as follows:
| Obligations under finance leases | Minimum finance lease payments |
Present value of minimum finance lease payments |
||
|---|---|---|---|---|
| Amounts under finances leases: | 31 December 2017 |
31 December 2016 |
31 December 2017 |
31 December 2016 |
| N+1 | 3.698.446 | 3.549.899 | 3.422.578 | 3.214.278 |
| N+2 | 3.565.384 | 3.550.020 | 3.355.296 | 3.283.104 |
| N+3 | 3.564.885 | 3.416.974 | 3.419.195 | 3.214.318 |
| N+4 | 2.848.597 | 3.416.428 | 2.763.738 | 3.276.618 |
| N+5 | 3.297.885 | 2.699.879 | 3.256.291 | 2.619.305 |
| After N+5 | 1.096.411 | 4.119.202 | 1.072.999 | 4.056.617 |
| 18.071.609 | 20.752.403 | 17.290.098 | 19.664.241 | |
| Future Interest | (781.511) | (1.088.162) | ||
| 17.290.098 | 19.664.241 |
| Obligations under finance leases - net of current obligations | 13.807.082 | 16.375.972 |
|---|---|---|
| Current obligations under finance leases | 3.422.578 | 3.214.278 |
| Up-front fees | (60.437) | (73.991) |
Finance leases are contracted at market interest rates, have defined useful lives and include an option for the acquisition of the related assets. The interest rate of these contracts as at 31 December 2017 was on average 1.74% (1.80% at 31 December 2016).
As at 31 December 2017 and 2016, the fair value of finance leases is close to their book value.
Obligations under finance leases are guaranteed by the reservation of ownership of the leased assets.
As at 31 December 2017 and 2016, the book value of assets acquired under finance leases can be detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Assets acquired under finance leases | ||
| Plant and machinery | 18.570.468 | 20.165.918 |
| Fixtures and Fittings | 2.130 | 2.650 |
| Total tangible assets | 18.572.598 | 20.168.568 |
As of 31 December 2017 the Group has no hedging instruments.
Hedging instruments used by the Group as at 31 December 2016 were mainly interest rate options (cash-flow hedges) contracted with the goal of hedging interest rate risks on loans in the amount of 193,263 euro, whose fair value of 4,530 euro is recorded as liabilities in other loans. As at 31 December 2016 all derivatives were hedging derivatives.
These interest rate hedging instruments are valued at fair value as at the balance sheet date, determined by valuations made by the Group using derivative valuation calculation schedules and external valuations when these schedules do not permit the valuation of certain instruments. For options, fair value is determined using the Black-Scholes model and its variants.
The fair value of derivatives is calculated using valuation models based on assumptions which are confirmed by market benchmarks, thus complying with level 2 requirements set on the IFRS 7.
Risk coverage guidelines generally used by the Group in contractually arranged hedging instruments are as follows:
Counterparts for derivatives are selected based on their financial strength and credit risk profile, with this profile being generally measured by a rating note attributed by rating agencies of recognized merit. Counterparts for derivatives are top level, highly prestigious financial institutions which are recognized nationally and internationally.
| Assets | Liabilities | ||||
|---|---|---|---|---|---|
| 31 December 2017 |
31 December 2016 |
31 December 2017 |
31 December 2016 |
||
| Non-Hedge accounting derivatives | |||||
| Interest rate | - | - | - | - | |
| Hedge accounting derivatives | |||||
| Interest rate (Note 23) | - | - | - | 4.530 | |
| Other derivatives | - | - | - | - | |
| - | - | - | 4.530 |
The fair value of derivatives is as follows:
As at 31 December 2017 and 2016 other non-current creditors liabilities can be detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Loans and other amounts payable to related parties | ||
| Plaza Mayor Parque de Ocio, SA (Note 44) | 1.739.399 | 1.825.274 |
| Others | 203.172 | 232.150 |
| 1.942.571 | 2.057.424 | |
| Other creditors | ||
| Creditors in the restructuring process of Torralta | 650.478 | 623.702 |
| Fixed assets suppliers | - | - |
| Others | 5.349 | - |
| 655.827 | 623.702 | |
| Deferred income | ||
| Investment aid | - | 606.056 |
| Obligations by share-based payments (Note 27) | 416.815 | 464.519 |
| Others | - | - |
| 416.815 | 1.070.574 | |
| Pension fund responsabilities | ||
| Other non-current creditors | 3.015.213 | 3.751.701 |
In 2017, investment aid amounting to 606,056 euro were reclassified to Tangible Fixed Assets and Intangible Assets as permitted in IAS 20 - Accounting for Government Grants and Disclosure of Government Assistance.
As at 31 December 2017 and 2016, other creditor's balances maturity can be detailed as follows:
| 31 December 2017 | N+1 | N+2 | N+3 | N+4 | N+5 | Total |
|---|---|---|---|---|---|---|
| Fixed assets suppliers | - | - | - | - | - | - |
| Other non current creditors | - | - | - | - | 655.827 | 655.827 |
| Total | - | - | - | - | 655.827 | 655.827 |
| 31 December 2016 | N+1 | N+2 | N+3 | N+4 | N+5 | Total |
| Fixed assets suppliers | - | - | - | - | - | - |
| Other non current creditors | - | - | - | - | 623.702 | 623.702 |
| Total | - | - | - | - | 623.702 | 623.702 |
In 2012 and in previous years, the Sonae Capital Group granted deferred performance bonuses to employees, based on shares of Sonae Capital SGPS, SA to be acquired at nil cost, three years after they were attributed to the employee. In any case, the acquisition can be exercised during the period commencing on the third anniversary of the grant date and the end of that year. The company has the choice to settle in cash instead of shares. The option can only be exercised if the employee still works for the Sonae Capital Group on the vesting date.
| Year of grant | Vesting year | Number of participants |
Fair Value | ||
|---|---|---|---|---|---|
| Shares | 31 December 2017 | 31 December 2016 | |||
| 2014 | 2017 | 6 | - | 406.269 | |
| 2015 | 2018 | 6 | 569.471 | 512.554 | |
| 2016 | 2019 | 6 | 415.708 | 368.445 | |
| 2017 | 2020 | 12 | 419.031 | - | |
| Total | 1.404.210 | 1.287.269 |
As at 31 December 2017 and 2016, the market value of total liabilities arising from share-based payments, which have not yet vested, may be summarised as follows:
As at 31 December 2017 and 2016, the financial statements include the following amounts corresponding to the period elapsed between the date of granting and those dates for each deferred bonus plan, which have not yet vested:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Other non-current creditors (Note 26) | 416.815 | 464.518 |
| Other current creditors (Note 29) | 569.471 | 406.269 |
| Reserves | (170.768) | |
| Staff Costs (Note 38) | 708.667 | 700.019 |
As at 31 December 2017 and 2016 trade accounts payable can be detailed as follows:
| Payable | ||||
|---|---|---|---|---|
| 31 December 2017 |
Less than 90 days |
90 to 180 days |
More than 180 days |
|
| Trade creditors current account | ||||
| Resorts | 1.350.016 | 1.233.099 | 23.393 | 93.524 |
| Hotels | 1.061.426 | 944.723 | 90.960 | 25.742 |
| Fitness | 1.401.902 | 1.314.466 | 87.436 | - |
| Energy | 2.760.413 | 2.713.385 | 29.653 | 17.375 |
| Refrigeration and HVAC | 11.801.148 | 11.631.644 | 51.060 | 118.445 |
| Other Assets | 733.632 | 632.611 | 63.346 | 37.676 |
| Metal | 1.609.632 | 65.804 | 190.722 | 1.353.106 |
| 20.718.170 | 18.535.732 | 536.570 | 1.645.868 | |
| Trade creditors - Invoices Accruals | 4.651.631 | 3.960.623 | 164.295 | 526.713 |
| Total Operations | 25.369.800 | 22.496.355 | 700.865 | 2.172.581 |
| Payable | ||||
| 31 December 2016 |
Less than 90 days |
90 to 180 days |
More than 180 days |
|
| Trade creditors current account | ||||
| Resorts | 1.632.377 | 1.449.710 | 136.321 | 46.347 |
| Hotels | 626.848 | 538.477 | 35.702 | 52.669 |
| Fitness | 993.969 | 973.927 | 13.001 | 7.040 |
| Energy | 2.548.252 | 2.547.049 | 20 | 1.183 |
| Refrigeration and HVAC | 8.914.751 | 8.464.145 | 303.384 | 147.222 |
| Other Assets | 538.323 | 476.278 | 13.057 | 48.988 |
| Metal | - | - | - | - |
| 15.254.520 | 14.449.586 | 501.485 | 303.449 | |
| Trade creditors - Invoices Accruals | 1.225.034 | 873.098 | 309.858 | 42.078 |
As at 31 December 2017 and 2016 other creditors can be detailed as follows:
| Payable | ||||
|---|---|---|---|---|
| 31 December 2017 |
Less than 90 days |
90 to 180 days |
More than 180 days |
|
| Other creditors | ||||
| Fixed assets suppliers | 2.392.508 | 2.173.509 | 37.954 | 181.045 |
| Others | 12.743.821 | 1.318.037 | 255.212 | 11.170.572 |
| 15.136.329 | 3.491.546 | 293.166 | 11.351.617 | |
| Advances from customers and down payments |
1.881.047 | |||
| 17.017.376 | ||||
| Related parties | 608.120 | |||
| Total | 17.625.496 | |||
| Payable | ||||
| 31 December 2016 |
Less than 90 days |
90 to 180 days |
More than 180 days |
|
| Other creditors | ||||
| Fixed assets suppliers | 1.164.703 | 987.300 | 6.150 | 171.254 |
| Others | 2.482.586 | 1.333.683 | 61.764 | 1.087.139 |
| 1.258.393 | ||||
| 3.647.289 | 2.320.983 | 67.914 | ||
| Advances from customers and down payments |
838.494 | |||
| 4.485.783 | ||||
| Related parties | 204.288 |
As at 31 December 2017 and 2016, this caption includes balances payable to other creditors and fixed assets suppliers that do not include interest. The caption includes also advances from customers on promissory sales of Inventories and tangible assets.
The balance of others includes the debt of the purchase of a finantial participation company for 8,750,000 euros (Note 46).
The Board of Directors believes that the fair market value of these payables is approximately their book value, and that effects of discounting these balances are immaterial.
As at 31 December 2017 and 2016 other current liabilities can be detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Staff Costs | 7.590.826 | 6.376.663 |
| Amounts invoiced for works not yet completed | 3.658.159 | 4.892.128 |
| Accruals of Purchases expenses - Energy segment | - | 1.872.405 |
| Interest payable | 354.584 | 408.023 |
| Investment aid | 126.309 | 926.085 |
| Others | 11.951.630 | 10.514.414 |
| Total Operations | 23.681.508 | 24.989.717 |
Refrigeration and HVAC is the segment with the most significant contribution to works not yet completed, amounting to 3.6 million euros as at 31 December 2017 (4.8 million euros at 31 December 2016).
The amount included under Others respects to amounts relating to creditors for accrued expenses and income to be recognized.
As at 31 December 2017, the the accruals include expenses with various external supplies and services, remuneration and insurance to be settled in 2018, among others.
Movements in provisions and accumulated impairment losses over the period ended 31 December 2017 and 2016 were as follows:
| Captions | Balance as at 1 January 2017 |
Increases | Decreases | Utilisations | Transfers | Balance as at 31 December 2017 |
|---|---|---|---|---|---|---|
| Accumulated impairment losses on: | ||||||
| Tangible Assets (Note 10) | 34.634.071 | 3.957.099 | (3.956.323) | - | - | 34.634.847 |
| Intangible Assets (Note 11) | - | 689.536 | - | - | - | 689.536 |
| Goodwill (Note 12 and 41) | 24.353.034 | 350.677 | - | - | - | 24.703.711 |
| Other Investments (Notes 6.7 and 41) |
323.781 | - | (31.943) | - | - | 291.838 |
| Other non-current assets (Note 13) |
34.916 | - | - | - | - | 34.916 |
| Trade accounts receivable (Note 15) |
4.259.204 | 2.648.681 | (498.899) | (200.143) | - | 6.208.847 |
| Other current assets (Note 16) | 2.003.417 | 147.342 | (154.834) | - | - | 1.995.925 |
| Stocks (Note 14) | 15.351.494 | 459.418 | (10.108.216) | - | 5.702.697 | |
| Non-current provisions | 3.079.824 | - | - | - | - | 3.079.824 |
| Current provisions | 3.939.016 | 2.138.438 | (2.000) | (1.672.052) | - | 4.403.401 |
| Total | 87.978.757 | 10.391.190 | (14.752.215) | (1.872.195) | - | 81.745.545 |
| Captions | Balance as at 1 January 2016 |
Increases | Decreases | Utilisations | Transfers | Balance as at 31 December 2016 |
|---|---|---|---|---|---|---|
| Accumulated impairment losses on: | ||||||
| Tangible Assets (Note 10) | 39.129.797 | 3.006.017 | (7.501.743) | - | - | 34.634.071 |
| Goodwill (Note 12) | 1.301.596 | 23.051.438 | - | - | - | 24.353.034 |
| Other Investments (Note 6 and 7) |
323.781 | - | - | - | - | 323.781 |
| Other non current assets (Note 13) |
34.916 | - | - | - | - | 34.916 |
| Trade accounts receivable (Note 15) |
3.986.937 | 978.794 | (372.415) | (334.112) | - | 4.259.204 |
| Other current debtors (Note 16) |
565.400 | 1.506.119 | (48.401) | (19.701) | - | 2.003.417 |
| Stocks (Note 14) | 5.951.751 | 5.206.562 | (1.077.752) | - | 5.270.932 | 15.351.494 |
| Non current provisions | 3.079.824 | - | - | - | - | 3.079.824 |
| Current provisions | 5.357.926 | 764.036 | (179.078) | (2.003.868) | - | 3.939.016 |
| Total | 59.731.929 | 34.512.966 | (9.179.389) | (2.357.681) | 5.270.932 | 87.978.757 |
On December 2017 and 2016, the amounts recorded in provisions and impairment losses were recognized for prudence; it is not possible to predict when these provisions and impairment charges will result in future cash flows.
During an inventory of assets at 31 March 2016, it was detected that the accounting, in some assets, of the impairment charges from previous years in the amount of 5,270,932 euro was made in the account of Inventories and not in the impairment account. A decision was taken to transfer these amounts to the impairment account and disclose this event in transfers.
As at 31 December 2017 and 2016 increases in provisions and impairment losses can be detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Provisions and impairment losses (Increases\Decreases) |
1.705.512 | 27.831.673 |
| Provisions and impairment losses recorded in cost of goods sold(note 14) and changes in inventories (note 36) |
604 | 5.206.562 |
| Impairment in Investment Income (note 41) | - | 1.449.406 |
| Godwill Impairment | 350.677 | - |
| Changes in consolidation perimeter | 8.328.524 | |
| others increase | 5.873 | 25.325 |
| Balance increases | 10.391.190 | 8.873.667 |
| Provisions and impairment losses (decreases) | 14.263.817 | 8.873.667 |
| Decreases in Provisions and impairment losses recorded in cost of goods sold (note 14 and 36) |
447.991 | 1.076.105 |
| Decreases in investments (note 41) | 31.943 | |
| Other reversals of impairment losses and provisions to the income statement |
(409.938) | (769.236) |
| Changes in consolidation perimeter | 267.628 | - |
| Other decreases | 150.774 | (1.147) |
| Decreases on the balance sheet | 14.752.215 | 9.179.389 |
Impairment losses are deducted from the book value of the corresponding asset.
As at 31 December 2017 and 2016 detail of other provisions was as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Judicial claims | 2.225.121 | 1.697.459 |
| Provision for secured income | 1.451.279 | 2.628.037 |
| Others | 3.806.826 | 2.693.345 |
| 7.483.226 | 7.018.840 |
The amount considered in "Provision for secured income" is calculated estimating the difference between the amount to be charged through the properties leased in Tróia and the secured income to be paid to property owners.
The amount to be charged through the marketing of real estate is estimated based on the average of the values obtained in previous years. It is expected that the provision for secured income, totalling 1,568,000 euro, will generate a cash outflow for the year 2018.
The judicial claims in progress relate essentially to litigation / damages in companies Inparvi SGPS, SA. and Societe de Tranchage Isoroy SAS.
In others, the provisions refer for assets dismantling.
As at 31 December 2017 and 2016 the most important contingent liabilities referred to guarantees given and were made up as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Guarantees given: | ||
| on VAT reimbursements | 5.199.346 | 5.199.346 |
| on tax claims | 15.163.918 | 17.589.470 |
| on municipal claims | 1.134.224 | 1.134.224 |
| on loans | 16.466.333 | 3.521.714 |
| Others | 9.574.135 | 10.172.103 |
Others include the following guarantees:
The Group has not registered provisions for the events/disagreements for which these guarantees were given since the Group believes that the above mentioned events will not result in a loss for the Group.
Minimum lease payments (fixed income) arising from operational leases, in which the Group acts as a lessor, recognized as income during the period ended 31 December 2017 and 2016 amounted to 3,485,520 euro and 3,511,991 euro, respectively.
Additionally, as at 31 December 2017 and 2016, the Group had operational lease contracts, as a lessor, whose minimum lease payments (fixed income) had the following payment schedule:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Due in: | ||
| N+1 automatically renewed | 1.594.484 | 3.309.035 |
| N+1 | 1.171.374 | 2.116.111 |
| N+2 | 920.950 | 1.959.339 |
| N+3 | 841.753 | 1.546.687 |
| N+4 | 731.306 | 1.427.361 |
| N+5 | 6.562.400 | 978.808 |
| After N+5 | 1.944.238 | 6.263.417 |
| 13.766.505 | 17.600.758 |
Lease payments arising from operational leases, in which the Group acts as a lessee, recognized as an expense during the period ended 31 December 2017 and 2016 amounted to 7,668,609 euro and 4,980,633 euro, respectively.This variation took place in the fitness segment whose annual contribution amounted to 2,188,496 euro.
Additionally, as at 31 December 2017 and 2016, the Group had operational lease contracts, as a lessee, whose minimum lease payments (fixed income) had the following payment schedule:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Due in: | ||
| N+1 automatically renewed | 2.964.068 | 3.002.254 |
| N+1 | 310.811 | 451.841 |
| N+2 | 310.811 | 394.410 |
| N+3 | 155.015 | 361.699 |
| N+4 | - | 185.762 |
| N+5 | - | 27.371 |
| After N+5 | - | 52.409 |
| 3.740.705 | 4.475.746 |
Turnover for the year ended 31 December 2017 and 2016 was as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Sale of goods | 94.545.135 | 101.855.576 |
| Sale of products | 14.968.829 | 25.213.744 |
| 109.513.964 | 127.069.320 | |
| Services Rendered | 67.642.801 | 57.970.341 |
| Continued Operations | 177.156.765 | 185.039.661 |
| Discontinued Operations | 6.402.261 | 6.287.249 |
| Total | 183.559.026 | 191.326.910 |
The Sale of Products includes amounts from the sale of real estate assets totalling 9.9 million euro as at 31 December 2016 (23.7 million euro at 31 December 2016).
At 31 December 2017 the most significant amounts under IAS 11 - Construction contracts, are as follows:
| Total | |
|---|---|
| Revenue on the works in progress for construction contracts at 31 December 2017 | 78 997 307 |
| Invoicing on works in progress at 31 December 2017 | 78 401 688 |
| Amounts not invoiced for works in progress at 31 December 2017 | 23 599 079 |
| Expenses with works in progress at 31 December 2017 | 69 243 395 |
| Other current liabilities - Works already invoiced but not yet performed (Note 30) | 3 658 159 |
| Inventories for the works in progress at 31 December 2017 (Note 14) | 4 253 778 |
Other operational income for the year ended 31 December 2017 and 2016 was as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Own work capitalised | 676.761 | 44.284 |
| Gains on sales of assets | 2.707.951 | 36.972.509 |
| Supplementary income | 704.752 | 649.021 |
| Others | 2.505.966 | 3.681.711 |
| Continued Operations | 6.595.430 | 41.347.525 |
| Discontinued Operations | (194.214) | (431.331) |
| Total | 6.401.216 | 40.916.194 |
The caption Others includes in the year ended in 2017, (i) government subsidies (207,763 euro); (ii) foreign exchange gains (179,358 euro); (iii) adjustments to prior years associated with Taxes (517,853 euro) and other non-recurring gains related to the sale of assets (179,9361 euro). When compared to the previous year the difference in the amounts comes from non-recurring gains related to the sale of assets in 2016.
The caption "Gains on sales of assets" in 2016 includes the gain obtained in the sale of real estate assets located in Tróia, called UNOP 7, 8 and 9.
Changes in Inventories for the years ended 31 December 2017 and 2016 was as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Finished goods | (2.705.566) | (7.410.866) |
| Work in progress | (4.217.353) | (9.466.774) |
| (6.922.919) | (16.877.640) | |
| Impairment losses (note 31) | 439.653 | (1.084.222) |
| Continued Operations | (6.483.266) | (17.961.863) |
| Discontinued Operations | (1.103.110) | 640.818 |
| Total | (7.586.376) | (17.321.045) |
Changes in Inventories were calculated as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Opening inventories (Note 14) | 87.824.711 | 100.877.564 |
| Exchange rate effect | - | - |
| Changes in perimeter | 1.990.605 | 69.146 |
| Inventories adjustments | (2.238.533) | 3.755.641 |
| Closing inventories (Note 14) | 80.653.864 | 87.824.711 |
| (6.922.919) | (16.877.640) | |
| Impairment losses (Note 31) | - | (1.766.480) |
| Reversion of impairment losses | 439.653 | 682.258 |
| Continued Operations | (6.483.266) | (17.961.863) |
| Discontinued Operations | (1.103.110) | 640.818 |
| Total | (7.586.376) | (17.321.045) |
As at 31 December 2017 and 2016, external supplies and services were made up as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Subcontracts | 9.329.910 | 19.439.007 |
| Services | 8.077.330 | 7.248.822 |
| Rents | 10.250.087 | 6.733.833 |
| Fees | 1.230.222 | 835.674 |
| Maintenance | 5.440.273 | 4.619.215 |
| Cleaning, health and safety | 3.626.086 | 2.978.331 |
| Electricity | 2.849.290 | 2.502.136 |
| Travelling expenses | 1.121.534 | 872.442 |
| Publicity | 1.120.199 | 1.224.645 |
| Fuel | 701.376 | 603.052 |
| Security | 588.361 | 503.408 |
| Communication | 1.048.780 | 780.387 |
| Comissions | 3.187.248 | 3.950.027 |
| Other fluids | 1.109.474 | 1.071.333 |
| Insurance | 790.635 | 784.770 |
| Others | 5.266.355 | 4.392.191 |
| Continued Operations | 55.737.160 | 58.539.273 |
| Discontinued Operations | 3.370.704 | 2.774.364 |
| Total | 59.107.864 | 61.313.637 |
Refrigeration and HVAC is the segment with the most significant contribution to subcontracts, totalling 8 million euros as at 31 December 2017 (19.7 million euros at 31 December 2016). This decrease translates to the completion of the work Parklake.
The caption "Services" includes consultancy services, fees and subcontracting of labour. Compared to the previous year the differences in the amounts are from the increase of fees with consultancy services with ongoing projects in the Energy and Refrigeration and HVAC segments, as well the increase in the subcontracting of labour by the hotel segment.
The increases in "Rents" and "Communication" are mostly explained by the opening of new Solinca Health Clubs.
In "Fees" are included fees with lawyers, musicians and external staff (mainly personal trainers hired to the Fitness segment).
In "Commissions" are included the amounts with services provided by real state agencies and paid by the segments Hotels, Resorts and Other Assets.
The variation of the heading "Travelling expenses" resulted in the prospect of new business and follow-up of other existing ones.
"Maintenance" includes repair and maintenance services primarily for energy and fitness equipment.
In the caption "Others" are included, among others, bank services, water consumptions and costs with transports of goods.
As at 31 December 2017 and 2016, staff costs were made up as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Salaries | 27.183.087 | 24.709.345 |
| Social security contributions | 5.574.373 | 4.877.116 |
| Insurance | 595.114 | 598.150 |
| Welfare | 92.873 | 85.960 |
| Other staff costs | 1.517.875 | 1.353.876 |
| Continued Operations | 34.963.322 | 31.624.447 |
| Discontinued Operations | 3.580.466 | 3.323.807 |
| Total | 38.543.788 | 34.948.254 |
Sonae Capital's average headcount can be detailed as follows:
| 31 December 2017 | 31 December 2016 | ||
|---|---|---|---|
| Resorts | 142 | 140 | |
| Hotels | 236 | 277 | |
| Fitness | 395 | 265 | |
| Energy | 70 | 52 | |
| Refrigeration e HVAC | 280 | 508 | |
| Industrial Engennering | 125 | - | |
| Other Assets | 120 | 111 | |
| 1.368 | 1.353 |
The caption "Staff costs" includes 708,667 euro (700,019 euro in 31 December 2016) with liabilities for payments in shares (Note 27).
As at 31 December 2017 and 2016, other operational expenses were made up as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Losses on sales of assets | 1.198.653 | 10.464 |
| Other taxes | 694.567 | 737.245 |
| Property tax | 1.328.857 | 856.535 |
| CO2 Emissions | 726.938 | 304.633 |
| Doubtful debts written-off | - | 3.145 |
| Others | 1.722.933 | 1.418.808 |
| Continued Operations | 5.671.948 | 3.330.830 |
| Discontinued Operations | 50.455 | 348.824 |
| Total | 5.722.403 | 3.679.654 |
The caption "Others" includes in the year ended in 2017, mainly, write-offs of debtor balances, foreign exchange losses, and tax penalties mostly paid in Romania.
As at 31 December 2017 and 2016, net financial expenses were made up as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Expenses: | ||
| Interest payable | ||
| Related with bank loans and overdrafts | 429.883 | 1.873.525 |
| Related with bank non convertible bonds | 1.962.390 | 1.931.018 |
| Related with finance leases | 326.204 | 336.227 |
| Related with hedge accounting derivatives | 1.727 | 17.563 |
| Others | 109.377 | 138.371 |
| 2.829.581 | 4.296.704 | |
| Exchange Losses | 206 | 95.171 |
| Payment discounts given | 14.161 | - |
| Up front fees | 140.717 | 122.488 |
| Other financial expenses | 1.382.254 | 2.223.469 |
| 4.366.919 | 6.737.832 | |
| Income: | ||
| Interest receivable | 118.625 | 407.281 |
| Exchange gains | 213 | 49.363 |
| Cash payment discounts | - | - |
| Gains in value of hedging derivative instruments | - | - |
| Other financial income | 2 | 1 |
| 118.840 | 456.645 | |
| Continued Operations | (4.248.079) | (6.281.187) |
| Discontinued Operations | (628.726) | (497.588) |
| Total | (4.876.805) | (6.778.776) |
At 31 December 2017, the caption "Other financial expenses" mainly includes expenses with bank commissions.
As at 31 December 2017 and 2016, Investment income was made up as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Dividends | - | 119.197 |
| Adjustment to the liquidation price of "Sodesa SA." | 1.448 | |
| Acquisition of Suncoutim Solar Energy S.A. | 1.689 | |
| Acquisition of Acrobatic Title S.A. | 1.359 | |
| Adjustment to the liquidation price of "Powercer SA." | 4.944 | |
| Adjustment to the selling price of "Box Lines Navegação" | 54.840 | 119.300 |
| Losses on sales of group companies | (116.872) | - |
| Gains in the acquisition of group companies (Note 8) | 2.414.496 | - |
| Gains of investments in group companies | 2.358.856 | 122.348 |
| Equity settlement in other investments (Note 6) | - | 17.808.072 |
| Impairment losses (Note 31) | (318.739) | (1.449.563) |
| Sale of investment units from "Fundo de Investimento Imobiliário Fechado Imosede" |
- | (22.325) |
| Settlement of the sale agreement of UPK - Gestão de Facilities e Manutenção SA |
(23.039) | (247.557) |
| Gains/(Losses) on sale of other investments | (341.778) | 16.088.627 |
| Others | (7) | (244) |
| Investment Income | 2.017.071 | 16.329.928 |
| Discontinued Operations | - | - |
| Total Operations | 2.017.071 | 16.329.928 |
As at 31 December 2017 and 2016, Taxation was made up as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Current tax | 533.618 | 878.846 |
| Deferred tax | 1.371.182 | 4.923.230 |
| Taxation | 1.904.800 | 5.802.076 |
| Discontinued Operations | 414 | - |
| Continued Operations | 1.905.214 | 5.802.076 |
The reconciliation between the profit before taxation and the tax charge for the periods ended 31 December 2017 and 2016 may be summarised as follows:
| 31 December 2017 | 31 December 2016 | |||
|---|---|---|---|---|
| Basis of incidence |
Tax amount |
Basis of incidence |
Tax amount |
|
| Profit before income tax (1) | (577.316) | 24.494.970 | ||
| Income tax rate in Portugal | 21% | 21% | ||
| Theorical Income tax | (121.236) | 5.143.944 | ||
| Increases / (Reductions) to the taxable amount: | ||||
| Difference between accounting and tax treatment of capital gains/(losses) |
(6.628.331) | (1.391.949) | (59.195.383) | (12.431.030) |
| Share of results of associated companies | (391.017) | (82.114) | (350.193) | (73.541) |
| Provisions and impairment losses not accepted for tax purposes |
(3.404) | (715) | 20.752.254 | 4.357.973 |
| Other permanent differences | (5.612.058) | (1.178.532) | (9.769.302) | (2.051.554) |
| Use of tax losses carried forward | (897.909) | (188.561) | (147.832) | (31.045) |
| Recognition of tax losses that have not originated deferred tax assets |
25.377.138 | 5.329.199 | 28.038.403 | 5.888.065 |
| Effect of different income tax rates in other countries | - | 15.692 | - | 16.033 |
| Effect of increases or decreases in deferred taxes from previous years |
- | 1.993.727 | - | (3.711.812) |
| Effect of increases or decreases in deferred taxes from current year |
- (703.369) |
- | 8.635.041 | |
| Municipality tax | - | 272.958 | - | 728.811 |
| Under / (over) taxation estimates | - | (2.231.362) | - | (833.267) |
| Autonomous taxes and tax benefits | - | 301.414 | - | 164.374 |
| Others | - | (110.351) | - | 83 |
| Taxation (2) | 11.267.102 | 1.904.800 | 3.822.917 | 5.802.076 |
As at 31 December 2017 and 2016, the reconciliation of consolidated net profit can be analysed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Aggregate net profit - continued operations | 55.800.698 | 61.872.177 |
| Aggregate net profit - discontinued operations | (2.702.520) | (990.019) |
| Harmonisation adjustments | 4.490.623 | (1.209.365) |
| Elimination of intragroup dividends | (156.478.402) | (456.894.269) |
| Share of gains/(losses) of associated undertakings | 391.017 | 62.953 |
| Elimination of intragroup capital gains/(losses) | 68.715.926 | - |
| Elimination of intragroup impairment | 7.321.776 | 444.423.881 |
| Adjustments of gains/(losses) of financial shareholdings sale | 17.059.486 | (28.572.463) |
| Others | (7) | - |
| Consolidated net profit for the year - continued operations | (2.482.116) | 20.519.657 |
| Consolidated net profit for the year - discontinued operations | (2.919.288) | (1.826.762) |
| Consolidated net profit for the year | (5.401.404) | 18.692.895 |
Balances and transactions during the periods ended 31 December 2017 and 2016 with related parties are detailed as follows:
| December 2017 | December 2016 | ||||
|---|---|---|---|---|---|
| Transactions | Sales and services rendered (Note 34) |
Purchases and services obtained (Note 37) |
Sales and services rendered (Note 34) |
Purchases and services obtained (Note 37) |
|
| Parent company | - | - | |||
| Associated companies | 26.535 | 20.319 | 56.347 | 28.494 | |
| Feneralt - Produção de Energia, ACE | 16.406 | 21.174 | 33.898 | (1.714) | |
| Lidergraf - Artes Gráficas, Lda | 10.129 | 42.033 | 22.449 | 30.208 | |
| Other partners and Group companies | 46.732.281 | 6.833.999 | 44.788.940 | 5.098.117 | |
| 8ª Avenida - Centro Comercial, SA | - | - | 18.476 | - | |
| Águas Furtadas - Soc. Agricola, SA | 2.506 | 1.378 | 2.442 | - | |
| Alpêssego - Sociedade Agrícola, SA | 6.658 | - | 4.250 | (327) | |
| Casa Agrícola de Ambrães, S.A. | 2.398 | - | - | - | |
| Aqualuz - Turismo e Lazer, Lda | 1.639.787 | 4.244 | - | - | |
| Arrábidashopping- Centro Comercial, S.A. | 2.302 | - | - | - | |
| Asprela - Sociedade Imobiliária, S.A. | 142.474 | - | - | - | |
| BB Food Service, SA | 353.181 | (6.020) | 670.222 | (12.495) | |
| BOM MOMENTO - Comércio Retalhista, SA | 296.486 | (34) | 10.850 | (7.129) | |
| Bright Brands SportsGoods, S.A. | 6.231 | - | - | - | |
| Bright Development Studio, S.A. | 1.738 | - | - | - | |
| Cascaishopping- Centro Comercial, S.A. | 701.572 | (5) | 680.007 | (884) | |
| Centro Colombo- Centro Comercial, S.A. | 877.684 | 1.164.653 | 1.139.096 | 231.646 | |
| Continente Hipermercados, S.A. | 6.218.922 | (33.967) | 1.209.406 | 4.432 | |
| Contimobe-Imobil.Castelo Paiva,SA | - | 4.830 | 361.226 | 4.417 | |
| Digitmarket-Sistemas de Informação,SA | 261 | 269.065 | 75 | 241.095 | |
| Discovery Sports, SA | 11.390 | - | 14.204 | (1.283) | |
| Efanor Investimentos, SGPS, S.A. | 244 | - | 46 | - | |
| Efanor Serviços de Apoio à Gestão, S.A. | 67.364 | - | 66.850 | - | |
| Sierra Spain, Shop. Centers Serv.,S.A.U. | - | - | 198 | - | |
| Estação Viana - Centro Comercial, S.A. | 16 | - | 140 | - | |
| Euroresinas-Indústrias Quimicas,SA | - | 7.340 | - | 17.756 | |
| Fashion Division, S.A. | 4.292 | - | 4.184 | - | |
| Guimarãeshopping- Centro Comercial, S.A. | 2.327 | - | - | - | |
| Iberosegur - Sociedade Ibérica de Mediação de Seguros, Lda | 1.187 | - | - | - | |
| Fundo de Invest. Imobiliário Imosede | 92.481 | 564.639 | 93.868 | 523.680 | |
| Imosistema-Sociedade Imobiliária,SA | 968 | - | 9.628 | (1.572) | |
| Fundo Invest. Imobiliário Imosonae Dois | 77.215 | - | - | - | |
| Infofield-Informática,SA | - | - | 2.132 | - | |
| Insco Insular de Hipermercados, S.A. | 1.169.751 | (2.092) | 488.584 | (11.189) | |
| LCC LeiriaShopping Centro Comercial SA | 13.242 | - | 1.242 | - | |
| Loureshopping-Centro Comercial, S.A. | - | - | 37.216 | - | |
| Madeirashopping- Centro Comercial, S.A. | - | - | 13.145 | - | |
| NOS Sistemas S.A. | 21.082 | 1.097.232 | - | - | |
| Modelo - Dist.de Mat. de Construção,S.A. | 61.605 | - | 93.855 | - | |
| Modelo Continente Hipermercados,SA | 24.469.926 | 1.025.173 | 30.657.260 | 534.598 | |
| Modelo Continente Hipermercados, Suc. | 1.023 | 10.800 | - | 9.600 | |
| MDS Affinity-Sociedade de Mediação Lda | - | - | 1.163 | - | |
| MDS Corretor de Seguros, SA | 373.594 | 157 | 373.644 | (9.289) | |
| MDS RE-Mediador de Resseguros, S.G.P.S., S.A. | - | - | 472 | - | |
| MDS Africa SGPS, S.A. | 1.806 | - | - | - | |
| MDS Auto - Mediação de Seguros, SA | 1.902 | - | 2.478 | - | |
| Herco Consultoria de Risco,SA | 11.068 | 2.687 | 11.262 | 3.597 | |
| MDS, SGPS, SA | 951 | - | 981 | - |
| 46.758.816 | 6.854.318 | 44.845.287 | 5.126.611 | |
|---|---|---|---|---|
| ZIPPY - Comércio e Distribuição, SA | 25.691 | - | 44.303 | (79) |
| Worten-Equipamento para o Lar,SA | 330.141 | 37 | 422.035 | 9.279 |
| We Do Consulting-SI,SA | 181 | 295.548 | - | 317.242 |
| Centro Vasco da Gama-Centro Comercial,SA | - | 4.878 | - | 5.854 |
| Tableros Tradema,S.L. | 1.702 | - | 8.593 | - |
| Textil do Marco,SA | 110.860 | - | 115.682 | - |
| Sonae Arauco, S.A. | 2.533 | - | 9.331 | - |
| Sport Zone-Comércio Art.Desporto,SA | 29.625 | 52.921 | 39.296 | 53.667 |
| Sysvalue Consultadoria, Int e Seg SI, S.A. | - | - | 538 | - |
| Sonae SGPS, SA | 14.633 | 50.000 | 13.928 | 50.000 |
| Sonaerp - Retail Properties, SA | 977.433 | 6.829 | 1.165.690 | 35.071 |
| Sonae MC - Modelo Continente, SGPS, SA | - | - | - | (713) |
| Sonaegest-Soc.Gest.Fundos Investimentos | 2.882 | 223.792 | 5.616 | 225.400 |
| Sonaecom - Serviços Partilhados, S.A | 98.451 | (149.148) | 93.603 | (131.729) |
| Sonae Investment Management-S.T.,SGPS,S.A. | 287 | - | - | - |
| Sonae.com,SGPS,SA | - | 11.280 | 1.287 | |
| Sonae Center Serviços II, SA | 125.272 | 526.999 | 127.789 | 519.035 |
| Sohi Meat Solut-Distr. Carnes | 125.220 | 53.862 | - | - |
| Socijofra-Sociedade Imobiliária,SA | - | - | 38.645 | - |
| Sierra Management Portugal-Gest. CC,S.A. | 11.110 | 770.293 | 46.392 | 1.927.998 |
| SIRS-Soc.Ind.Radiodifusão Sonora,SA | - | 25.257 | 2.423 | 19.218 |
| Sonae Industria de Revestimentos,SA | 411.012 | 331.612 | 404.227 | 390.923 |
| Sonae Arauco Portugal, S.A. | 74.369 | 8.749 | 59.420 | (213) |
| Sonae Indústria-SGPS,SA | 3.362 | - | 1.112 | - |
| Sonae Financial Services, S.A. | 1.874 | - | - | - |
| Sempre à Mão - Sociedade Imobiliária,SA | 20.218 | - | 262.640 | - |
| SONAESR - Serviços e logistica, S.A. | 27.212 | - | 40.064 | (6.396) |
| Saphety Level - Trusted Services S.A. | - | 150.356 | - | 149.074 |
| Público-Comunicação Social,SA | 90 | 8.240 | 345 | 2.734 |
| Prosa - Produtos e Serviços Agrícolas,S.A. | 52.857 | 2.765 | - | - |
| PHARMACONTINENTE - Saúde e Higiene, S.A. | 3.609 | 541 | 88.522 | 412 |
| Parklake Shopping, S.A. | 7.272.210 | (366) | - | - |
| Paracentro - Gest.de Galerias Com., S.A. | 46.009 | 4.600 | 138.371 | 3.400 |
| Norteshopping-Centro Comercial, S.A. | 30.500 | 345.477 | 5.615.113 | - |
| Movelpartes-Comp.para Ind.Mobiliária,SA | 1.209 | - | 297 | - |
| MODALLOOP - Vestuário e Calçado, SA | 380 | - | (5.829) | - |
| Modalfa-Comércio e Serviços,SA | 97.537 | (603) | 82.192 | - |
| Transactions | Interest income (Note 40) |
Interest expenses (Note 40) |
Interest income (Note 40) |
Interest expenses (Note 40) |
|---|---|---|---|---|
| Parent company | ||||
| Associated companies | 41.660 | - | 261.447 | - |
| Andar-Sociedade Imobiliária,SA | 41.660 | - | 57.432 | - |
| Norscut - Concessionária de Scut Interior Norte, SA | - | 204.015 | - | |
| Other partners and Group companies | - | 87.804 | - | 96.645 |
| 41.660 | 87.804 | 261.447 | 96.645 |
| December 2017 | December 2016 | ||||
|---|---|---|---|---|---|
| Balances | Accounts receivable (Notes 15 and 16) |
Accounts payable (Notes 28 and 29) |
Accounts receivable (Notes 15 and 16) |
Accounts payable (Notes 28 and 29) |
|
| Parent company | - | - | |||
| Associated companies | 34.294 | 17.105 | 112.744 | 3.074 | |
| Andar-Sociedade Imobiliária,SA | 16.054 | - | 28.347 | - | |
| Feneralt - Produção de Energia, ACE | 9.333 | - | 79.716 | - | |
| Lidergraf - Artes Gráficas, Lda | 8.907 | 17.105 | 4.681 | 3.074 | |
| Other partners and Group companies | 7.586.105 | 2.117.281 | 10.717.353 | 1.480.910 |
| Águas Furtadas - Soc. Agricola, SA | 257 | - | 299 | - |
|---|---|---|---|---|
| Algarveshopping- Centro Comercial, S.A. | 21.943 | - | 16.479 | - |
| Alpêssego - Sociedade Agrícola, SA | 2.866 | - | 292 | - |
| BB Food Service, SA | 101.974 | 1.783 | 80.579 | - |
| BOM MOMENTO - Comércio Retalhista, SA | 157.504 | - | 4.055 | - |
| Casa Agrícola de Ambrães, S.A. | 171 | - | - | - |
| Cascaishopping- Centro Comercial, S.A. | 163.696 | - | - | - |
| Centro Colombo- Centro Comercial, S.A. | 75.232 | 199.160 | 139.374 | 16.545 |
| Contimobe-Imobil.Castelo Paiva,SA | 404 | 993 | 77.223 | 1.500 |
| Continente Hipermercados, S.A. | 1.630.860 | 10.144 | 350.457 | 4.945 |
| Digitmarket-Sistemas de Informação,SA | 133.948 | 39.418 | 106.409 | 692 |
| Discovery Sports, SA | - | - | 2.010 | - |
| Efanor Serviços de Apoio à Gestão, S.A. | 2.709 | 5.512 | 6.923 | 5.451 |
| Sonaerp - Retail Properties, SA | 390.668 | 34.839 | 5.341 | 58.919 |
| Estação Viana - Centro Comercial, S.A. | - | - | 4.445 | - |
| Euroresinas-Indústrias Quimicas,SA | - | 10.160 | - | 12.926 |
| Fashion Division, S.A. | 1.364 | - | 1.364 | - |
| Fundo de Invest. Imobiliário Imosede | 13.502 | 6.410 | 43.665 | 44.556 |
| Guimarãeshopping- Centro Comercial, S.A. | 163 | - | 720 | - |
| Herco Consul.Riscos Corret.Seguros, Ltda | - | - | - | 1.071 |
| Imosistema-Sociedade Imobiliária,SA | - | - | 11.842 | - |
| Infofield-Informática,SA | 1.683 | - | 1.683 | - |
| Insco Insular de Hipermercados, S.A. | 523.525 | - | 108.945 | - |
| LCC LeiriaShopping Centro Comercial SA | 9.372 | - | 2.628 | - |
| Loureshopping-Centro Comercial, S.A. | 1.768 | - | 37.216 | - |
| Madeirashopping- Centro Comercial, S.A. | - | - | 42.432 | - |
| MDS Consulting, SA | - | 1.918 | - | - |
| MDS Corretor de Seguros, SA | 17.948 | 106.257 | 33.098 | 129.892 |
| Mds Knowledge Centre, Unipessoal, Lda | - | - | - | - |
| MDS RE-Mediador de Resseguros, S.G.P.S., S.A. | 838 | - | (530) | - |
| Modalfa-Comércio e Serviços,SA | 68.245 | - | 8.554 | - |
| MODALLOOP - Vestuário e Calçado, SA | 6.241 | 6.235 | - | 6.235 |
| Modelo - Dist.de Mat. de Construção,S.A. | 989 | - | 94.402 | - |
| Modelo Continente Hipermercados, Suc. | 160 | - | - | - |
| Modelo Continente Hipermercados,SA | 3.550.053 | 311.852 | 6.961.465 | 260.677 |
| Movelpartes-Comp.para Ind.Mobiliária,SA | 494 | - | - | - |
| Norteshopping-Centro Comercial, S.A. | 21.699 | 347.635 | - | 456.799 |
| Paracentro - Gest.de Galerias Com., S.A. | - | 4.000 | - | 1.700 |
| Parklake Shopping, S.A. | - | 117.207 | 1.924.623 | - |
| PHARMACONTINENTE - Saúde e Higiene, S.A. | 1.841 | - | 7.000 | - |
| Plaza Mayor Parque de Ocio,SA | - | 40.300 | - | 40.300 |
| Prosa - Produtos e Serviços Agrícolas,S.A. | 28.772 | 3.740 | - | - |
| Público-Comunicação Social,SA | - | 1.047 | - | 780 |
| Rio Sul - Centro Comercial, SA | 6.334 | - | 6.334 | - |
| Saphety Level - Trusted Services S.A. | - | 53.466 | - | 35.174 |
| SEKIWI, SGPS., S.A. | 273 | - | 80 | - |
| Sempre à Mão - Sociedade Imobiliária,SA | - | - | 38.209 | - |
| Somit Imobiliária,SA | - | - | 2.261 | - |
| Sierra Management Portugal-Gest. CC,S.A. | 5.357 | 29.276 | 87.257 | 91.435 |
| Sierra Spain, Shop. Centers Serv.,S.A.U. | - | - | 210 | - |
| SIRS-Soc.Ind.Radiodifusão Sonora,SA | - | 7.824 | 1.997 | 3.953 |
| Sohi Meat Solut-Distr. Carnes | 119.910 | 27.332 | - | - |
| Sonae Arauco Portugal, S.A. | 19.861 | 10.890 | 14.398 | (130) |
| Sonae Arauco, S.A. | 544 | - | 754 | - |
| Sonae Center Serviços II, SA | 52.498 | 183.618 | 9.808 | 77.314 |
| Sonae Industria de Revestimentos,SA | 185.960 | 83.380 | 137.810 | 106.546 |
| Sonae Indústria-SGPS,SA | 830 | - | 290 | - |
| Sonae SGPS, SA | 5.341 | 50.000 | 1.265 | 50.000 |
| Sonae.com,SGPS,SA | - | 4.059 | - | 250 |
| Sonaecom - Serviços Partilhados, S.A | 25.460 | - | 23.587 | 300 |
| Sonaegest-Soc.Gest.Fundos Investimentos | - | 16.849 | - | 16.657 |
| Sonaerp – Retail Properties, S.A. | - | - | 5.341 | 58.919 |
| SONAESR - Serviços e logistica, S.A. | 10.289 | - | 33.944 | - |
| Spinarq, S.A. | - | - | 13.232 | - |
| Sport Zone-Comércio Art.Desporto,SA | 2.178 | 14.337 | 1.083 | 8.158 |
| Tableros Tradema,S.L. | ||||
| 215 | - | 811 | - | |
| Textil do Marco,SA | 9.101 | 119 | 8.817 | 119 |
| We Do Consulting-SI,SA | 20.191 | 86.412 | - | 39.800 |
| Worten-Equipamento para o Lar,SA | 79.431 | 9.221 | 260.645 | 8.346 |
| 7.620.399 | 2.134.386 | 10.830.097 | 1.483.984 | |
|---|---|---|---|---|
| Balances | Loans obtained (Note 26) |
Loans granted (Note 13) |
Loans obtained (Note 26) |
Loans granted (Note 13) |
| Parent Company | - | - | - | -- |
| Associated companies | - | 872.739 | - | 839.697 |
| Andar-Sociedade Imobiliária,SA | - | 872.739 | - | 839.697 |
| Feneralt - Produção de Energia, ACE | - | - | - | - |
| Other partners and Group companies | 1.710.059 | - | 1.825.274 | - |
| Plaza Mayor Parque de Ocio, SA | 1.710.059 | - | 1.825.274 | - |
| 1.710.059 | 872.739 | 1.825.274 | 839.697 |
Remunerations attributed in 2017 to key management staff of main companies of the Sonae Capital Group (excluding members of the Board of Directors of Sonae Capital, SGPS, SA) amounted to 1,140,331 euro (1,193,592 euro in 2016), of which 690,763 euro (706,413 euro in 2016) are fixed remunerations and 449,568 euro (487,180 euro in 2016) are performance bonuses.
Earnings per share for the periods ended 31 December 2017 and 2016 were calculated taking into consideration the following amounts:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Net profit | ||
| Net profit taken into consideration to calculate basic earnings per share (Net profit for the period ) |
(6.513.485) | 17.594.199 |
| Effect of potential shares | - | - |
| Interest of convertible bonds (net of taxes) | - | - |
| Net profit taken into consideration to calculate diluted earnings per share |
(6.513.485) | 17.594.199 |
| Number of shares | ||
| Weighted average number of shares used to calculated basic earnings per share |
247.409.380 | 246.740.156 |
| Weighted average number of shares used to calculated diluted earnings per share |
247.409.380 | 246.740.156 |
| Earnings per share (basic and diluted) - Continued operations |
(0,014527) | 0,078710 |
| Earnings per share (basic and diluted) - Discontinued operations |
(0,011799) | (0,007404) |
| Earnings per share (basic and diluted) | (0,026327) | 0,071307 |
There are no convertible instruments included in Sonae Capital, SGPS, SA's shares, hence there is no dilutive effect in earnings.
As at 31 December 2017 and 2016, cash receipts and cash payments related to investments can be analysed as follows:
| 31 December 2017 | 31 December 2016 | |||
|---|---|---|---|---|
| Amount received |
Amount paid | Amount received |
Amount paid | |
| Acquisition of "Lusobrisa, SA." | - | 5.611.417 | - | - |
| Acquisition of "Ventos da Serra, SA." | - | 20.135.622 | - | - |
| Acquisition of "Adira, SA." | - | 10.220.186 | - | - |
| Acquisition of "Gasflow, SA." | - | 2.947.414 | - | - |
| Acquisition of "Siaf Energia, SA." | - | 1.790.843 | - | - |
| Sale of "Norscut, S.A." (Note 6) | - | - | 35.226.649 | - |
| Sale of "Operscut, S.A." (Note 6) | - | - | 1.726.000 | - |
| Adjustment price of "UPK - Gestão Facilitie Manutenção, SA" |
146.832 | - | - | - |
| Sale of units from "Fundo Inv. Imobiliario Imosonae Dois" |
- | - | 100.466 | - |
| Adjustment to the liquidation price of "Powercer SA." |
7.953 | - | - | - |
| Sale of "Spred SGPS SA" | 1 | - | - | - |
| Acquisition of "Suncoutim - Solar Energy, SA." | - | - | - | 3.084.994 |
| Acquisition of "Acrobatic, SA." | - | - | - | 5.000 |
| Adjustment to the selling price of "Box Lines Navegação" |
600.000 | - | 600.000 | - |
| Other | 57.683 | 46.347 | 31.042 | 98.163 |
| Cash and Cash equivalents of "Lusobrisa\Ven tos da Serra\ Gasflow\ Adira\ Guimadira e Siaf Energia SA" (Note 8) |
3 025 803 | - | 478.496 | - |
| Total Operations | 3.838.272 | 40.751.829 | 38.162.653 | 3.188.157 |
In 31 December 2017 and 2016, the following were identified as segments:
The contribution of the business segments to the income statement of the periods ended 31 December 2017 and 31 December 2016 can be detailed as follows:
| 31 December 2017 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Profit and Loss Account |
Resorts | Hotels | Fitness | Energy | Refrigeration and HVAC |
Industrial Engineering |
Other Assets |
Intersegment Adjustments |
Consolidated | |
| Turnover | 21.669.005 | 19.768.311 | 23.247.906 | 45.218.677 | 51.240.237 | 4.269.895 | 22.320.699 | (10.577.965) | 177.156.765 | |
| Other operational income |
3.428.389 | 579.158 | 685.539 | 1.390.374 | 128.969 | 145.939 | 1.280.807 | (1.043.744) | 6.595.431 | |
| Total operational income |
25.097.394 | 20.347.469 | 23.933.445 | 46.609.052 | 51.369.206 | 4.415.834 | 23.601.506 | (11.621.710) | 183.752.196 | |
| Operational cash-flow (EBITDA) |
3.381.199 | (605.280) | 1.960.122 | 14.192.424 | 962.821 | (590.526) | 780.870 | 444.886 | 20.526.516 |
| 31 December 2016 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Profit and Loss Account |
Resorts | Hotels | Fitness | Energy | Refrigeration and HVAC |
Industrial Engineering |
Other Assets |
Intersegment Adjustments |
Consolidated | |
| Turnover | 29.510.877 | 17.001.324 | 18.087.904 | 38.230.975 | 60.891.075 | - | 32.361.758 | (11.044.252) | 185.039.661 | |
| Other operational income |
38.653.460 | 603.897 | 343.411 | 1.205.013 | 1.180.231 | - | 757.210 | (1.395.697) | 41.347.525 | |
| Total operational income |
68.164.337 | 17.605.221 | 18.431.315 | 39.435.989 | 62.071.305 | - | 33.118.969 (12.439.950) | 226.387.186 | ||
| Operational cash-flow (EBITDA) |
17.207.785 | (2.301.167) | 1.868.483 | 8.466.806 | 2.895.600 | - | 3.207.537 | - | 31.345.045 |
The contribution of the business segments to the Balance sheets as at 31 December 2017 and 31 December 2016 can be detailed as follows:
| 31 December 2017 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Balance Sheet |
Resorts | Hotels | Fitness | Energy | Refrigeration and HVAC |
Industrial Engineering |
Other Assets |
Intersegment Adjustments |
Consolidated |
| Fixed Assets Tangible, Intangible and Goodwill |
108.537.442 | 12.618.277 | 10.476.681 | 67.475.147 | 9.763.348 | 17.078.211 | 121.792.174 | (25.110.414) | 322.630.866 |
| Investments | 49.655.358 | 10.849.159 | 25.662 | 172.389 | 15.484 | 1.912.507 | 301.598.621 (362.231.722) | 1.997.458 | |
| Other Assets |
52.803.428 | 5.694.754 | 2.287.983 | 12.812.445 | 49.527.629 | 16.903.442 | 488.073.988 (436.605.386) | 191.498.283 | |
| Total Assets | 210.996.228 | 29.162.190 | 12.790.326 | 80.459.981 | 59.306.461 | 35.894.160 | 911.464.783 (823.947.522) | 516.126.607 | |
| Total Liabilities |
183.193.486 | 25.962.972 | 9.029.069 | 72.862.309 | 21.196.764 | 12.362.419 | 332.882.297 (437.525.567) | 224.757.320 | |
| Technical investment |
1.889.402 | 954.495 | 3.232.316 | 4.666.123 | 102.031 | 96.682 | 1.792.791 | (10.539) | 12.723.301 |
| Gross Debt | 9.886.023 | - | 964.151 | 7.582.867 | 73.571 | 4.227.709 | 93.945.810 | - | 116.680.131 |
| Net Debt | 9.340.181 | (334.502) | 838.451 | 7.373.986 | (2.590.142) | 4.032.147 | 90.712.940 | - | 109.373.062 |
| 31 December 2016 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Balance Sheet |
Resorts | Hotels | Fitness | Energy | Refrigeration and HVAC |
Industrial Engineering |
Other Assets |
Intersegment Adjustments |
Consolidated |
| Fixed Assets Tangible, Intangible and Goodwill |
115.857.957 | 12.729.785 | 9.145.613 | 29.695.898 | 9.853.707 | - | 131.504.913 (24.546.482) | 284.241.391 | |
| Investments | 46.712.016 | 10.693.538 | 11.573 | 98.948 | 9.691 | - | 342.388.894 (398.200.905) | 1.713.755 | |
| Other Assets |
60.237.499 | 9.948.572 | 2.537.855 | 7.882.427 | 44.978.632 | - | 538.990.283 (450.152.835) 214.422.433 | ||
| Total Assets | 222.807.472 | 33.371.895 | 11.695.041 | 37.677.273 | 54.842.030 | - | 1.012.884.090 (872.900.222) | 500.377.579 | |
| Total Liabilities |
187.208.324 | 30.113.066 | 8.944.775 | 32.545.115 | 20.914.865 | - | 350.921.833 (450.628.130) | 180.019.848 | |
| Technical investment |
1.212.720 | 1.359.711 | 1.994.065 | 3.764.716 | 71.574 | - | 1.014.124 | (2.668) | 9.414.242 |
| Gross Debt | 11.715.949 | - | 158.972 | 9.658.175 | 515.200 | - | 76.687.376 | - | 98.735.673 |
| Net Debt | 10.844.588 | (102.001) | 83.404 | 8.830.431 | (110.543) | - | 46.442.585 | - | 65.988.465 |
Contribution of the main business segments to the cash-flow statement for the periods ended 31 December 2017 and 2016 can be detailed as follows:
| 31 December 2017 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Resorts | Hotels | Fitness | Energy | Refrigeration and HVAC |
Industrial Engineering |
Other Assets |
Consolidated | ||
| Operational Activities |
1.836.098 | 5.656.897 | 4.445.759 | 11.451.148 | 6.358.210 | (3.301.415) | 1.940.314 | 28.387.011 | |
| Investment Activities |
4.434.346 | (881.096) | (1.877.079) (29.815.432) | 34.124 (10.319.669) | 2.084.310 (36.340.496) | ||||
| Finantial Activities |
(1.942.886) | (565) | (41.341) | (4.452.337) | (8.028) | (773.238) | (10.256.101) (17.474.496) | ||
| Changes in Cash and Cash Equivalents |
(325.517) | 232.502 | 50.132 | (618.865) | 2.050.128 | 194.651 | (27.011.012) (25.427.981) |
| 31 December 2016 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Resorts | Hotels | Fitness | Energy | Refrigeration and HVAC |
Industrial Engineering |
Other Assets |
Consolidated | ||
| Operational Activities |
11.335.626 | 5.294.061 | 3.869.228 | 8.719.751 | (7.410.733) | - | 1.541.887 | 23.349.843 | |
| Investment Activities |
48.045.317 | (1.200.951) | (2.211.578) (5.580.202) | (14.742) | - | 43.261.644 | 82.237.080 | ||
| Finantial Activities |
(2.086.157) | (1.490) | (319.877) | 1.588.225 | (364.718) | - (107.544.424) (108.728.441) | |||
| Changes in Cash and Cash Equivalents |
57.294.786 | 4.091.620 | 1.337.772 | 4.727.776 | (7.790.188) | - (62.740.907) | (3.141.518) |
| 31 December 2017 | |
|---|---|
| Tangible assets | 10.872 |
| Intangible assets | 2.120 |
| Other non-current assets | 66.309 |
| Inventories | 25.000 |
| Trade account receivables | 592.294 |
| Other debtors | 42.829 |
| Income tax receivable | 1.448.837 |
| Other current assets | 2.418 |
| Cash and cash equivalents | 225.153 |
| Assets held for sale | 2.415.830 |
| Loans | 220.586 |
| Trade creditors | 602.842 |
| Income tax payable | 830.184 |
| Other creditors | (5.257) |
| Other current liabilities | 3.145.218 |
| Liabilities associated with assets held for sale | 4.793.573 |
Fair value was only considered for the purpose of evaluating the company's tangible fixed assets, intangible assets and inventories, which, despite being recorded at cost, were evaluated in order to test their impairment. The valuations of the Group's real estate assets were made by the company Cushman & Wakefield-Consultoria Imobiliária, Unipessoal, Lda. According to the "RICS Valuation january 2014 - Professional Standards" published by "The Royal Institution of Chartered Surveyors".
Regarding the fair value hierarchy used:
Level 1 - nothing to mention;
Level 2 - real estate valuations of tangible fixed assets and inventories (note 14), considered in the respective tables in column (VM). In fact, these properties have been valued at their market value, which is defined as the estimated amount for the transaction of an asset or liability at the valuation date between a willing buyer and seller without any relationship, after an appropriate period of trading, and in which the parties have acted consciously, prudently and without coercion. For the purpose of valuations at market value, market comparisons were used essentially.
Level 3 - real estate valuations of tangible fixed assets and inventories (note 14), considered in the respective tables in column (OM). It is defined as value opinion when the normal valuation parameters are not met and as such, the reported amount cannot be considered as the market value.
During the years ended 31 December 2017 and 2016, the following amounts have been paid to the company's external auditor:
| 31 December 2017 | 31 December 2016 | |||
|---|---|---|---|---|
| Audit and Statutory Audit 1 | 163.155 | 97,42% | 178.002 | 85,90% |
| Other Assurance 2 | 3.461 | 2,07% | - | 0,00% |
| Tax Consultancy 2 | - | 0,00% | - | 0,00% |
| Other Services 2 | 855 | 0,51% | 29.180 | 14,10% |
| Total | 167.471 | 100% | 207.182 | 100% |
The amount in "Other Services" is related to the provision of work services of reasonable assurance of reliability on the document of accountability regarding the Real Rights of housing and the Services of Tourist Use, to be prepared by the Administrative Entity of the Employee for the purpose of presentation to the holders of the Real Rights of Periodic Housing and to the joint owners.
The amount of "Other services" refers to Training provided to Sonae Capital employees in open enrolment for the entire market.
No significant events, requiring further disclosure, have occurred after 31 December 2017.
These consolidated financial statements were approved by the Board of Directors and authorized for issue on 2 March 2018.
The Board of Directors
Duarte Paulo Teixeira de Azevedo Chairman
Maria Cláudia Teixeira de Azevedo CEO
Álvaro Carmona e Costa Portela Member of the Board of Directors Ivone Pinho Teixeira CFO
Francisco de La Fuente Sánchez Member of the Board of Directors Miguel Jorge Moreira da Cruz Gil Mata Member of the Board of Directors
Paulo José Jubilado Soares de Pinho Member of the Board of Directors
| Amounts expressed in euro | Notes | 31/12/2017 | 31/12/2016 |
|---|---|---|---|
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Tangible assets | 27.721 | 28.660 | |
| Investments | 4 | 300.257.447 | 307.179.610 |
| Investments in associated companies and joint ventures | 4 | 1.125.301 | 1.125.301 |
| Other investments | 4 | 275.185 | 275.185 |
| Deferred tax assets | 7 | 16.764.699 | 14.314.699 |
| Other non-current debtors | 5 | 314.130.162 | 332.918.086 |
| Total non-current assets | 632.580.515 | 655.841.541 | |
| CURRENT ASSETS | |||
| Other debtors | 6 | 61.331.400 | 34.507.441 |
| Income tax receivable | 6 | 1.639.593 | 2.163.794 |
| Other current assets | 6 | 4.316.836 | 8.991.069 |
| Cash and cash equivalents | 8 | 171.848 | 27.861.181 |
| Total Current Assets | 67.459.677 | 73.523.485 | |
| TOTAL ASSETS | 700.040.192 | 729.365.026 |
| EQUITY AND LIABILITIES | |||||
|---|---|---|---|---|---|
| EQUITY | |||||
| Share capital 9 |
250.000.000 | 250.000.000 | |||
| Own Shares 9 |
(1.305.839) | (1.404.226) | |||
| Reserves 10 |
301.630.917 | 316.888.258 | |||
| Profit/(Loss) for the year | 5.589.342 | 8.738.316 | |||
| TOTAL EQUITY | 555.914.420 | 574.222.348 | |||
| LIABILITIES | |||||
| Non-current liabilities | |||||
| Bank Loans 11 |
14.000.000 | 19.579.665 | |||
| Bonds 11 |
57.245.810 | 57.107.711 | |||
| Other non-current liabilities 13 |
287.354 | 360.486 | |||
| Total Non-Current Liabilities | 71.533.164 | 77.047.862 | |||
| Current liabilities | |||||
| Bank Loans 13 |
22.700.000 | 101.559 | |||
| Trade creditors 11 |
137.599 | 15.990.000 | |||
| Other creditors 11 |
48.568.841 | 10.000.000 | |||
| Other taxes payable 12 |
50.069 | 124.763.497 | |||
| Other current liabilities 13 |
1.136.099 | 1.005.369 | |||
| Provisions | - | 151.860.425 | |||
| Total Current Liabilities | 72.592.608 | 239.217.777 | |||
| TOTAL LIABILITIES | 144.125.772 | 155.142.678 | |||
| TOTAL EQUITY AND LIABILITIES | 700.040.192 | 729.365.026 |
The accompanying notes are part of these financial statements.
| SONAE CAPITAL, SGPS, SA — INDIVIDUAL INCOME STATEMENTS | |
|---|---|
| BY NATURE FOR THE TWELVE MONTHS ENDED | |
| 31 DECEMBER 2017 AND 2016 |
| Amounts expressed in euro | Notas | 31/12/2017 | 31/12/2016 |
|---|---|---|---|
| Other operating income | 18 | 118.338 | 119.999 |
| External supplies and services | 14 | (1.417.268) | (1.019.054) |
| Staff costs | 16 | (1.760.666) | (1.600.084) |
| Depreciation and amortisation | (2.052) | (1.586) | |
| Other operating expenses | 18 | (43.634) | (68.472) |
| Operational profit/(loss) | (3.105.282) | (2.569.197) | |
| Financial Expenses | 17 | 9.920.503 | 18.597.345 |
| Financial Income | 17 | (3.823.607) | (6.052.239) |
| Net financial income / (expenses) | 6.096.896 | 12.545.106 | |
| Investment income | 17 | (1.204.460) | (7.776.980) |
| Profit/(Loss) before taxation | 1.787.154 | 2.198.929 | |
| Taxation | 19 | 3.802.188 | 6.539.387 |
| Profit/(Loss) for the year | 5.589.342 | 8.738.316 |
The accompanying notes are part of these financial statements.
| SONAE CAPITAL, SGPS, SA — INDIVIDUAL INCOME |
|---|
| STATEMENTS BY NATURE FOR THE 4TH QUARTERS |
| OF 2017 AND 2016 |
| Amounts expressed in euro | 4th Quarter 20171 | 4th Quarter 2016 |
|---|---|---|
| Other operating income | 33.006 | 34.966 |
| External supplies and services | (374.996) | (252.921) |
| Staff costs | (375.668) | (486.587) |
| Depreciation and amortisation | (499) | (470) |
| Provisions and impairment losses (Increases)/Decreases | - | - |
| Other operating expenses | (7.575) | 30.415 |
| Operational profit/(loss) | (725.732) | (674.597) |
| Financial Expenses | 2.174.024 | 4.517.936 |
| Financial Income | (949.429) | (1.006.138) |
| Net financial income / (expenses) | 1.224.595 | 3.511.798 |
| Profit/(Loss) in associated and jointly controlled companies measured using the equity method |
- | - |
| Investment income | (18.060.051) | (36.601.150) |
| Profit/(Loss) before taxation | (17.561.188) | (33.763.949) |
| Taxation | 2.530.234 | 6.175.335 |
| Profit/(Loss) for the year | (15.030.954) | (27.588.614) |
The accompanying notes are part of these financial statements.
| Amounts expressed in euro | 31/12/2017 | 31/12/2016 |
|---|---|---|
| Consolidated net profit/(loss) for the period | 5.589.342 | 8.738.316 |
| Items that may be reclassified subsequently to net profit / (loss): | ||
| Changes in the currency translation differences | ||
| Change in the fair value of assets available for sale | ||
| Change in the fair value of cash flow hedging derivatives | ||
| Tax related to other comprehensive income captions | ||
| Total comprehensive income for the period | 5.589.342 | 8.738.316 |
The accompanying notes are part of these financial statements.
| Amounts expressed in euro | ||||||||
|---|---|---|---|---|---|---|---|---|
| Share Capital (Note 9) |
Own Shares (Note 9) |
Legal Reserves (Note 9) |
Others Reserves (Note 9) |
Retained Earnings |
Subtotal | Net Profit/ (Loss) |
Total Equity |
|
| Balance as at 1 January 2016 |
250.000.000 | (1.426.791) | 9.463.225 309.676.446 | - | 319.139.671 | 12.198.782 | 579.911.662 | |
| Total comprehensive income for the period |
- | - | - | - | - | - | 8.738.316 | 8.738.316 |
| Appropriation of profit of 2015: |
||||||||
| Transfer to legal reserves and retained earnings |
- | - | 609.939 | - | 11.588.843 | 12.198.782 | (12.198.782) | - |
| Dividends paid | - | - | - | (3.080.184) (11.588.843) (14.669.027) | - | (14.669.027) | ||
| (Acquisition)/Sales of own shares |
- | 22.565 | - | 218.832 | - | 218.832 | - | 241.397 |
| Changes in the percentage of capital held in affiliated companies |
- | - | - | - | - | - | - | - |
| Other changes | - | - | - | - | - | - | - | - |
| Balance as at 31 December 2016 |
250.000.000 (1.404.226) | 10.073.164 306.815.094 | - 316.888.258 | 8.738.316 | 574.222.348 | |||
| Balance as at 1 January 2017 |
250.000.000 (1.404.226) | 10.073.164 306.815.094 | - 316.888.258 | 8.738.316 | 574.222.348 | |||
| Total comprehensive income for the period |
- | - | - | - | - | - | 5.589.342 | 5.589.342 |
| Appropriation of profit of 2016: |
||||||||
| Transfer to legal reserves and retained earnings |
- | - | 436.916 | 8.301.400 | 8.738.316 | (8.738.316) | - | |
| Dividends paid | - | - | - (16.220.257) | (8.301.400) | (24.521.657) | - | (24.521.657) | |
| (Acquisition)/Sales of own shares |
- | 98.387 | - | 525.999 | - | 525.999 | - | 624.386 |
| Changes in the percentage of capital held in affiliated companies |
- | - | - | - | - | - | - | - |
| Other changes | - | - | - | - | - | - | - | - |
| Balance as at 31 December 2017 |
250.000.000 | (1.305.839) | 10.073.164 291.557.752 | - 301.630.917 | 5.589.342 555.914.420 |
The accompanying notes are part of these financial statements.
| Amounts expressed in euro | Notes | 31/12/2017 | 31/12/2016 4th Quarter 2017 (non-audited) |
4th Quarter 2016 (non-audited) |
||||
|---|---|---|---|---|---|---|---|---|
| OPERATING ACTIVITIES | ||||||||
| Cash receipts from trade debtors | - | 9.512 | - | - | ||||
| Cash receipts from trade creditors | 1.371.988 | 1.044.697 | 403.128 | 249.189 | ||||
| Cash paid to employees | 1.236.535 | 942.598 | 247.235 | 252.656 | ||||
| Cash flow generated by operations | (2.608.523) | (1.977.783) | (650.363) | (501.845) | ||||
| Income taxes (paid) / received | (1.415.190) | 740.365 | 460.336 | 477.926 | ||||
| Other cash receipts and (payments) relating to operating activities |
122.359 | (257.554) | 1.594.691 | (381.603) | ||||
| Discontinued operations | - | - | - | - | ||||
| Net cash from operating activities (1) | (1.070.974) | (2.975.702) | 483.992 | (1.361.374) | ||||
| INVESTMENT ACTIVITIES | ||||||||
| Cash receipts arising from: | ||||||||
| Investments | 22 | 600.001 | 2.484 | - | - | |||
| Tangible assets | - | 5.000 | - | - | ||||
| Interest and similar income | 14.438.065 | 26.321.767 | 904.704 | 1.313.562 | ||||
| Loans granted | 6 | 15.474.868 | 61.586.657 | 9.386.631 | 61.586.657 | |||
| Dividends | 16 | 18.122.785 | 34.791.098 | - | - | |||
| Others | 1.951.839 | 2.745.546 | 898.086 | 1.967.613 | ||||
| Changes in consolidation perimeter (companies in) | - | - | - | |||||
| 50.587.558 | 125.452.552 | 11.189.421 | 64.867.832 | |||||
| Cash Payments arising from: | ||||||||
| Investments | 22 | 2.792.590 | 1.107.100 | 1.723.246 | 3.137 | |||
| Tangible assets | 1.113 | 1.706 | - | 456 | ||||
| Intangible assets | - | - | - | - | ||||
| Loans granted | 6 | 35.420.988 | 19.455.015 | 6.998.005 | 18.083.987 | |||
| Others | - | - | - | - | ||||
| 38.214.691 | 20.563.821 | 8.721.251 | 18.087.580 | |||||
| Discontinued operations | - | - | - | - | ||||
| Net cash used in investment activities (2) | 12.372.867 | 104.888.731 | 2.468.170 | 46.780.252 | ||||
| FINANCING ACTIVITIES | ||||||||
| Cash receipts arising from: | ||||||||
| Loans obtained | 11 | 16.700.000 | 93.850.000 | (32.750.000) | - | |||
| Sale of own shares | 98.387 | 144.043 | 98.387 | - | ||||
| Others | (98.387) | - | ||||||
| 16.798.387 | 93.994.043 | (32.750.000) | - | |||||
| Cash Payments arising from: | ||||||||
| Loans obtained | 11 | 27.653.700 | 177.598.565 | (30.964.828) | 58.949.650 | |||
| Interest and similar charges | 3.620.339 | 6.344.933 | 1.239.679 | 1.340.230 | ||||
| Reimbursement of capital and paid in capital | - | - | - | - | ||||
| Dividends | 24.515.574 | 14.665.371 | - | - | ||||
| Purchase of own shares | - | - | - | - | ||||
| Others | - | - | - | - | ||||
| 55.789.613 | 198.608.869 | (29.725.149) | 60.289.880 | |||||
| Discontinued operations | - | - | - | - | ||||
| Net cash used in financing activities (3) | (38.991.226) | (104.614.826) | (3.024.851) | (60.289.880) | ||||
| Net increase in cash and cash equivalents [4] = [1]+[2]+[3] |
(27.689.333) | (2.701.797) | 97.592 | (14.871.002) | ||||
| Effect of foreign exchange rate | 14 | - | - | - | - | |||
| Cash and cash equivalents at the beginning of the period |
27.861.181 | 30.562.977 | - | - | ||||
| Caixa e equivalentes cindidos | - | - | - | - | ||||
| Cash and cash equivalents at the end of the period | 14 | 171.848 | 27.861.181 | 97.592 | (14.871.002) |
The accompanying notes are part of these financial statements.
1 Prepared in accordance with IAS 34 - Interim Financial Reporting and unaudited
(AMOUNTS EXPRESSED IN EURO)
Sonae Capital, SGPS, SA ("the Company" or "Sonae Capital") whose registered office is at Lugar do Espido, Via Norte, Apartado 3053, 4471-907 Maia, Portugal, was set up on 14 December 2007 by public deed, following the demerger from Sonae, SGPS, SA of the whole of the shareholding in the company formerly named Sonae Capital, SGPS, SA, now named SC, SGPS, SA, in compliance with paragraph a) of article 118 of the Commercial Companies Code.
The Company's financial statements are presented as required by the Commercial Companies Code. According to Decree-Law 158/2009 of 13 July of 2009, the Company's financial statements have been prepared in accordance with International Financial Reporting Standards.
The main accounting policies adopted in preparing the accompanying individual financial statements are as follows:
The accompanying individual financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS" – previously named International Accounting Standards – "IAS"), issued by the International Accounting Standards Board ("IASB") and Interpretations issued by the "International Financial Reporting Interpretations Committee" ("IFRIC"), previously named "Standing Interpretations Committee" ("SIC"), beginning on 1 January 2017.
As at the date of the approval of these financial statements, the following standards have been endorsed by the European Union
| Accouting standards | Effective Date (started on or after) |
|---|---|
| IAS 7 – Cash flow statement | 1 January 2017 |
| IAS 12 – Income taxes | 1 January 2017 |
| Accouting standards | Effective Date (started on or after) |
|---|---|
| IFRS 4 – Applying IFRS 4 with IFRS 9) | 1 January 2018 |
| IFRS 9 – Financial instruments | 1 January 2018 |
| Amendments to IFRS 15 – Revenue from contracts with customers | 1 January 2018 |
| IFRS 16 – Leases | 1 January 2019 |
| Accouting standards | Effective Date (started on or after) |
|---|---|
| Annual improvements to IFRS 2014 - 2016 | 1 January 2017 / 1 January 2018 |
| IFRS 2 – Share-based payments | 1 January 2018 |
| IFRS 9 – Financial instruments | 1 January 2019 |
| IAS 28 – Investiments in Associates and Joint Ventures | 1 January 2019 |
| Annual improvements to IFRS 2015 – 2017 | 1 January 2019 |
| IFRS 17 – Insurance contacts | 1 January 2021 |
| IFRIC 22 – Foreign currency transactions and advance consideration | 1 January 2018 |
| IFRIC 23 – Uncertainty over income tax treatments | 1 January 2019 |
| IAS 40 – Investment propoerty | 1 January 2018 |
In assessing the impacts of adopting IFRS 9, the Company assessed the nature of the financial assets recorded in order to identify the measurement impacts. The Company's financial assets refer mainly to Loans and accounts receivable from Group companies. From the analysis carried out, it is clear that the category of customers should be segregated into 3 categories, which will correspond to the model "hold to collect", "hold to collect and sell" and "hold to sell. Similar analysis by client rating was already carried out by the Company, and the impacts were already recognized according to the risk of each individual customer.
Thus, this new segmentation will not result in additional relevant amounts of losses to be recorded, and changes in the timing of impairment records are also not expected to generate significant impacts.
With regard to IFRS 15 - Revenue from contracts with customers, the Company analysed its transactions that give rise to revenue registration and concluded that these are essentially financial results or investments, does not estimate any additional revenue.
From this analysis it is concluded that the impact of the adoption of IFRS 15 in the Company's financial statements is not significant.
Lease contracts are classified as (i) a finance lease if the risks and rewards incidental to ownership lie with the lessee and (ii) as an operating lease if the risks and rewards incidental to ownership do not lie with the lessee. Wheter a lease is classified as a finance or an operating lease depends on the substance of the transaction rather than the form of the contract."
Tangible assets acquired through finance lease contracts are recorded as assets and corresponding obligations as liabilities in the balance sheet. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability, at the lower of fair value and present value of minimum lease payments up to the end of the lease. Both the finance charge and the depreciation expense for depreciable assets are taken to the income statement in the period in which they are incurred.
Tangible fixed assets acquired through finance leases are depreciated by the lower of the two criteria - useful life of the asset or the period of the lease (when the Group has no option to purchase at the end of the lease), or estimated useful life (when the Group Intends to acquire the assets at the end of the contract).
Lease payments under operating lease contracts are recognised as an expense on a straight line basis over the lease term.
Where the Group acts as a lessor in operating leases, the value of assets leased is maintained in the Group's balance sheet and related rents (net of any incentives granted to the lessee) are taken to the profit and loss account on a straight line basis over the period of the lease.
Financial charges connected with loans contracted are generally recognised as a cost in accordance with the accruals principle, using for this purpose the effective interest rate method.
Investments are classified into the following categories:
Held to maturity investments are classified as non-current assets unless they mature within 12 months of the balance sheet date. Investments classified as held to maturity have defined maturities and the Company has the intention and ability to hold them until the maturity date. Investments measured at fair value through profit or loss are classified as current investments. Available-for-sale investments are classified as noncurrent assets.
Investments measured at fair value through profit and loss include investments held for negotiation, which the company acquires with a view to disposal within a reasonable period of time and are classified in the balance sheet as current investments.
The Company classifies as available for sale investments those, which are not classified as investments measured at fair value through profit and loss nor as investments held to maturity. These investments are classified as non current assets, unless there is an intention to dispose of them within 12 months of the balance sheet date.
All purchases and sales of investments are recognised on the trade date, independently of the settlement date.
Investments are initially measured at cost, which is the fair value of the consideration paid for them, including transaction costs, in the case of available for sale investments.
Available-for-sale investments and investments measured at fair value through profit or loss are subsequently carried at fair value, without any deduction for transaction costs which may be incurred on sale, by reference to their quoted market price at the balance sheet date. Investments in equity instruments that do not have a quoted market price and whose fair value cannot be reliably measured are stated at cost, less impairment losses.
Gains and losses arising from a change in fair value of available-for-sale investments are recognised directly in equity, under Fair value reserve, until the investment is sold or otherwise disposed of, or until its fair value is lower than its carrying amount and that corresponds to an impairment loss, at which time the cumulative gain or loss previously recognised in equity is transferred to net profit or loss for the period.
Gains and losses resulting from changes to the fair value of derivatives valued at fair value are shown in the financial statements in the caption net financial charges/ income.
Held to maturity investments are carried at amortised cost using the effective interest rate, net of capital reimbursements and interest income received.
In accordance with IAS 27, investments in affiliated and associated undertakings are stated at acquisition cost, less impairment losses.
Loans and accounts receivable are recorded at amortized cost using the effective interest method and deducted from possible impairment losses.
Financial income is calculated at the effective interest rate, except for very short-term receivables of which the amounts to be recognized would be immaterial.
These financial investments arise when the Company delivers money or supplies goods or services directly to a debtor with no intention to negotiate the debt.
Loans and accounts receivable are classified as current assets, except when maturity is greater than 12 months from the balance sheet date, which are classified as noncurrent.
Financial liabilities and equity instruments are classified and accounted for based on their contractual substance, independently from the legal form they assume.
Loans are recorded as liabilities at their nominal value, net of up-front fees and commissions related to the issuance of those instruments. Financial expenses are calculated based on the effective interest rate and are recorded in the income statement on an accruals basis, in accordance with the accounting policy defined in Note 2.5. The portion of the effective interest charge relating to up-front fees and commissions, if not paid in the period, is added to the book value of the loan.
Trade accounts payable are stated at their nominal value.
The Company uses derivatives in the management of its financial risks only to hedge such risks, and/or to optimize funding costs, in accordance with the interest rate risk policy stated in Note 3.1.
The derivatives used by the Company defined as cash-flow hedge instruments relate mainly to interest rate hedge instruments on loans contracted. The indices, calculation methods, dates for re-fixing interest rates and the reimbursement plans for the interest rate hedge instruments are all identical to the conditions established for the underlying contracted loans, and thus qualify as perfect hedges. Inefficiencies that may exist are shown in the caption Net financial income/expenses in the income statement.
The Company's criteria for classifying a derivative instrument as a cash-flow hedge instrument include:
Cash-flow hedge instruments used by the Company to hedge the exposure to changes in interest rates of its loans are initially accounted for at cost, if any, and subsequently adjusted to their corresponding fair value. Changes in fair value of these cash flow hedge instruments are recorded in equity, under the caption Hedging reserves, and then recognised in the income statement over the same period in which the hedged instrument affects profit or loss.
Hedge accounting of derivative instruments is discontinued when the instrument matures or is sold. Whenever a derivative instrument can no longer be qualified as a hedging instrument, the fair value differences recorded in equity, under the caption Hedging reserves, are transferred to profit or loss of the period or to the carrying amount of the asset that resulted from the hedged forecast transaction. Subsequent changes in fair value are recorded in the income statement.
In cases in which derivative instruments, in spite of having been negotiated in accordance with the interest rate risk policy stated in Note 3.1, in relation to which the Company did not apply hedge accounting, are initially recorded at cost, if any, and subsequently measured at fair value. Changes in value resulting from the measurement at fair value, calculated using especially designed software tools, are included in Net financial charges in the income statement.
When embedded derivatives exist, they are accounted for as separate derivatives when the risks and characteristics are not closely related to economic risks and characteristics of the host contract, and this is not stated at fair value, and unrealized gains or losses arising from these derivatives recorded in the income statement.
In specific situations, the Company may use interest rate derivatives with the goal of obtaining fair value hedging. In these situations, derivatives are booked at their fair value in the profit and loss account. In situations in which the derivative involved is not measured at fair value (in particular borrowings measured at amortised cost), the effective share of hedging will be adjusted to the accounting value of the derivative hedged through the profit and loss account.
Cash and cash equivalents include cash on hand, cash at banks, term deposits and other treasury applications which mature in less than three months and are subject to insignificant risk of change in value.
In the cash-flow statement, cash and cash equivalents also include bank overdrafts, which are included in the balance sheet caption current bank loans
Income and expenses are recorded in the year to which they relate, independently of the date of the corresponding payment or receipt. Income and expenses for which their real amount is not known are estimated.
Other current assets and Other current liabilities include income and expenses of the reporting year which will only be invoiced in the future. Those captions also include receipts and payments that have already occurred but will only correspond to income or expenses of future years, when they will be recognised in the income statement.
Events after the balance sheet date that provide additional information about conditions that existed at the balance sheet date (adjusting events), are reflected in the financial statements. Events after the balance sheet date that are non-adjusting events are disclosed in the notes when material.
The most significant accounting estimates reflected in the financial statements are as follows:
Estimates were based on the best information available at the date of the preparation of the financial statements and on the best knowledge and experience of past and/ or current events. These estimates may, however, be affected by subsequent events which are not foreseeable at the present day. Changes to these estimates, which take place after the date of the financial statements, will be recognized prospectively in the income statement, in accordance with IAS 8.
The main estimates and assumptions concerning future events included in the financial statements are described in the corresponding notes to the accounts, when applicable.
Provisions are recognised when, and only when, the Group has an obligation (legal or constructive) resulting from a past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of that obligation. Provisions are reviewed and adjusted at the balance sheet date to reflect the best estimate as of that date.
Provisions for future operating losses are not recognized.
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.
The subjectivity inherent in determining the probability and amount of domestic resources required to pay the obligations may lead to significant adjustments, either by varying the assumptions used or by the future recognition of provisions previously disclosed as contingent liabilities.
Current income tax is determined in accordance with tax rules in force in Portugal, considering the profit for the period.
The Company is subject to a special fiscal regime applicable to Group companies, according article 69 and next of the IRC code (RETGS), being part of a fiscal perimeter whose mother company is Sonae Capital SGPS, SA. Companies being part of the perimeter of the Group of companies subject to this regime calculate and account for Tax Income as on a stand-alone basis. The tax savings attributed to the RETGS is accounted for at the mother company.
Deferred taxes are calculated based on the liability method of the balance sheet and reflect the temporary differences between the amount of assets and liabilities for accounting purposes and the respective amounts for tax purposes. Deferred tax assets and liabilities are calculated and annually assessed at the current or announced tax rates to be effective at the expected date of reversal of the temporary differences.
Deferred tax liabilities are recognized on all taxable temporary differences, except those related to: i) the initial recognition of goodwill; or ii) the initial recognition of assets and liabilities that do not result from a concentration of activities and that at the date of the transaction do not affect the accounting or fiscal result. However, as regards temporary taxable differences related to investments in subsidiaries, these are not recognized to the extent that: (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.
At the end of each fiscal year, these deferred taxes are reviewed and reduced whenever their future use is no longer probable.
Deferred taxes are recorded in the applicable situations according to the balance sheet method, and deferred tax assets are only recognized in the situations in which their recovery is probable.
Subsidiaries are all entities (including structured entities) over which Sonae Capital has control. Sonae Capital controls an entity when it is exposed to or has rights over the variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary.
Joint Ventures correspond to joint agreements through which ventures exercising joint control over the agreement for the purpose of sharing the return obtained from the Joint Venture activity.
The Associates are entities in which Sonae Capital owns between 20% and 50% of the voting rights, or on which Sonae Capital has significant influence.
The main objective of financial risk management is to support the Company in the pursuit of long-term strategy of Sonae Capital, reducing unwanted financial risk, volatility associated and mitigate any negative impacts on the Group's results of such risks. The attitude of Sonae Capital in relation to financial risk management is conservative and prudent, and when used derivative instruments to hedge certain risks related to operating activities of Sonae Capital, does not contract, by policy, derivatives or other financial instruments for speculative purposes or they are not related to the Company's operations.
As a result of maintaining its debt in the balance sheet at variable rates, and the resulting cash flows from interest payments, the Company is exposed to a Euro interest rate risk.
In view of the fact that:
In view of the above, the Company policy concerning this issue defines a case by case review of each potential transaction, such that any contract for derivatives must follow the following principles:
Interest rate sensitivity is based on the following assumptions:
Given the above mentioned assumptions, if interest rates of financial instruments denominated in euro had been 0.75 percentage points higher/lower, the net profit before tax of the Company as at 31 December 2017 would have been higher/lower by 2,039,424 euro (as at 31 December 2016 they would have been higher/lower by 2,408,506 euro).
Sonae Capital is not exposed to an exchange risk.
The Company is exposed to risks arising from the value of investments made in financial shareholdings. However, these investments are in general made with strategic objectives in mind and not for current trading.
Credit risk is defined as the probability of a financial loss resulting from failure to meet contractual payment obligations of a counterparty. Sonae is a holding company and has no commercial activity in addition to the normal activities of a portfolio manager participation and providing services to its subsidiaries. As such a regular basis, the Company is only exposed to credit risk arising from financial instruments (investments and deposits in banks and other financial institutions or resulting from derivative financial instruments entered into in the normal course of its hedging activities) or loans to subsidiaries.
Credit risks at Sonae Capital arises mainly from (i) its relationships with financial institutions in the course of its day to day business activity, and (ii) the risk of non compliance by business counterparts in portfolio transactions.
deposits and other investments at 31 December 2017 can be detailed as follows:
The ratings (S & P rating) of the main institutions of credit where Sonae Capital had
| Rating 2017 | Deposits % | Rating 2016 | Deposits % |
|---|---|---|---|
| B | 100,00% | B+ | 100,00% |
In compliance with the established policy, Sonae Capital only constitutes deposits and other short-term financial investments and with prestigious financial institutions and national and / or international recognition, based on the respective ratings, being that the institutions of banking relationship of the Group with a creditor position equal to or greater than the intended application.
Sonae Capital has a regular need for external funds to finance its current operations and its expansion plans holding a diversified loan portfolio, which consists mainly of long-term bonds, but also includes a variety of short-term financing transactions, in the form of commercial paper and credit lines.
The objective of liquidity risk management is to ensure at any given moment that the Company has the financial capability under favourable market conditions to: (i) comply with its payment obligations when these fall due and (ii) ensure in a timely manner the appropriate financing for the development of its businesses and strategy.
To that end, the Company aims at maintaining a flexible financial structure, so that the process of managing liquidity within the Company includes the following key aspects:
i. Financial planning based on cash flow forecasts and for different time periods (weekly, monthly, annual and multi year);
Sonae Capital maintains a liquidity reserve in the form of credit lines with its relationship banks, in order to ensure the ability to meet its commitments without having to refinance in unfavourable conditions. Additionally at the end of the year Sonae Capital had a liquidity reserve consisting of cash and cash equivalent.
Sonae Capital believes that it has access to all the necessary financial resources and expects thus meet its short-term commitments, whether through release of funds generated by the business, whether using their financial applications, or if necessary by the existing credit lines or contracting new financing.
Although the Working Capital Fund is negative, liquidity risk is low since the main receivables payable are with group companies, so the payment obligation will be adequate to the availability of Sonae Capital.
As at 31 December 2017 and 31 December 2016 Investments are detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Investments in affiliated and associated undertakings | 349.194.729 | 361.971.915 |
| Investments in other companies | ||
| Sonae RE - (0,04%) | 1.200 | 1.200 |
| Fundo Invest. Imob. Imosonae Dois - (0,001%) | - | - |
| Matadouro Alto Alentejo, SA - (0,89%) | 1 | 1 |
| NET Novas Tecnologias, SA - (0,98%) | 23.034 | 23.034 |
| Fundo F HITEC - (6,48%) | 250.950 | 250.950 |
| 349.469.914 | 362.247.100 | |
| Impairment | (47.811.981) | (53.667.004) |
| 301.657.933 | 308.580.096 |
As at 31 December 2017 and 31 December 2016, the detail of Investments in Affiliated and Associated Companies is as shown in the table below:
| 31.12.2017 | ||||
|---|---|---|---|---|
| Company | % Held | Book Value | Equity | Profit/ (Loss) for the period |
| CAPWATT, S.G.P.S., S.A. | 100,00% | 2.725.000 | 5.132.247 | 2.139.631 |
| Fundo Esp de Invest. Imob Fechado WTC | 59,87% | 42.271.519 | 72.210.814 | 4.081.698 |
| Troiaresort, SGPS, S.A. | 100,00% | 167.132.793 | 78.750.172 | (793.608) |
| Interlog - SGPS, S.A. | 98,94% | 21.658.210 | 21.858.053 | 5.065 |
| Lidergraf - Artes Gráficas, SA. | 24,50% | 1.125.301 | 8.198.240 | 1.296.983 |
| SC Assets S.G.P.S., SA | 100,00% | 25.577.659 | 13.507.379 | (314.576) |
| SC Hospitality, S.G.P.S., S.A. | 100,00% | 5.857.175 | 6.272.267 | (169.017) |
| SC Finance B.V. | 100,00% | 263.698 | (4.814.085) | 6.022.698 |
| SC-Industrials, S.G.P.S., S.A. | 100,00% | 34.575.100 | 24.479.800 | 23.279.800 |
| Race, SGPS, S.A. | 70,00% | 32.492.436 | 40.903.083 | 252.350 |
| Solinca - Health & Fitness, S.A. | 100,00% | 15.515.838 | 1.075.719 | (144.724) |
| Spred, S.G.P.S., S.A. | 100,00% | - | - | - |
| Impairment Losses |
| SC Assets S.G.P.S., SA | 25.577.659 |
|---|---|
| Interlog - SGPS,S.A. | 36.864 |
| Troiaresort, SGPS, S.A. | 11.140.826 |
| SC Finance BV | 263.698 |
| SC, Industrials, SGPS, S.A. | 10.792.934 |
| Spred, S.G.P.S., S.A. | - |
| 31.12.2016 | ||||
|---|---|---|---|---|
| Company | % Held | Book Value | Equity | Profit/ (Loss) for the period |
| CAPWATT, S.G.P.S., S.A. | 100,00% | 2.725.000 | 8.022.003 | 5.294.092 |
| Fundo Esp de Invest. Imob Fechado WTC | 59,87% | 42.271.519 | 71.389.116 | 3.137.593 |
| Troiaresort, SGPS, S.A. | 100,00% | 167.132.793 | 79.543.780 | (2.001.159) |
| Interlog - SGPS, S.A. | 98,94% | 21.658.210 | 21.852.988 | 30.161 |
| Lidergraf - Artes Gráficas, SA. | 24,50% | 1.125.301 | 7.558.348 | 1.233.982 |
| SC Assets S.G.P.S., SA | 100,00% | 25.577.659 | 13.821.956 | (3.476.518) |
| SC Hospitality, S.G.P.S., S.A. | 100,00% | 5.857.175 | 6.746.620 | 305.336 |
| SC Finance B.V. | 100,00% | 263.698 | (10.836.784) | (964.510) |
| SC-Industrials, S.G.P.S., S.A. | 100,00% | 34.575.100 | 13.873.988 | 12.673.988 |
| Race, SGPS, S.A. | 70,00% | 32.492.436 | 40.650.733 | (239.599) |
| Solinca - Health & Fitness, S.A. | 100,00% | 14.446.494 | 151.101 | (1.069.344) |
| Spred, S.G.P.S., S.A. | 100,00% | 13.846.529 | 227.094 | 84.120 |
| Impairment Losses |
| SC Assets S.G.P.S., SA | 21.565.892 |
|---|---|
| Interlog - SGPS,S.A. | 36.864 |
| Troiaresort, SGPS, S.A. | 19.344.286 |
| SC Finance BV | - |
| SC, Industrials, SGPS, S.A. | - |
| Spred, S.G.P.S., S.A. | 12.719.962 |
Investments carried at cost correspond to those in unlisted companies and for which a fair value cannot be reliably estimated.
Impairment tests on financial investments were performed, based on external valuations of the real estate of group companies or DCF methodology, to assess the fair value of such investments.
These assessments use discount rates that correspond to the weighted average rates of the cost of capital (WACC), calculated on the basis of the business type in which they operate and s target capital structures, and are in the range [7.1% - 10,1%]. 5 years projections were considered and growth rates in perpetuity were considered void.
As a result of this impairment tests as at 31 December 2017 and 31 December 2016, the detail of Impairments on Investments in Affiliated and Associated Companies is as shown in the table below:
| 31 December 2017 | 31 December 2016 | Variation (Note 17) | |
|---|---|---|---|
| Spred, SGPS, SA | - | (12.719.962) | 12.719.962 |
| Interlog - SGPS,S.A. | (36.864) | (36.864) | - |
| Troiaresort, SGPS, S.A. | (11.140.826) | (19.344.286) | 8.203.460 |
| SC Assets, SGPS, SA | (25.577.659) | (21.565.892) | (4.011.767) |
| SC Finance BV | (263.698) | - | (263.698) |
| SC, Industrials, SGPS, S.A. | (10.792.934) | - | (10.792.934) |
| (47.811.981) | (53.667.004) | 5.855.023 |
a) formerly designated Praedium SGPS, S.A.
The variation in Spred SGPS, SA is related to the disposal of the company.
As at 31 December 2017 and 2016, other non-current assets are detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Loans granted to group companies: | (Note 21) | (Note 21) |
| SC Assets, SGPS, SA | 174.450.597 | 177.691.228 |
| Troiaresort, S.G.P.S., SA | 138.805.637 | 135.742.637 |
| SC Finance BV | 5.885.000 | 5.885.000 |
| Solinca - Health & Fitness, SA | - | 2.940.222 |
| SC Hospitality SGPS SA | 6.155.000 | 9.971.000 |
| SC Engª. Promoção Imobiliária, SA | 661.000 | 688.000 |
| 325.957.234 | 332.918.086 | |
| Impairment Losses | ||
| SC Assets, SGPS, SA (Note 17) | (11.640.970) | - |
| SC Finance BV (Note 17) | (462.649) | - |
| (12.103.619) | - | |
| Income tax withheld | 276.547 | - |
| 314.130.162 | 332.918.086 |
As at 31 December 2017, loans granted matured as follows:
| 2019 | 2020 | 2021 | 2022 | Total |
|---|---|---|---|---|
| 102.521.234 | 205.724.000 | 10.357.000 | 7.355.000 | 325.957.234 |
These assets were not due or impaired as at 31 December 2017. The fair value of loans granted to Group companies is basically the same as their book value.
Loans to group companies interest at market rates and are repayable within a period exceeding one year. The interest rate as at 31 December 2016 stood, in average, at approximately de 2.349% (2016: 4.677%).
As at 31 December 2017 and 2016, other current assets and Income tax are made up as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Other Debtors - Group | 1.447.535 | 1.417.349 |
| Loans granted | 58.707.800 | 33.034.900 |
| Other Debtors | 1.176.066 | 55.192 |
| 61.331.400 | 34.507.441 | |
| Accrued income | 4.094.304 | 8.608.007 |
| Deferred costs | 222.532 | 383.062 |
| 4.316.836 | 8.991.069 | |
| Income tax withheld | 1.639.593 | 2.163.794 |
| 67.287.829 | 45.662.304 |
The balance registered at Shareholding, other Operations is related to the values transferred from subsidiaries under the IRC regime (RETGS).
As at 31 December 2017 and 2016, the item Loans Granted is related to financial operations with the following subsidiaries:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Loans granted | (Note 21) | (Note 21) |
| SC Assets, SGPS, SA | 73.000 | 59.000 |
| SC Hospitality, SGPS, SA | 454.000 | - |
| CAPWATT, SGPS, S.A. | 41.175.000 | 13.225.200 |
| Inparvi SGPS, SA | 69.000 | 68.000 |
| SC, SGPS, S.A. | 14.269.500 | 13.943.600 |
| Solinca - Health & Fitness, SA | 1.186.300 | 703.400 |
| Spred SGPS SA | - | 2.523.500 |
| Troiaresort, S.G.P.S., SA | 1.481.000 | 2.512.200 |
| 58.707.800 | 33.034.900 |
Loans to group companies interest at market rates and are repayable within a period inferior to one year. The interest rate as at 31 December 2017 stood, in average, at approximately de 1.360% (2016: 3.130%).
The item Other Debtors includes as at 31 December 2017 , includes the amount of 1,173,358 euros related to the Via Maritima credit acquired from the subsidiary Spred SGPS.
The amount recorded in the accrued income includes 3.980.318 euro relating to interest on loans granted to subsidiaries as well as 113.986 euro relating to commissions of guarantees given to subsidiaries (Note 21).
Deferred costs include 183.199 euro relating to bank charges, which are deferred over the loan period.
Under current legislation, tax returns are subject to review and correction by the tax authorities for a period of four years (five years for Social Security), except if there have been tax losses or tax benefits, or ongoing tax inspections or claims. In these cases, and depending on the circumstances, the time limits are extended or suspended. In this way the Company tax return, from the years 2014 to 2017, could still be subject to review. However, in the opinion of the Company's Board of Directors, it is not expected that any correction relating to the said financial years will be significant for the financial statements as at 31 December 2017.
As mentioned in 2.9 note the Company is subject to the special regime for the taxation of groups of companies (RETGS) provided for in Article 69 and following of the IRC Code, integrating the taxation group, which is the mother company.
In the fiscal year 2017, the Company is subject to taxation on Corporate Income Tax at the normal rate of 21%, plus municipal taxes at a maximum rate of 1.5%.
In addition, on the part of the taxable profit of more than 1,500,000 euros subject to and not exempt from Corporate Income Tax, the following state levy fees are levied: 3% over 1,500,000 euros and less than 7,500,000 euros; 5% on the upper part to 7,500,000 euros and up to 35,000,000 euros; and 7% that is levied on the part of the taxable income that exceeds 35,000,000 euros.
Under the terms of Article 88 of the Portuguese Income Tax Code, the company is also subject to autonomous taxation on a set of charges at the rates provided for in the mentioned article.
The Corporate income tax rate in force for 2017 is 21%.
As at 31 December 2017 and 2016, the item Income tax is made up as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Income tax withheld | 849.047 | 1.325.486 |
| Income tax (advanced payment) | 760.611 | 1.374.287 |
| Income tax | 29.935 | (535.979) |
| 1.639.593 | 2.163.794 |
Deferred tax assets and liabilities as at 31 December 2017 and 2016 can be detailed as follows, split between the different types of temporary differences:
| Deferred taxes Assets | Deferred taxes Liabilities | |||
|---|---|---|---|---|
| 31 December 2017 |
31 December 2016 |
30 December 2017 |
31 December 2016 |
|
| Tax losses carried forward | 16.764.699 | 14.314.699 | - | - |
In accordance with the tax statements presented by companies that recorded deferred tax assets arising from tax losses carried forward, as at 31 December 2017 and 2016, tax losses carried forward can be summarized as follows:
| 31 December 2017 | 31 December 2016 | |||||
|---|---|---|---|---|---|---|
| Tax losses |
Deferred tax assets |
To be used until |
Tax losses |
Deferred tax assets |
To be used until |
|
| Generated in 2013 | 61.175 | 12.847 | 2018 | 61.175 | 12.847 | 2018 |
| Generated in 2014 | 13.536.168 | 2.842.595 | 2026 | 13.536.168 | 2.842.595 | 2026 |
| Generated in 2015 | 45.035.288 | 9.457.411 | 2027 | 47.663.128 | 10.009.257 | 2027 |
| Generated in 2016 | 12.025.566 | 2.525.369 | 2028 | 6.904.762 | 1.450.000 | 2028 |
| Generated in 2017 | 9.173.702 | 1.926.477 | 2022 | - | - | |
| 79.831.899 | 16.764.699 | 68.165.233 | 14.314.699 |
The constitution of deferred tax assets was based on the analysis of the relevance of its recognition, notably as regards the possibility of their recovered, given the prospects for medium and long term of the company.
The deferred tax assets recognized resulting from fiscal losses are recorded to the extent that it is probable that taxable profit will occur in the future.
The valuation of deferred tax assets is based on the business plans of the Group companies, periodically reviewed and updated.
Since fiscal year 2014, most of the Group's subsidiaries, based in Portugal, are part of the perimeter of the taxed Corporate Group in accordance with the Special Taxation Regime for Company Groups (RETGS), whose parent company is the Sonae Capital, SGPS, SA. Gains generated by the application of this tax regime are allocated to Sonae Capital SGPS.
The analysis carried out on 31 December 2017, resulted that there is reasonable expectation of recovery of deferred tax assets recorded before their date of expiry.
As at 31 December 2017 and 2016, cash and cash equivalents can be detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Cash | - | - |
| Bank deposits | 171.848 | 27.861.181 |
| Cash and cash equivalents in the balance sheet | 171.848 | 27.861.181 |
| Bank overdrafts | - | - |
| Cash and cash equivalents in the cash flow statement |
171.848 | 27.861.181 |
The share capital of Sonae Capital SGPS, SA both in December 2017 and 2016 is represented by 250,000,000 ordinary shares, which do not have the right to a fixed remuneration, with a nominal value of 1 euro each.
As at 31 December 2017, Sonae Capital SGPS, SA holds 4,783,433 own shares representing 1.913% of the share capital (5,516,226 shares at 31 December 2016), recorded by 1,305,839 euros (1,404,226 euros at 31 December 2016) (Note 10).
As at 31 December 2017, and 31 December 2016 this caption can be detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Legal reserves | 10.510.080 | 10.073.164 |
| Free reserves | 157.176.745 | 172.772.616 |
| Demerger reserve | 132.638.253 | 132.638.253 |
| Own shares reserve | 1.305.839 | 1.404.226 |
| 301.630.917 | 316.888.258 |
Free Reserves: These reserves result from the transfer of the positive results obtained in retained exercises and can be distributed to shareholders provided they are not required to cover losses.
The overall value of the demerger reserve (Note 1), representing the difference between the book value of the stake in SC, SGPS, SA (382,638,252 euros) which was highlighted Sonae, SGPS, SA for the Company and the amount of capital social Society (250,000,000 euros) which is comparable to the legal Reserve, according to the Companies Code, may not be distributed to the shareholders except in the event of liquidation of the Company, but may be used to absorb accumulated losses, after other reserves are exhausted, or can be incorporated into capital.
Legal Reserve: Under the law, at least 5% of annual net profit is positive, should be allocated to the legal reserve until it represents 20% of the share capital. This reserve is not distributable except in the event of liquidation of the company, but can be used to absorb losses after the other reserves, or increase capital.
Reserve own shares: This reserve, established in accordance with article 342 of the CSC, is the same amount of the own shares value held by the company. This reserve is unavailable while the own shares are in possession of the company.
As at 31 December 2017 and 31 December 2016 this caption included the following loans:
| 31 December 2017 | 31 December 2016 | |||
|---|---|---|---|---|
| Current | Non Current | Current | Non Current | |
| Bank loans | ||||
| Sonae Capital SGPS -commercial paper a) | 4.500.000 | - | - | - |
| Sonae Capital SGPS - commercial paperl b) | - | 4.000.000 | - | - |
| Sonae Capital SGPS - commercial paper c) | 3.200.000 | - | - | - |
| Sonae Capital SGPS - commercial paper d) | 10.000.000 | - | - | - |
| Sonae Capital SGPS - commercial paper e) | - | 10.000.000 | - | - |
| Sonae Capital SGPS - commercial paper f) | 5.000.000 | - | - | - |
| Sonae Capital SGPS - commercial paper g) | - | - | - | 20.000.000 |
| Up-front fees not yet charged to income statement |
- | - | - | (420.335) |
| 22.700.000 | 14.000.000 | - | 19.579.665 | |
| Bank overdrafts (Note 8) | - | - | - | - |
| 22.700.000 | 14.000.000 | - | 19.579.665 | |
| Bond Loans | ||||
| Sonae Capital 2016/2021 Bonds h) | - | 15.000.000 | - | 15.000.000 |
| Sonae Capital 2014/2019 Bonds i) | - | 42.500.000 | - | 42.500.000 |
| Up-front fees not yet charged to income statement |
- | (254.190) | - | (392.289) |
| - | 57.245.810 | - | 57.107.711 | |
| 22.700.000 | 71.245.810 | - | 76.687.376 |
The interest rate on bank loans and bonds in force on 31 December 2016 was on average 2.39%. (em 2016 : 2.88%).
Bank loans pay interest rates that are indexed to the Euribor market rates of the period, and its fair value is considered close to its book value.
In case of any Bank institution or commercial paper investor do not renew, at the maturity date, its respective loans, the Company has credit lines available to overcome such renewables
There are no derivative instruments.
The repayment schedule of the nominal value of borrowings may be summarised as follows:
| 31 December 2017 | 31 December 2016 | |||
|---|---|---|---|---|
| Capital | Interest | Capital | Interest | |
| N+1 | 22.700.000 | (2.112.847) | - | (2.119.111) |
| N+2 | 52.500.000 | (1.255.768) | 5.000.000 | (1.970.493) |
| N+3 | - | (427.135) | 47.500.000 | (1.149.176) |
| N+4 | 19.000.000 | (410.573) | 5.000.000 | (343.125) |
| N+5 | - | (46.667) | 20.000.000 | (342.188) |
| Afters N+5 | - | (2.917) | - | - |
| 94.200.000 | (4.255.906) | 77.500.000 | (5.924.094) |
As at 31 December 2017 and 31 December 2016, available credit lines may be summarised as follows:
| 31 December 2017 | 31 December 2016 | ||||
|---|---|---|---|---|---|
| Commitments | Commitments | ||||
| less than 1Y | over 1 Y | less than 1Y | over 1 Y | ||
| Amounts of credit lines available | (43.650.000) | (68.500.000) | 63.850.000 | 30.000.000 | |
| Amounts of credit lines contracted | (61.350.000) | (82.500.000) | 63.850.000 | 50.000.000 |
At 31 December 2017 the reconciliation of the liabilities whose flows affect the financing activities are detailed as follows:
| 31 December 2016 |
Cash | No cash | 31 December 2017 |
||
|---|---|---|---|---|---|
| Up-front fees not yet charged to income statement |
fair value | ||||
| Non current loans | 76.687.376 | (6.000.000) | (558.435) | 71.245.810 | |
| Current loans (Note 12) | 75.502.700 | (4.953.700) | - | 70.549.00 | |
| 152.190.076 | (10.953.700) | (558.435) | 141.794.810 |
As at 31 December 2017 and 2016 other creditors can be detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Other creditors | ||
| Group companies – Short term loans | 47.849.000 | 75.502.700 |
| Other creditors | 719.841 | 1.306.240 |
| 48.568.841 | 76.808.940 |
As at 31 December 2017 and 2016 the caption loans granted is relative to financial operations granted to the following subsidiaries:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| (Note 21) | (Note 21) | |
| Interlog-SGPS,SA | 21.858.000 | 21.856.000 |
| SC Industrials,SGPS,S.A. | 9.347.000 | 37.421.000 |
| SC For - Serv.de For.e Des. de Rec. Hum., Unip., Lda | 11.000 | 19.700 |
| Sistavac, SGPS, S.A. | 16.613.000 | 13.074.500 |
| SC Hospitality SGPS SA | - | 3.131.500 |
| Solinca - Health & Fitness, S.A. | 20.000 | - |
| 47.849.000 | 75.502.700 |
Loans obtained from group companies bear interest at market rates and are repayable within one year. The interest rate as at 31 December 2017 was, in average, approximately 0.080% (2016: 0.182%).
The item Other Creditors, there are included 700,481 euros (Note 21) regarding transfers from subsidiaries of tax estimates under the special regime RETGS.
As at 31 December 2017 and 2016 these items were as follows:
| 31 December 2017 | 31 December 2016 | |||
|---|---|---|---|---|
| Current | Non Current | Current | Non Current | |
| Trade creditors | 137.599 | - | 92.536 | - |
| Taxes payable - other taxes | 50.069 | - | 70.975 | - |
| Other current liabilities | ||||
| Accruals: | ||||
| Staff costs | 750.007 | 287.354 | 664.870 | 360.486 |
| Interest payable | 308.166 | - | 379.457 | - |
| Other accruals | 73.158 | - | 73.119 | - |
| Deferred income | 4.769 | - | 4.919 | - |
| 1.136.100 | 287.354 | 1.122.365 | 360.486 |
At 31 December 2017, the items Suppliers, Other Accruals and Staff costs include balances with related entities amounting to 95,520 euro, 50,000 euro and 360 euro respectively (Note 21).
The amount of staff cost (Non-current) refers to deferred compensation payable in periods exceeding one year.
As at 31 December 2017 and 2016 interest payable can be detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Interest payable | ||
| Bank loans | 305.672 | 371.182 |
| Group companies loans (Nota 21) | 2.494 | 8.275 |
| 308.166 | 379.457 |
As at 31 December 2017 and 2016 the Income tax and Other taxes can be detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Taxes payable - income taxes | ||
| Income taxes | - | - |
| Taxes payable - other taxes | ||
| Income taxation - amounts withheld | 27.300 | 42.921 |
| VAT | 69 | 55 |
| Social security contributions | 22.700 | 27.998 |
| Stamp tax | - | - |
| 50.069 | 70.975 |
As at 31 December 2017 and 2016 External Supplies and services can be detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Operational rents | (52.266) | (24.229) |
| Insurance costs | (39.629) | (41.141) |
| Travelling expenses | (53.683) | (35.773) |
| Services obtained | (1.217.573) | (877.016) |
| Other services | (54.116) | (40.894) |
| (1.417.268) | (1.019.054) |
The variation observed in the item "Services obtained" is mainly due to the increase in the item "Holding cost" in 2017 is approximately 663 thousand euros (432 thousand euros in 2016), which was debited by the subsidiary SC Sociedade de Consultadoria, SA. and Specialized Works - Others category which in 2017 has a value of 134 thousand euros (63 thousand euros in 2016).
As at 31 December 2017, External Supplies and Services included transactions with related entities amounting to 967,316 euros (782,627 euros in 2016) (Note 21).
As at 31 December 2017 and 2016, the Company had operational lease contracts, as a lessor, whose minimum lease payments (fixed income) had the following payment schedule:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| N+1 | 39.071 | 17.605 |
| N+2 | 39.071 | - |
| N+3 | 39.071 | - |
| N+4 | 39.071 | - |
| N+5 | 18.597 | - |
| 174.881 | 17.605 |
As at 31 December 2017 and 2016, staff costs were made up as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Governing bodies' remunerations | (1.225.969) | (1.234.273) |
| Staff and other sectors remunerations | (291.711) | (168.227) |
| Social security contributions | (178.145) | (173.514) |
| Other staff costs | (64.841) | (24.070) |
| (1.760.666) | (1.600.084) |
In 2017 and 2016 the average number of employees was 1 (one).
As at 31 December 2017 and 31 December 2016, Net Financial Expenses and Investment Income can be detailed as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Interest payable and similar expenses | ||
| Interest arising from: | ||
| Bank loans | (318.015) | (1.776.799) |
| Bonds | (1.962.390) | (1.845.854) |
| Other | (50.800) | (162.237) |
| Other financial expenses | (1.492.402) | (2.267.348) |
| (3.823.607) | (6.052.239) | |
| Interest receivable and similar income | ||
| Interest income | 9.920.503 | 18.597.345 |
| 9.920.503 | 18.597.345 | |
| Net financial expenses | 6.096.896 | 12.545.106 |
| Reversal of /and Impairment losses (Note 4.1) | (6.248.597) | (45.313.563) |
| Dividends received | 18.122.785 | 34.791.098 |
| Losses on finantial investments | (15.080.601) | (444) |
| Other income | 2.001.952 | 2.745.929 |
| Investment income | (1.204.460) | (7.776.980) |
As at 31 December 2017, the amount mentioned in "Interest arising from other" includes interest on current loans obtained from group companies amounting to 50,700 euros (2016: 162,220 euros) (Note 21).
As at 31 December 2017, the amount mentioned in "interest receivable and similar income" includes interest on loans granted to group companies amounting to 9,918,433 euros (2016: 18,587,414 euros) (Note 21).
As at 31 December 2017, the amount mentioned in "Other financial expenses" refers to commissions incurred with the assembly and management of bank loans and bonds.
As at 31 December 2017 and 31 December 2016, the amount of dividends received from affiliated companies was as follows (Note 21):
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Lidergraf, SA | 114.074 | 75.222 |
| SC Industrials SGPS, SA | 12.673.988 | 27.271.077 |
| SC Hospitality SGPS SA | 305.336 | - |
| Sistavac SGPS, SA | - | 700.000 |
| Capwatt SGPS SA | 5.029.387 | - |
| Spred SGPS | - | 6.744.800 |
| 18.122.785 | 34.791.098 |
As at 31 December 2017, the amount recorded under "Other income" relates essentially to income obtained from the WTC Fund.
As at 31 December 2017, the amount recorded under the caption Losses on financial Investments, Includes the losses on the disposal of the subsidiary Spred SGPS, SA.
As at 31 December 2017 and 2016 these items were as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Other operating income | ||
| Other supplementary income - comissions (Note 21) | 114.714 | 111.106 |
| Other | 3.624 | 8.892 |
| 118.338 | 119.998 | |
| Other operating expenses | ||
| Taxes | 43.390 | 68.272 |
| Other | 244 | 200 |
| 43.634 | 68.472 |
As at 31 December 2017 and 2016, Taxation was made up as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Current tax | 1.352.188 | 499.905 |
| Deferred tax (Note 7) | 2.450.000 | 6.039.482 |
| 3.802.188 | 6.539.387 |
The reconciliation between profit before income tax and taxation for the periods ended 31 December 2017 and 31 December 2016 is made up as follows:
| 31 December 2017 | 31 December 2016 | |||
|---|---|---|---|---|
| Incidence value | Tax amount | Incidence value | Tax amount | |
| Profit before income tax (1) | 1.787.155 | 2.198.929 | ||
| Tax charge | 21% | 21% | ||
| Tax charged | (375.302) | (461.775) | ||
| Increases or (decreases) in taxable profit | ||||
| Reversal of Impairment losses (Note 17) | (20.923.422) | 4.393.919 | - | - |
| Dividends received (Note 17) | (18.122.785) | 3.805.785 | (34.791.098) | 7.306.131 |
| Payment based on shares | 33.709 | (7.079) | 242.478 | (50.920) |
| Impairment losses (Note 17) | 27.172.018 | (5.706.124) | 45.313.563 | (9.515.848) |
| Losses on financial investments | 13.846.529 | (2.907.771) | - | - |
| Others | - | - | (6.203) | 1.303 |
| Deduction of tax losses | (61.175) | 12.847 | (61.175) | 12.847 |
| Tax osses that did not give rise to deferred tax assets |
- | - | - | - |
| Tax savings (RETGS) | 2.269.128 | 4.984.893 | ||
| Municipality and state tax | (125.694) | (569.502) | ||
| Autonomous taxes | (7.520) | (3.508) | ||
| Under/ Over taxation estimates | - | (1.203.713) | ||
| Effect of increases or decreases in deferred taxes |
2.450.000 | 6.039.482 | ||
| Taxation (2) a) | 3.732.029 | 3.802.188 | 12.318.268 | 6.539.387 |
| Effective tax charge | N/A | N/A |
a) Includes deferred taxes on tax losses, generated in 2016, in the amount of EUR 1,450,000
Earnings per share for the periods ended 31 December 2017 and 2016 were calculated taking into consideration the following amounts:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Net profit | ||
| Net profit taken into consideration to calculate basic earnings per share (Net profit for the period ) |
5.589.342 | 8.738.316 |
| Effect of dilutive potential shares | - | - |
| Net profit taken into consideration to calculate diluted earnings per share |
5.589.342 | 8.738.316 |
| Number of shares | ||
| Weighted average number of shares used to calculate basic earnings per share |
247.409.380 | 246.740.156 |
| Earnings per share (basic and diluted) | 0,022591 | 0,035415 |
Balances and transactions during the periods ended 31 December 2017 and 2016 with related parties are detailed as follows:
| Expenses (Notes 14 and 17) |
Income (Notes 17 and 18) |
|||
|---|---|---|---|---|
| Transactions | 31 December 2017 31 December 2016 |
31 December 2017 | 31 December 2016 | |
| Parent company | - | - | - | - |
| Group and associated companies | 1.018.016 | 881.021 | 28.155.932 | 53.489.618 |
| 1.018.016 | 881.021 | 28.155.932 | 53.489.618 | |
| Accounts payable Accounts receivable (Notes 12 and 13) (Note 6) |
||||
| Balances | 31 December 2017 | 31 December 2016 | 31 December 2017 | 31 December 2016 |
| Parent company | - | - | - | - |
| Group and associated companies | 848.854 | 1.298.085 | 5.541.839 | 10.071.566 |
| 848.854 | 1.298.085 | 5.541.839 | 10.071.566 | |
| Lons obtained Loans granted (Note 12) (Notes 5 and 6) |
||||
| Balances | 31 December 2017 | 31 December 2016 | 31 December 2017 | 31 December 2016 |
| Parent company | - | - | - | - |
| Group and associated companies | 47.849.000 | 75.502.700 | 384.665.034 | 365.952.986 |
| 47.849.000 | 75.502.700 | 384.665.034 | 365.952.986 |
In 2017, the income include dividends received from group companies in the amount of 18,122,785 euro (2016: 34,791,098 euro).
It should also be noted that the Board of Directors was identified as a related party of Sonae Capital.
Cash receipts and payments related to investments during the periods ended 31 December 2017 and 2016 are detailed as follows:
| 31 December 2017 | 31 December 2016 | |||
|---|---|---|---|---|
| Receips | Payments | Receips | Payments | |
| Fundo Esp de Invest. Imob IMO SONAE II |
- | - | 2.484 | - |
| Fundo Esp de Invest. Imob WTC | - | - | - | 214.246 |
| Solinca - Health & Fitness, S.A. | - | 1.069.344 | - | 892.854 |
| Spred, S.G.P.S., S.A. | - | 1.723.246 | - | - |
| Third parties | 600.001 | - | - | - |
| 600.001 | 2.792.590 | 2.484 | 1.107.100 |
Art 5 nr 4 of Decree-Law nr 495/88 of 30 December changed by art 1 of Decree-Law nr 318/94 of 24 December.
In the period ended 31 December 2017 shareholders' loan contracts were entered into with the companies Spred SGPS, SA, SC Assets, SGPS, SA, Troiaresort SGPS, SA e Solinca Health and Fitness, SA.
In the period ended 31 December 2017 short-term loan contracts were entered with the companies SC Industrials, SGPS, SA, SC Hospitality, SGPS, SA, Troiaresort SGPS, SA, Solinca Health and Fitness, SA, Companhia Térmica Tagol, Lda., CAPWATT MAIA-HEAT POW.,SA, CAPWATT MARTIM Longo -S.P.,SA, CAPWATT VALE CAIMA-H.P,SA, CAPWATT, SGPS, S.A, CAPWATT ACE, SC-Sociedade de Consultadoria, SA, SC Assets, SGPS, SA, SC Finance BV, QCE-D.FAB.EQUIPAMENTOS,SA, Race, SA, Race, SA (Matosinhos), SOBERANA Invest.Imobil., SA, Sotáqua-S.Em.Tu.Quarteira, SA, Troiamarket, SA, INPARVI, SGPS, SA, SC SGPS, SA, UP Invest. SGPS, SA, The House Ribeira Hotel, SA, Soternix-Prod.Energia,ACE, Porto Palacio Hotel Exploração Hoteleira, SA, Aqualuz Tróia Exploração Hoteleira, SA,, Marina de Troia, SA,, ATLANTIC FERRIES, SA, CAP-WATT II - Energia, SA, GOLF TIME-Golfe e Invest., SA, IMOPENINSULA-SOC.IMOB.,SA, IMOBEAUTY, S.A., IMORESORT-Soc.Imobil.S.A., MARMAGNO-Expl.Hot.Imob.SA, The Artist Porto Hotel & Bistro-Actividades Hoteleiras, SA, TROIARESORT-Inv.T,SA, TULI-PAMAR-Expl.Hot.Im.SA
As at 31 December 2017 amounts due by affiliated companies can be summarized as follows:
| Loans and Short term loans granted (Note 21) | |
|---|---|
| Companies | Closing Balance |
| SC Assets, SGPS, SA | 174.523.597 |
| SC Hospitality, SGPS, SA | 6.609.000 |
| CAPWATT, SGPS, S.A. | 41.175.000 |
| Inparvi SGPS, SA | 69.000 |
| SC Finance BV | 5.885.000 |
| SC, SGPS, S.A. | 14.269.500 |
| Solinca - Health & Fitness, SA | 1.186.300 |
| Troiaresort, S.G.P.S., SA | 140.286.637 |
| SC, Industrials, SGPS, S.A. | 661.000 |
| 384.665.034 |
As at 31 December 2017 amounts due to affiliated companies can be summarized as follows:
| Short term loans obtained (Note 21) | |
|---|---|
| Companies | Closing Balance |
| Interlog-SGPS,SA | 21.858.000 |
| SC Industrials,SGPS,S.A. | 9.347.000 |
| SC For - Serv.de For.e Des. de Rec. Hum., Unip., Lda | 11.000 |
| Sistavac, SGPS, S.A. | 16.613.000 |
| Solinca - Health & Fitness, S.A. | 20.000 |
| 47.849.000 |
At 31 December 2017 and 2016, the main contingent liabilities were related to the guarantees provided and were as follows:
| 31 December 2017 | 31 December 2016 | |
|---|---|---|
| Borrowed Warranties | ||
| In going tax proceedings | 1.006.210 | 1.006.210 |
The company did not record provisions for the events / disputes for which these guarantees were provided because it is the understanding of the Board of Directors that these events will not result in losses for the Group.
No significant events, requiring further disclosure, have occurred after 31 December 2017.
These financial statements were approved by the Board of Directors and authorized for issue on March 2, 2018. However, they are still subject to approval by the General Shareholders' Meeting, in accordance with the commercial legislation in force in Portugal.
| The certified acountant | Board of Directors |
|---|---|
| Rui Manuel Machado Morais | Duarte Paulo Teixeira de Azevedo |
| Maria Cláudia Teixeira de Azevedo | |
| Álvaro Carmona e Costa Portela | |
| Ivone Pinho Teixeira | |
| Francisco de La Fuente Sánchez | |
| Paulo José Jubilado Soares de Pinho | |
| Miguel Jorge Moreira da Cruz Gil Mata |
31 December 2017
Lugar do Espido, Via Norte Apartado 3053 4471-907 Maia Portugal
T (+351) 22 010 79 03 F (+351) 22 010 79
(Translation of a report originally issued in Portuguese)
To the Shareholders of Sonae Capital, S.G.P.S., S.A.
In accordance with applicable legislation and the mandate given to the Fiscal Board, we hereby submit our Report and Opinion which covers the report of the Board of Directors and the consolidated and individual financial statements of Sonae Capital, S.G.P.S., S.A. for the year ended 31 December 2017, which are the responsibility of the Company's Board of Directors.
During the year, we have monitored the management of the Company, reviewed the development of the operations of the Company and of its main affiliates, and held meetings whenever considered necessary and with the appropriate scope. In face of the subject under review, these meetings were attended by key staff of the finance department, namely the Chief Financial Officer, of the planning and control department and of internal audit and risk management. We have also followed up closely the work of the statutory auditor and external auditor of the Company who kept us informed of the scope and conclusions of the audit work performed. In performing these tasks, the Fiscal Board has obtained from the Board of Directors, Company staff and affiliated companies' staff and from the statutory auditor all the necessary information and explanations, for a proper understanding and assessment of business developments, financial performance and position, as well as of risk management and internal control systems.
We have also reviewed the preparation and disclosure of financial information, as well as the statutory audit performed on the individual and consolidated accounts of the Company, having obtained from the statutory auditor all information and explanations requested. Additionally, within the scope of the mandate given to the Fiscal Board, we examined the individual and consolidated balance sheets as at 31 December 2017, the individual and consolidated statements of profit and loss by nature, statements of cash flows, statements of comprehensive income and statements of changes in equity for the year ended on that date and related notes.
We have also reviewed the report of the Board of Directors and the Corporate Governance Report for the year 2017, issued by the Board of Directors, and the Statutory Auditor's Report issued by the External Auditor of the Company, whose content we agree with.
Considering the above, we are of the opinion that the consolidated and individual financial statements referred to above were prepared in accordance with applicable accounting, legal and statutory standards and give a true and fair view of the assets and liabilities, financial position and results of Sonae Capital, S.G.P.S., SA and of its main affiliates, and that the report of the Board of Directors faithfully describes business developments, performance and financial position of the Company and of its affiliates and the main risks and uncertainties they face. We hereby inform that the Corporate Governance report issued complies with article 245-A of the Portuguese Securities Code.
The Fiscal Board would like to express its gratitude to the Company's Board of Directors and staff for their cooperation.
Lugar do Espido, Via Norte Apartado 3053 4471-907 Maia Portugal
T (+351) 22 010 79 03 F (+351) 22 010 79
In face of the above mentioned, we are of the opinion that the Shareholders' General Meeting can approve:
a) The report of the Board of Directors, the individual and consolidated balance sheets as at 31 December 2017, the individual and consolidated financial statements of profit and loss by nature, of cash flows, of comprehensive income and of changes in equity for the year ended on that date and related notes;
b) The profit appropriation proposal of the Board of Directors.
Under the terms of Article 245, paragraph 1, c) of the Portuguese Securities Code, the members of the Fiscal Board hereby declare that, to their knowledge, the information disclosed in the Report of the Board of Directors and other accounting documents, was prepared in accordance with applicable accounting standards, and give a true and fair view of the assets, liabilities, financial position and results of the Company and of its affiliates.
Moreover, members of the Fiscal Board consider that the Report of the Board of Directors faithfully describes business developments, the performance and the position of the Company and of its affiliates and the main risks and uncertainties they face.
Maia, 2 March 2018
The Fiscal Board,
António Monteiro de Magalhães
Manuel Heleno Sismeiro
Carlos Manuel Pereira da Silva
31 December 2017
We have audited the consolidated financial statements of Sonae Capital S.G.P.S., S.A. (the Group), which comprise the consolidated balance sheet as at 31 December 2017 (which shows total assets of Euro 516.126.609 and total shareholders' equity of Euro 291.369.289 including a net loss of Euro 6.513.485), the consolidated statement of income 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 notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly in all material respects, the consolidated financial position of Sonae Capital S.G.P.S., S.A. as at 31 December 2017, and their consolidated financial performance and their consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union
We conducted our audit in accordance with International Standards on Auditing (ISAs) and other technical and ethical standards and recommendations issued by the Institute of Statutory Auditors. Our responsibilities under those standards are described in the "Auditor's responsibilities for the audit of the consolidated financial statements" section below. In accordance with the law we are independent of the entities that are included in the Group and we have fulfilled our other ethical responsibilities in accordance with the ethics code of the Institute of Statutory Auditors.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current year. 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.
As disclosed in Notes 10 and 14 of the notes to the consolidated financial statements, the balance sheet presents real estate assets recorded under Property, Plant and Equipment and under Inventory (in a total of Euro 130.592 thousan and Euro 85.509 thousand, respectively).
The relevance of the amounts in question and the degree of judgment associated with the assessment of the recoverability of these assets justify that it has been considered a key audit matter.
The evaluation of the recoverability of this type of asset requires the use of assumptions that always involve some uncertainty, namely cash flow forecasts, estimates of recoverable amounts, obtain market comparable, growth rates, discount rates and sensitivity assumptions.
To avaliate the recovery of real estate assets recorded under Property, Plant and Equipment and under Inventory, and based in the real estate appraisals prepared by independent entities in 2016 and the audit procedures then executed, we have evaluated if the impacts of those evaluations in 2017 financial information are current, threw comparation of the evolution of the real estate market indicators in Portugal from 2016 to 2017 and of real estate transactions carried out during the year 2017 with the net value recorded.
We have verified the adequacy of the disclosures in the consolidated financial statements with respect to these assets.
The balance sheet presents a Goodwill value of Euro 47.376 thousand.
Considering the relevance of the amount and the complexity and level of judgment inherent in the model adopted for the calculation of impairment and the identification and aggregation of cashgenerating units (CGUs), this issue was a key audit matter.
Disclosures are presented in not 2.2 c) about the accounting policy applicable to the Goodwill and in note 12 of the consolidated financial statements.
In order to evaluate the recoverability of these assets, we obtained and analyzed the impairment tests prepared by the Group. Considering the identification and aggregation of CGUs, we have analyzed the reasonableness of the assumptions used in the forecasts, the market conditions, the sensitivity analyzes and the historical accuracy of the Group in the preparation of forecasts and budgets. We also analyzed the reasonableness of the discount rates used, as well as the perpetuity growth rates, using market comparable and other information in the market, and we reexecuted the model calculations. We have also analysed Goodwill calcuation which results from the entries in the consolidation perimeter in 2017 We have verified the adequacy of the disclosures
in the consolidated financial statements.
As disclosed in Note 34 of the notes to the consolidated financial statements, the Construction Contracts ongoing at 31.12.2017 revenue amounts to Euro 78.997 thousand.
The work map that supports the recognition of revenue based on the percentage of completion of construction contracts has several assumptions, essentially as regards the overall budget for construction expenses, already incurred expenses and expenses to be incurred. Given the uncertainty inherent in estimates of this nature, and the inherent assumptions, they must be continually reviewed and, as such, we consider a key audit matter.
Disclosures are presented in notes 34 and 2.16 policies.
We reconcile the work maps with the values of the balance sheet and the income statement. We reviewed the contracts supporting the work maps, analyzed the reasonableness of the percentage of completion considered taking into account the underlying assumptions and compared the results obtained with the recorded revenue. In order to validate Management's assumptions regarding the recognized margin, we analyze the information available, essentially as it relates to the terms in the contracts signed, the latest projections, the current state of the works, the invoicing made and the reasonableness of the budgets In the past, compared to actual values.
We have verified the adequacy of the disclosures in the consolidated financial statements.
The balance sheet presents Deferred tax-assets value of Euro 27.774 thousand.
The relevance of the amounts in question and the degree of judgment associated with the assessment of the recoverability of deferred tax assets, which requires the use of estimates in the projection of future taxable income and the determination of the taxes required for their recovery, justify that it has been considered a key audit matter.
Disclosures are presented in notes 19 and 2.15 policies.
As disclosed in Note 32 of the notes to the consolidated financial statements, there are tax contingencies for which no provisions have been In order to evaluate the Group's ability to recover these assets, we have analyzed the budgeting models and Management's assumptions and estimates in relation to the Group's probability of generating sufficient future taxable profits to support the estimated recovery of deferred tax assets. We also evaluate the Group's historical accuracy in the preparation of forecasts and budgets, namely by comparing the tax results obtained with those previously forecast. We have reexecuted the calculations of budgeting models.
We have verified the adequacy of the disclosures in the consolidated financial statements.
The audit procedures we have carried out in this area included understanding of tax and legal contingency assessment procedures; getting and
recorded, since Management understands that these events will not result in losses for the Group. The complexity and the degree of judgment inherent in the tax matters in question, as well as the level of uncertainty associated with the
Disclosures are presented in notes 32 and 2.14 policies.
outcome, justify that it was a key audit matter.
analysis of disputes affecting the Group; analysis of communications with external experts; obtaining and analysis of the answers obtained to the requests for confirmation of the processes carried out by external lawyers; inquiry to the management and to the legal and tax responsible over the estimates and judgments; obtaining and analyzing the opinion of internal specialists; verification of the assumptions used by Management for non-provisioning. We discussed with the Management and with the legal and tax responsible about the estimates, judgments and decisions taken in order to assess the reasonableness of the probability of outcome for each proceeding in in accordance with IAS 37, supporting the disclosures made and the non-provisioning.
Management is responsible for:
a) the preparation of the consolidated financial statements, which present fairly the financial position, the financial performance and the cash flows of the Group in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union;
b) the preparation of the Directors' Report, including the Corporate governance Report, in accordance with the applicable law and regulations;
c) the creation and maintenance of an appropriate system of internal control to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error;
d) the adoption of appropriate accounting policies and criteria;
e) the assessment of the Group's ability to continue as a going concern, disclosing, as applicable, events or conditions that may cast significant doubt on the Group's ability to continue its activities.
The supervisory board is responsible for overseeing the process of preparation and disclosure of the Group's financial information.
Our responsibility is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, 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 scepticism throughout the audit. We also:
a) 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;
b) 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;
c) evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
d) 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 auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern;
e) evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
f) 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;
g) communicate with those charged with governance, including the supervisory board, 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;
h) of the matters we have communicated to those charged with governance, including the supervisory board, we determine which one's were the most important in the audit of the consolidated financial statements of the current year, these being the key audit matters. We describe these matters in our report, except when the law or regulation prohibits their public disclosure; and
i) confirm to the supervisory board that we comply with the relevant ethical requirements regarding independence and communicate all relationships and other matters that may be perceived as threats to our independence and, where applicable, the respective safeguards.
Our responsibility also includes verifying that the information included in the Directors' report is consistent with the consolidated financial statements and the verification set forth in paragraphs 4 and 5 of article No. 451 of the Portuguese Company Law.
In compliance with paragraph 3 e) of article No. 451 of the Portuguese Company Law, it is our understanding that the Director's report has been prepared in accordance with applicable requirements of the law and regulation, that the information included in the Directors' report is consistent with the audited consolidated financial statements and, taking into account the knowledge and assessment about the Group, no material misstatements were identified.
In compliance with paragraph 6 of article No. 451 of the Portuguese Company Law, we hereby inform that the entity prepared a separate report of the Director's report that includes the non-financial information set forth in article No. 66-B of the Portuguese Company Law, which was published together with the Director's report.
In compliance with paragraph 4 of article No. 451 of the Portuguese Company Law, it is our understanding that the Corporate governance report includes the information required under article No. 245-A of the Portuguese Securities Market Code, that no material misstatements were identified in the information disclosed in this report and that it complies with paragraphs c), d), f), h), i) and m) of that article.
In accordance with article No. 10 of Regulation (EU) 537/2014 of the European Parliament and of the Council, of April 16, 2014, and in addition to the key audit matters referred to above, we also provide the following information:
a) We were first appointed auditors of the Entity in the Shareholders' General Meeting of 31 March 2011 for the period from 2011 to 2012, having remained in functions until the current period. Our last appointment was in the Shareholders' General Meeting of 31 March 2015 for the period from 2015 to 2017.
b) The management has confirmed to us it has no knowledge of any allegation of fraud or suspicions of fraud with material effect in the financial statements. We have maintained professional scepticism throughout the audit and determined overall responses to address the risk of material misstatement due to fraud in the consolidated financial statements. Based on the work performed, we have not identified any material misstatement in the consolidated financial statements due to fraud.
c) We confirm that our audit opinion is consistent with the additional report that was prepared by us and issued to the Group's supervisory board at the same date.
d) We declare that we did not provide any prohibited non-audit services referred to in paragraph 8 of article No. 77 of the by-laws of the Institute of Statutory Auditors ("Estatutos da Ordem dos Revisores Oficiais de Contas") and that we remain independent of the Group in conducting our audit.
e) We inform that, besides the audit services, the following additional services, permitted by law and regulation in force, were provided by us to the Group:
2 March 2018
PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda. represented by:
Hermínio António Paulos Afonso, R.O.C.
We have audited the financial statements of Sonae Capital S.G.P.S., S.A. (the Entity), which comprise the balance sheet as at 31 December 2017 (which shows total assets of Euro 700.040.192 and total shareholders' equity of Euro 555.914.420 including a net profit of Euro 5.589.342), the statement of income 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 notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly in all material respects, the financial position of Sonae Capital S.G.P.S., S.A. as at 31 December 2017, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union.
We conducted our audit in accordance with International Standards on Auditing (ISAs) and other technical and ethical standards and recommendations issued by the Institute of Statutory Auditors. Our responsibilities under those standards are described in the "Auditor's responsibilities for the audit of the financial statements" section below. In accordance with the law we are independent of the Entity and we have fulfilled our other ethical responsibilities in accordance with the ethics code of the Institute of Statutory Auditors.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current year. 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.
As disclosed in the individual financial statements, at 31 December 2017, Sonae Capital, S.G.P.S., S.A. holds financial investments on group companies in the amount of Euro 300 million, which are measured at cost. The valuation of financial investment is considered a key audit matter, because changes caused by events or circumstances that adversely affect the performance of the investees may lead to nonrecoverability of the book value of these assets. Impairment tests are performed on the financial investments whenever an event or change in circumstances is identified that indicates that the asset may not be recovered. The valuation model used is the discounted cash flow model. To build this model, management incorporates judgments based on assumptions about cash flow projections, real estate fair value differentials, perpetuity growth rates and discount rate to be applied.
Disclosures are presented in notes 2.9 and 4.1 policies.
In order to validate the assumptions and judgments made by management in the valuation of financial investments, we perform the following procedures: a) assessment of whether or not there is evidence of impairment in financial investments; and b) obtaining and analyzing the impairment tests of the financial investments, in the applicable cases. The analysis of impairment tests, based on discounted cash flow models, involved the following procedures: a) verifiy id the real estate valuations performed by independent entities obtained in 2016 are still current b) analysis of the evolution of real estate market indicators in Portugal from 2016 to 2017 c) comparison of real estate transactions carried out during 2017 with the value of the valuations obtained in 2016 We compare the recoverable amount obtained in the valuations with the book value of the financial investments and appreciate the reasonableness of the impairments recorded by the Entity. We have verified the adequacy of the disclosures in the consolidated financial statements.
Management is responsible for:
a) the preparation of the financial statements, which present fairly the financial position, the financial performance and the cash flows of the Entity in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union;
b) the preparation of the Directors' Report, including the Corporate governance Report, in accordance with the applicable law and regulations;
c) the creation and maintenance of an appropriate system of internal control to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error;
d) the adoption of appropriate accounting policies and criteria;
e) the assessment of the Entity's ability to continue as a going concern, disclosing, as applicable, events or conditions that may cast significant doubt on the Entity's ability to continue its activities.
The supervisory board is responsible for overseeing the process of preparation and disclosure of the Entity's financial information.
Our responsibility is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, 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 scepticism throughout the audit. We also:
a) 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;
b) 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;
c) evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
d) 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 auditor's report. However, future events or conditions may cause the Entity to cease to continue as a going concern;
e) 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;
f) communicate with those charged with governance, including the supervisory board, 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;
g) of the matters we have communicated to those charged with governance, including the supervisory board, we determine which one's were the most important in the audit of the financial statements of the current year, these being the key audit matters. We describe these matters in our report, except when the law or regulation prohibits their public disclosure; and
h) confirm to the supervisory board that we comply with the relevant ethical requirements regarding independence and communicate all relationships and other matters that may be perceived as threats to our independence and, where applicable, the respective safeguards.
Our responsibility also includes verifying that the information included in the Directors' report is consistent with the financial statements and the verification set forth in paragraphs 4 and 5 of article No. 451 of the Portuguese Company Law.
In compliance with paragraph 3 e) of article No. 451 of the Portuguese Company Law, it is our understanding that the Director's report has been prepared in accordance with applicable requirements of the law and regulation, that the information included in the Directors' report is consistent with the audited financial statements and, taking into account the knowledge and assessment about the Entity, no material misstatements were identified.
In compliance with paragraph 6 of article No. 451 of the Portuguese Company Law, we hereby inform that the entity prepared a separate report of the Director's report that includes the non-financial information set forth in article No. 66-B of the Portuguese Company Law, which was published together with the Director's report.
In compliance with paragraph 4 of article No. 451 of the Portuguese Company Law, it is our understanding that the Corporate governance report includes the information required under article No. 245-A of the Portuguese Securities Market Code, that no material misstatements were identified in the information disclosed in this report and that it complies with paragraphs c), d), f), h), i) and m) of that article.
In accordance with article No. 10 of Regulation (EU) 537/2014 of the European Parliament and of the Council, of April 16, 2014, and in addition to the key audit matters referred to above, we also provide the following information:
a) We were first appointed auditors of the Entity in the Shareholders' General Meeting of 31 March 2011 for the period from 2011 to 2012, having remained in functions until the current period. Our last appointment was in the Shareholders' General Meeting of 31 March 2015 for the period from 2015 to 2017.
b) The management has confirmed to us it has no knowledge of any allegation of fraud or suspicions of fraud with material effect in the financial statements. We have maintained professional scepticism throughout the audit and determined overall responses to address the risk of material misstatement due to fraud in the financial statements. Based on the work performed, we have not identified any material misstatement in the financial statements due to fraud,
c) We confirm that our audit opinion is consistent with the additional report that was prepared by us and issued to the Entity's supervisory board at the same date.
d) We declare that we did not provide any prohibited non-audit services referred to in paragraph 8 of article No. 77 of the by-laws of the Institute of Statutory Auditors ("Estatutos da Ordem dos Revisores Oficiais de Contas") and that we remain independent of the Entity in conducting our audit.
2 March 2018
PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda. represented by:
Hermínio António Paulos Afonso, R.O.C.
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