Management Reports • Apr 29, 2014
Management Reports
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Head Office: Rua João Mendonça, 529 – 4464‐501 Senhora da Hora
Share Capital 1,000,000,000 Euro
Porto Commercial Registry and Fiscal Number 501 532 927
31 DECEMBER 2013
Sonae Investimentos, SGPS, SA is the company within the Sonae Group which aggregates the core activity of the group, retail.
During the course of 2013, Sonae Investimentos, SGPS, SA delivered a consolidated turnover of 4,671 million Euro ‐ which represents a 3% increase when compared to the previous year. In this same period, the Company´s consolidated operating cash‐flow reached 357 million Euro. This figure represents a ratio over total net sales of 7.6%, 0.5 p.p. less than the previous year.
Focusing on the evolution of the Company´s activity, we highlight the following aspects:
The food based businesses returned to growth with a turnover increase of 4% to 3,415 million Euro, not only the selective expansion of its sales area (including 17 new Continente stores), but also the 1.4% growth in sales on a "LfL" basis. This growth is even more remarkable if we take into account the macroeconomic environment and the adjustment process which Portugal is still exposed to, with GDP falling by 1.4%. In 4Q13, Sonae MC sales on a "LfL" basis increased by 1.1%, which combined with the opening of 7 Continente stores, led to a turnover increase of 5.5% compared to 4Q12.
Thus, during this period, Sonae MC is estimated to have continued strengthening its leading market share in the Portuguese food retail sector1 on the back of:
1 For example, A.C.Nielsen's Homescan survey YTD up until 29th December: +0.4pp market share for Sonae MC
In 2013 Sonae MC increase the "Underlying" EBITDA to 258 million Euro and reached an EBITDA margin of 7.6%, despite the highly competitive environment that led us to a strong promotional effort, particularly in the last quarter of the year, causing an internal deflation of 0.8% and a negative effect on the EBITDA. This promotional activity continued to be supported by the Continente loyalty card (which was the basis of more than 90% of sales in the period). This profitability is only possible with a strict cost control and additional productivity gains, sustained by the success of continuous improvement programmes implemented with the unique dedication of our teams.
With regards to the specialised retail formats, Sonae SR reached 1,210 million Euro turnover. Despite the reduction of 13 thousand m2 and the impact of the negative macroeconomic evolution on the levels of consumption, particularly for the more discretionary products, sales performance ended up slightly above last year. Private consumption levels in Portugal and Spain continued to be negatively impacted by economic adjustment processes. Nevertheless, in the case of Portugal, it is estimated that the decline of consumption pace was slower, when compared to 20122. In 4Q13, Sonae SR turnover in Portugal grew by 9% yoy (and 5% LfL), which was the result of some combined factors: 1) better signs from the GDP evolution in the 2nd half of the year; 2) the refund of holiday allowance to civil workers; 3) measures taken to reposition Sonae SR 4 main brands and 4) the strengthening of Worten3 and Sport Zone leadership position together with a double digit growth from MO turnover.
Internationally, turnover increased 5% on a LfL basis. The positive performance of the international market was driven by 1) wholesale and franchising businesses evolution and, 2) the fine tuning in businesses models and value proposals of all brands, with a special focus in the Spanish market (4Q13 was the 3rd quarter in a row of positive LfL growth for Sport Zone in Spain). These results can be perceived as the reversal of the negative market trend for the most discretionary categories.
This business segment witnessed an "Underlying" EBITDA increase of 24 million Euro to 1 million Euro, which is remarkable particularly if we consider the prevailing crisis in the Iberian Peninsula. In the 4Q13, compared to the 4Q12 EBITDA recovered by 17 million Euro, and reached 16 million Euro. This was the result of the stronger sales evolution combined with the turnaround measures implemented, particularly the new Worten and Sport Zone concepts in Spain, the rebranding of MO with a completely new collection, as well as the product improvement of Zippy. It is also worth highlighting the successful implementation of the Omni‐channel strategy at Worten, where we are integrating online and store businesses. This include the possibility of having a kiosk in the store to access the online range or to use the (reserve and) pick up service in the store.
The retail properties profitability particularly reflects internal rents, defined in accordance with the returns on the underlying investments, which are broadly in line with market capitalisation rates. The "Underlying" EBITDA reached 115 million Euro.
During the course of the year in question, Sonae Investimentos, SGPS, SA consolidated direct profit totalled 88 million Euro. This includes the evolution of Financial results, which went from ‐76 million Euro in 2012 to ‐67 million Euro in 2013, with the lower amount of average debt more than compensating the increase in interest costs.
Indirect results included other non‐cash movements, namely those impairments related to revaluations of retail properties registered in 3Q13, as well as identification of new concepts in the specialised retail formats that required strong investments and accelerated depreciations.
2 Source Bank of Portugal: Boletim Económico - winter 2013
3 Source: GfK, YTD evolution until the end of November 2013 – estimated market share gain of 1pp
Consolidated Net Result for the period, attributable to Shareholders of the Holding Company, amounted to ‐84 million Euro, compared to 9 million Euro in the previous year.
During the course of 2013, Sonae Investimentos carried out an overall investment of 153 million Euro. This figure was mainly directed towards maintenance and refurbishment of store networks and the execution of the Company´s expansion plan, allowing it to end the year with a portfolio of 1,016 stores and a sales area of 1,034 thousand m2 (+1% on 2012 year end portfolio).
The global economic outlook is more auspicious for 2014, with an expected growth of 3.7%4, the highest rate of growth since 2011. The growth is mostly based on improved expectations across all economic areas, especially in developed economies and, particularly in the Eurozone that after two years of recession is expected to return to growth next year, albeit tenuously (approximately 1%7) in emerging economies, growth will mainly be determined by external demand from developed markets, but internal weaknesses remain a concern.
In Portugal, the economic outlook has been revised upwards, following the performance which was above expectations in 2013, with an estimated expansion of economic activity of 0.7% and 1.5% for 2014 and 2015, respectively5 . As in recent years, exports are expected to be the main determinant of growth, but domestic demand should return to a positive contribution.
The risk factors of recent years will continue to prevail in 2014, including the external economic environment, the evolution of the Eurozone debt crisis and the degree of commitment of the Portuguese authorities with the Programme for Economic and Financial Assistance. In this context, many uncertainties remain, namely concerning the actual commitment of the authorities to fulfil budgetary targets, their ability to implement the planned measures and the financing autonomy of the Republic.
4 IMF, World Economic Outlook, January 2014
5 Evaluation of the 10th iMF Economic and Financial Adjustment Programme (EFAP), February 2014
The forecasts for the Spanish economy predict a moderate economic growth in the coming years (0.7% and 1.0% in 2014 and 2015, respectively6), mostly because of the need to continue to address the economic imbalances that will limit the growth of domestic demand. Nevertheless, we expect a slight rebound in consumption reflecting the increasing confidence of families and their private consumer spending, as a result of the stabilisation of the labour market, the positive inflation scenario and maintenance of low interest rates. The external sector is expected to remain the main growth driver, with a dragging effect on investment especially in industrial equipment. Concerning the coming months, despite the reform efforts and the results already achieved, challenges remain high, particularly in the financial system and public finances.
In short, growth expectations in Iberian countries are based on a recovery, albeit that there is limited domestic demand, which is dependent on the success of adjustments and reforms. The external sector will continue to undoubtedly be the main driver of these economies and, therefore, its performance depends largely on the recovery of global economic activity and, in particular, on the consolidation of the recovery in the Eurozone.
The general financial risk management principles of the Company are found in detail in Note 3 of the Appendix to the Income Statement.
The members of the Board are not remunerated by the Company or by Group companies.
The remuneration of the members of the Statutory Audit Board is composed of a set annual amount, based on the Company´s financial situation and market practices. The set annual amount for the members of this committee were as follows:
| Member of Statutory Audit Board | 2012 | 2013 |
|---|---|---|
| UHY & Associados represented by António Francisco Barbosa dos Santos |
8,000 | 8,000 |
| Óscar José Alçada da Quinta | 7,800 | 7,010 |
| Arlindo Dias Duarte da Silva | 7,800 | 7,010 |
| Total | 23,600 | 22,020 |
6 Economist Intelligence Unit, February 2014
Sonae Investimentos Statutory Auditor and audit firm is Deloitte. The figures invoiced to Sonae Investimentos in 2012 and 2013, including subsidiaries, are as follows:
| Statutory External Auditor | 2012 | 2013 | ||
|---|---|---|---|---|
| Audit and Statutory Audit | 294,907 | 65% | 291,570 | 57% |
| Tax consultancy | 35,216 | 8% | 44,748 | 9% |
| Other services | 125,883 | 28% | 178,409 | 34% |
| Total | 456,006 | 100% | 514,727 | 100% |
The fees relative to auditing services and other compliance and assurance services decreased by 7pp in 2013, representing 66% of total fees. The other services represented 34% of total fees and were assessed by the Statutory Audit Board.
In 2013, the fees for other services included: consulting services provided to several subsidiaries of Sonae Investimentos.
In 2013, fees paid by Sonae Investimentos, in Portugal, to companies within the Deloitte network, represented less than 1% of Deloitte´s annual turnover in Portugal.
The External Auditor quality system controls and monitors the potential risks of loss of independence or possible conflict of interests with Sonae.
Under the terms of article 62º‐B of Law Decree nº 487/99 dated 16th November (altered by Decree Law nº 224/2008, 20th November), on an annual basis, the Statutory Audit Board receives a declaration of independence from the auditor, where services rendered by them and other entities within the same network are described, in addition to respective remuneration paid, eventual threats to independence and measures to safeguard against them.
The remuneration of the Board of Shareholder's General Meeting is constituted by a set figure, as detailed below:
| Board of Shareholder´s General Meeting | 2012 | 2013 |
|---|---|---|
| President | 3,750 | 3,750 |
| Secretary | 1,500 | 1,500 |
| Total | 5,250 | 5,250 |
During 2013 Sonae ‐ Specialized Retail, SGPS, SA sold the entire investment held of Sonae Investimentos, in a total of 100,000,000 shares, to Sonae MC ‐ Modelo Continente, SGPS, SA, at unit price of 3.20 Euro.
As of December 31st Sonae Investimentos, SGPS, SA, held, through Sonae MC – Modelo Continente, SGPS, SA, 100.000.000 shares representative of its share capital.
Sonae Investimentos, SGPS, S.A. net profit for the year, as a standalone company, totalled 11,906,939.26 Euro, for which the Board of Directors propose the following distribution:
| Total | 11,906,939.26 Euro |
|---|---|
| Dividends | 11,311,592.30 Euro |
| Legal Reserve | 595,346.96 Euro |
Additionally, the Board of Directors proposes to Sonae Investimentos, SGPS, S.A. Shareholder's General Meeting the distribution of 40.000.000 Euro as dividends, for which effect, 28,688,407.70 Euro of Free Reserves would be allocated. The dividend distribution excludes the shares that, at the date of the distribution are held by the company or any other companies under its control.
We thank all of our customers, suppliers, financial institutions and shareholders for their support and preferences demonstrated. To the external auditors and statutory auditors we also owe our gratitude for their cooperation throughout the year. Finally, a special word of thanks to all of Sonae Investimentos employees for their enthusiasm, dedication and competence demonstrated once again.
Maia, 17th March 2014
The Board of Directors
Duarte Paulo Teixeira de Azevedo (President)
Ângelo Gabriel Ribeirinho dos Santos Paupério
Sale of articles + services rendered;
total direct income ‐ total direct expenses ‐ reversal of direct impairment losses + Share of results in joint ventures and associated undertakings;
total direct income ‐ total expenses ‐ reversal of impairment losses;
Direct EBT ‐ financial results;
Direct results before non‐controlling interests and taxes;
Direct income Results excluding contributions to indirect income;
Includes arising from: (i) impairment of real estate assets for retail, (ii) decrease in goodwill, (iii) provisions (net of tax) for possible future liabilities and impairments related with non‐core financial investments, businesses, discontinued assets (or be discontinued / repositioned), (iv) valuation results based on the methodology "mark‐to‐market" of other current investments that will be sold or traded in the near future and (v) other irrelevant issues.
Investments in tangible and intangible assets and investments in acquisitions;
customer debts (receivables derived from the normal course of the Group's activities) – suppliers (amount payable resulting from purchases derived from the normal course of the Group's activities) + inventories (goods booked at acquisition cost, less quantity discounts and impairment losses) + other assets and liabilities (State and other public entities + associated companies + accruals and prepayments + deferred taxes + provisions for risks and charges + fixed asset suppliers + sundry debtors and creditors)
Total net debt + total shareholder funds
APPENDIX
The signatories individually declare that, to their knowledge, the Management Report, the Consolidated and Individual Financial Statements, the legal certification of the Statements and other accounting documents required by law or regulation were prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union, giving a truthful and appropriate image of the assets and liabilities, the financial situation and the results of the issuer and the companies included in the consolidation perimeter and that the Management Report faithfully describes the evolution of the businesses, the performance and position of the issuer and companies included in the consolidation perimeter and contains a description of the main risks and uncertainties with which they are faced.
Maia, 17th March 2014
The Board of Directors
Duarte Paulo Teixeira de Azevedo (President)
Ângelo Gabriel Ribeirinho dos Santos Paupério
Disclosure of the number of held shares and other securities issued by the Company 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:
| Additions | Reductions | Balance as of 31.12.2013 |
||||
|---|---|---|---|---|---|---|
| Date | Quantity | Aver. Price € | Quantity | Aver. Price € | Quantity | |
| Ângelo Gabriel Ribeirinho dos Santos Paupério () (*) Sonae, SGPS, SA (3) Shares purchased under the terms of the Annual Performance Bonus Plan and Medium Term Incentive Continente Bonds ‐ 7% ‐2015 |
08.03.2013 | 178,588 | 0.000 | 763,150 (a) 700,000 (b) |
||
| Duarte Paulo Teixeira de Azevedo () () () (**) Efanor Investimentos, SGPS, SA (1) Migracom, SGPS, SA (9) Sonae, SGPS, SA (3) Shares purchased under the terms of the Annual |
1 1,969,996 488,530 (c) |
|||||
| Performance Bonus Plan and Medium Term Incentive Sale Shares purchased under the terms of the Annual |
25.06.2013 26.06.2013 |
28,479 | 0.000 | 28,479 | 0.699 | |
| Performance Bonus Plan and Medium Term Incentive | 04.12.2013 | 485,707 | 0.000 | |||
| Arlindo Dias Duarte Silva (*) Continente Bonds ‐ 7% ‐2015 |
5,000 (d) | |||||
| Additions | Reductions | Balance as of 31.12.2013 |
||||
| Date | Quantity | Aver. Price € | Quantity | Aver. Price € | Quantity | |
| (1) EfanorInvestimentos, SGPS, SA Sonae, SGPS, SA (3) Pareuro, BV (2) |
200,100,000 5,583,100 |
|||||
| (2) Pareuro, BV Sonae, SGPS, SA (3) |
849,533,095 | |||||
| (3)Sonae, SGPS, SA Sonae Investments, BV (5) Sonae Investimentos, SGPS, SA (4) |
2,894,000 768,555,810 |
|||||
| (4) Sonae Investimentos, SGPS, SA Sonae MC ‐ Modelo Continente, SGPS, SA (8) Sonae‐Specialized Retail, SGPS, SA (7) |
362,937,063 210,000,000 |
|||||
| (5) Sonae Investments BV Sonae Investimentos, SGPS, SA (4) Libra Serviços, Sociedade Unipessoal, Lda (6) |
131,419,190 5,000 |
|||||
| (6) Libra Serviços, Sociedade Unipessoal, Lda Sonae Investimentos, SGPS, SA (4) |
25,000 | |||||
| (7)Sonae‐Specialized Retail, SGPS, SA Sonae Investimentos, SGPS, SA (4) |
0 | |||||
| Sale Sonae MC ‐ Modelo Continente, SGPS, SA (8) |
05.12.2013 | 100,000,000 | 3.200 | 502,062,937 | ||
| (8) Sonae MC ‐ Modelo Continente, SGPS, SA Sonae Investimentos, SGPS, SA (4) Purchase |
05.12.2013 | 100,000,000 | 3.200 | 100,000,000 | ||
| (9) Migracom, SGPS, SA Sonae, SGPS, SA (3) Purchase |
26.06.2013 | 28,479 | 0.699 | 2,936,683 | ||
| Imparfin, SGPS, SA (10) | 150,000 | |||||
| (10) Imparfin, SGPS, SA Sonae, SGPS, SA (3) Continente Bonds ‐ 7% ‐2015 |
4,105,280 5,000 |
(***) Member of the Board of Directors of Efanor Investimentos, SGPS, SA (1)
(****) Member of the Board of Directors of Imparfin, SGPS, SA (10)
(*****) Member of the Statutory Audit Board
(a) of wich 125,000 shares held by spouse
(b) of which 150,000 bonds held by spouse and 400,000 are held by company in which this person discharging managerial responsibilities ("dirigente") is
the sole director
(c) of which 530 shares held by descendants under his charge
(d) co‐held with the respective spouse
Number of shares held by shareholders owning more than 10%, 33% and 50% of the company's share capital.
| Sonae, SGPS, SA | 768,555,810 |
|---|---|
| Sonae Investments, BV | 131,419,190 |
| Libra Serviços, Sociedade Unipessoal, Lda | 25,000 |
| Sonae MC ‐ Modelo Continente, SGPS, SA | 100,000,000 |
Shares held and voting rights of companies owning more than 2% of the share capital of the company, as required by article 8 nr.1 b) of Securities Market Regulation Board (CMVM) regulation 05/2008:
| Shareholder | Nr. of shares | % share capital |
% of voting rights |
|---|---|---|---|
| Efanor Investimentos, SGPS, SA (i) | |||
| By Sonae, SGPS, SA | 768,555,810 | 76.8556% | 85.3951% |
| By Sonae Investments, BV | 131,419,190 | 13.1419% | 14.6021% |
| By Libra Serviços, Sociedade Unipessoal, Lda | 25,000 | 0.0025% | 0.0028% |
| By MC ‐ Modelo Continente, SGPS, SA (ii) | 100,000,000 | 10.0000% | ‐ |
| Total attributable to EfanorInvestimentos, SGPS, SA | 1,000,000,000 | 100.0000% | 100.0000% |
(i) Belmiro Mendes de Azevedo is, according to article 20, paragraph 1, subparagraph b), and article 21, paragraph 1, both of the Portuguese Securities Code, the ultimate beneficial owner, as it holds circa 99% of the share capital and voting rights in Efanor Investimentos SGPS, SA, and the latter wholly owns Pareuro BV.
(ii) Considered treasury shares in accordance with Commercial Companies Code as Sonae MC ‐ Modelo Continente, SGPS, SA is directly and indirectly owned by Sonae Investimentos, SGPS, SA.
Sonae Investimentos, SGPS, S.A. Corporate Governance practices annual report, pursuant to the terms of regulation number 4 of article 245 A of the Portuguese Securities Code and pursuant to the terms of article 2 and article 3 of the Law 28/2009 of 19th of June.
| Shareholder | Nr. of shares | % share capital |
% of voting rights |
|---|---|---|---|
| Efanor Investimentos, SGPS, SA (i) | |||
| By Sonae, SGPS, SA | 768,555,810 | 76.8556% | 85.3951% |
| By Sonae Investments, BV | 131,419,190 | 13.1419% | 14.6021% |
| By Libra Serviços, Sociedade Unipessoal, Lda | 25,000 | 0.0025% | 0.0028% |
| By MC ‐ Modelo Continente, SGPS, SA (ii) | 100,000,000 | 10.0000% | ‐ |
| Total attributable to EfanorInvestimentos, SGPS, SA | 1,000,000,000 | 100.0000% | 100.0000% |
(i) Belmiro Mendes de Azevedo is, according to article 20, paragraph 1, subparagraph b), and article 21, paragraph 1, both of the Portuguese Securities Code, the ultimate beneficial owner, as it holds circa 99% of the share capital and voting rights in Efanor Investimentos SGPS, SA, and the latter wholly owns Pareuro BV.
(ii) Considered treasury shares in accordance with Commercial Companies Code as Sonae MC ‐ Modelo Continente, SGPS, SA is directly and indirectly owned by Sonae Investimentos, SGPS, SA.
There are no shareholders who hold special rights.
As set in the company´s Articles of Association (if nothing is stated, the guidelines shall be those of the governing law):
The Shareholders General Meeting is made up of shareholders with voting rights, holders of shares or securities for subscription, that until 5 business days prior to the Assembly taking place, present prove of their shareholding, under the terms established by Law. The presence of shareholders who have preferential shares without voting rights in the Shareholders General Meeting, and their taking part in the discussion of matters regarding order of the day, depends on the General Assembly Authorisation.
One share corresponds to one vote.
Shareholders who are private individuals can be represented at the Shareholders' General Meetings by sending a letter to the Chairman of the Board of the Shareholders General Meeting, stating the name and address of the representative and date of the meeting. Legal entities may be represented by a person designated by them in writing, whose designation authenticity will be verified by the Chairman of the Board of the Shareholders General Meeting.
If the Company is listed as a publicly quoted company, shareholders can vote by mail, but only in relation to changes to the Articles of Association and Company Governing Bodies election.
Postal votes will only be considered when received at the Company's registered office by registered mail, receipt delivery, addressed to the Chairman of the Board of the Shareholders´ General Meeting at least 3 days prior to the date of the General Meeting, notwithstanding the requirement of proof of shareholding.
The voting declaration must be signed by the shareholder or by his/hers legal representative. In the case of a private individual, it should be accompanied by a certified copy of his/her identity card. In case of a legal entity, the signature should be notarised and should specify that the signatory is authorised and mandated for that purpose.
Voting declarations will only be considered valid when they clearly and unequivocally set out:
a) The item or items of the agenda they refer to;
b) The specific proposal to which they relate to with an indication of the respective proposer or proposers;
c) The precise and unconditional voting intention on each proposal.
Notwithstanding, what is set in section b) herein above, a shareholder is allowed to include in a written voting declaration, regarding an identified proposal, the intention to vote against all alternative proposals, in relation to the same item on the agenda, without further specification.
The shareholders who send their voting declaration by mail shall be deemed to have abstained from voting on any proposals that are not specifically included in their written voting declarations.
Postal votes count as negative votes regarding resolution proposals presented after the date on which the same votes were issued.
It is the Chairman of the Board of the Shareholders' General Meeting responsibility, or the person replacing him, to verify voting declarations sent by mail, disregarding any votes relating to declarations that have not been accepted.
It is the Company´s responsibility to guarantee the confidentiality of votes sent by mail, until voting takes place.
The Shareholders General Meeting may deliberate at first call so long as there are present or represented shareholders whom represent more than 50% of the issued share capital.
Chapter 4 – Rules applicable to the nomination and replacement of the Statutory Governing Bodies members and changes to the Company's Articles of Association
The Board of Directors is made up of an even or odd number of members. A minimum of 2 and maximum of 11, elected at the Shareholders General Meeting.
In case of death, resignation or temporary or permanent incapacity of any member, the Board of Directors will provide a substitute.
In the case of the company being a publicly quoted company, concessionaire of the State or equivalent entity, the definitive lack of a Director elected under the provision of article 392 of the Portuguese Companies Act (special election rules apply), results in new elections.
Notwithstanding, governing law does not prevent that the substitution may be decided by the Shareholders General Meeting.
As set forth in governing law, changes to the Articles of Association depend on the Shareholders General Meeting Resolution.
Required quorum for amendment to the Articles of Association:
a) The Articles of Association state that at first call to deliberate on any matter, shareholders whom represent more than 50% of the share capital must be present or represented;
b) In accordance with chapter 3, article 383 of the Portuguese Companies Act, the Assembly, on a second call, can deliberate regardless of the number of shareholders present, represented or the share capital by them represented.
Under the terms of chapter 3 article 386 of the Portuguese Companies Act, the resolution regarding a change to the articles of association, must be approved by 2/3 of votes, regardless of the Assembly meeting during a first or a second call.
Article 5, chapter 2 of the Articles of Association states that the Company's share capital can be increased, through new entries in cash, of up to five thousand million Euro, in one or more stages, by resolution of the Boards of Directors, which will determine, in accordance with the law, the conditions of subscription and the categories of shares to be issued, based on those already existing at the time".
This authorisation was renewed by the Shareholders General Meeting which took place on 27th of April 2012 and remains valid for a period of 5 years under the terms of chapter 2 b) of article 456 of the Portuguese Companies Act.
The existence of an effective internal control environment, particularly in the process of financial reporting, is a commitment Sonae Investimentos Board of Directors has. It aims to identify and improve most relevant process in terms of preparation and disclosure of financial information, with the aims of transparency, consistency, simplicity, reliability and relevance. The objective of the internal control system is to ensure a reasonable guarantee in relation to the preparation of financial statements in accordance with the accounting principles adopted, and quality of financial reporting.
The reliability of the financial information is guaranteed not only by the clear separation between who prepares it and the users, but also by the implementation of various control procedures during the process of preparation and disclosure of financial information.
The internal control system regarding accounting, preparation and disclosure of financial information, includes the following key controls:
The Management Report and the Corporate Governance Report are prepared with contributes from multidisciplinary teams;
The various documents which constitute the annual report are reviewed and approved by Sonae Investimentos Board of Directors. After the approval, the documents are sent to the External Auditor, who provides the Legal Accounts Certification and External Auditing Report;
Amongst the risk causes which may materially affect the accounting and financial reporting, we note the following:
More specific information on how these, and other risk causes were mitigated, can be consulted during the course of notes to the financial statements.
Sonae Investments adopts various actions related to the continuous improvement of the Financial Risk Control System, including:
The statutory Governing Bodies Remuneration Policy was approved at the Annual General Meeting held on 24th April 2013 based on the following principles:
The Remuneration and Performance Bonus Policy applicable to the statutory Governing Bodies and Officers, adheres to the basic outline and main principles of the Remuneration and Performance Bonus Policy approved by Sonae, SGPS, S.A. competent bodies. It is based upon the premise that initiative, competence and commitment are essential factors to perform well, and this should be in line with the medium and long‐term interests of our society, with a view to its sustainability.
The Remuneration Policy is determined by carrying out a comparative study between market references as supplied by the various studies made available in Portugal and other European Markets.
The remuneration packages are defined based upon market studies carried out on Top Executives in Portugal and Europe, and fall in‐line with market average in terms of fixed remuneration, and in‐line with the third quartile in terms of total remuneration on a comparable basis.
The lower and upper limits of fixed remuneration are aligned with market standards which are in turn measured by the equivalent practices in comparable societies.
The Performance Bonus component which is determined on a case‐by‐case basis and is non‐ binding to corporate entities, is subject to maximum percentage limits and follows pre‐ established and measurable performance criteria – performance indicators – agreed upon with each potential beneficiary every fiscal year.
B. In achieving the formulated principles, remuneration and compensation for the statutory Governing Bodies and Officers at Sonae Investimentos and respective controlled companies will follow the rules defined below, and will be applied on an individual basis considering the governance structure of each company:
The individual reward schemes are defined in accordance with each ED´s responsibility levels and are reviewed on an annual basis. Each ED is attributed a classification which internally is referred to as Functional Group. The ED´s are classified into functional groups "Senior Executive Group" (G1) and "Senior Executive" (G2). The structure of the functional classifications are based upon Hay´s International Model of classifying corporate functions, with the objective of facilitating market comparisons and promoting internal equality.
More specifically the policy is composed of (i) a fixed remuneration paid in monthly instalments covering a calendar year period and (ii) short and medium‐term Performance Bonus the award of which does not constitute an obligation on part of the controlled companies and must follow the following rules:
i) The Short‐Term Performance Bonus aims to compensate the achievement of objectives defined on an annual basis which are associated with Key Performance Indicators of Business Activity (Business KPIs) and Personal Key Performance Indicators (Individual KPIs). The Business KPIs represent 70% and are determined by the business, economic and financial KPIs. They encompass unambiguous indicators which are divided into Group Business and departmental KPIs. The Group Business KPIs are based on economic and financial indicators which are defined in accordance with the budget, the performance of each business unit as well as Sonae's overall consolidated performance. The remaining 30% are derived from Individual KPIs which combine ambiguous and unambiguous indicators. The final figures are a result of the actual performance (business results/individual contributions) and may vary between 0% and 140% of the previously defined compensation package. This Performance Bonus will be determined in accordance with the performance during the year immediately preceding it, and will be paid in full during the first quarter of the calendar year in which it is assigned. This payment will be carried out in strict compliance with the legal and regulatory arrangements that best correspond to each entity, namely via profit sharing when deliberated at the General Meeting.
ii) The Medium‐Term Variable Performance Bonus aims to strengthen the ED´s relationship with the performance of the respective companies, aligning their interests with that of the shareholders and increasing awareness regarding the importance of their performance for the overall success of the organisation. The amount pertaining to the Medium‐Term Performance Bonus is defined on an annual basis. For the ED´s, this figure represents the equivalent of 100% of the Short‐Term Performance Bonus. The value paid in Euros shall be divided by the quoted share price for the determination of the number of shares it corresponds to. The value converted into shares will be adjusted to include any variations occurring in the share capital or dividends (Total Share Returns) during a deferring period of three years. At the vesting date, the shares shall be delivered without cost, and the Company will keep the alternative option of delivering the corresponding amount in cash. The Medium‐Term Performance Bonus will be determined until April of the year following that in which the performance evaluation is applicable, and will be paid in full three years following the date on which it is attributed in the form of free disposal or discount on acquiring allocated shares. In the event of the latter, the principle of neutrality pertaining to impacts on society and for the beneficiary of the plan in accordance with the Share Allocation Plan and respective Regulation in effect for the group of companies denominated Sonae SGPS, S.A. shall be respected.
No variable remuneration or Performance Bonus of any kind is paid to Non‐Executive Directors.
The remuneration of the members of the Statutory Audit Board is based exclusively on fixed annual amounts, which includes an Annual Responsibility Allowance established in accordance with comparable market practices.
The Statutory External Auditor is remunerated in accordance with the applicable Standard Fee Table as per market practice under the supervision of our Statutory Audit Board.
The same principles as per that of the Executive Directors Remuneration and Performance Bonus apply to Officers where applicable and with the respective adjustments.
Maia, 17th March 2014
The Board of Directors
Duarte Paulo Teixeira de Azevedo (President)
Ângelo Gabriel Ribeirinho dos Santos Paupério
(Amounts expressed in euro) (Translation of consolidated financialstatements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.)
| ASSETS | Notes | 31 December 2013 | 31 December 2012 |
|---|---|---|---|
| NON‐CURRENT ASSETS: | |||
| Tangible assets | 8 | 1,820,583,824 | 2,025,784,857 |
| Intangible assets | 9 | 163,731,471 | 154,622,623 |
| Goodwill | 10 | 498,186,402 | 499,234,487 |
| Investments in joint ventures and associates | 5 | 51,797,067 | 60,819,852 |
| Other investments | 6 and 7 | 13,401,237 | 34,605,498 |
| Deferred tax assets | 18 | 117,412,133 | 123,115,350 |
| Other non‐current assets | 7 and 12 | 23,103,739 | 34,429,814 |
| Total Non‐Current Assets | 2,688,215,873 | 2,932,612,481 | |
| CURRENT ASSETS: | |||
| Inventories | 13 | 588,396,336 | 524,684,028 |
| Trade account receivables | 7 and 14 | 43,070,196 | 31,088,175 |
| Other debtors | 7 and 15 | 90,687,013 | 51,947,177 |
| Taxes recoverable | 16 | 63,196,961 | 63,826,930 |
| Other current assets | 17 | 58,912,883 | 64,165,275 |
| Investments | 7 and 11 | 42,105 | 892,728 |
| Cash and cash equivalents | 7 and 19 | 71,510,332 | 162,194,406 |
| Total Current Assets | 915,815,826 | 898,798,719 | |
| Assets available for sale | ‐ | 720,338 | |
| TOTAL ASSETS | 3,604,031,699 | 3,832,131,538 | |
| EQUITY AND LIABILITIES | |||
| EQUITY: | |||
| Share capital | 20 | 1,000,000,000 | 1,000,000,000 |
| Own shares | 20 | (320,000,000) | (320,000,000) |
| Legal reserve | 140,642,469 | 140,357,809 | |
| Reserves and retained earnings | (114,375,665) | (77,416,945) | |
| Profit/(Loss) for the period attributable to the equity holders of the Parent Company | (84,265,323) | 9,310,582 | |
| Equity attributable to the equity holders of the Parent Company | 622,001,481 | 752,251,446 | |
| Equity attributable to non‐controlling interests | 21 | 84,312,167 | 85,691,823 |
| TOTAL EQUITY | 706,313,648 | 837,943,269 | |
| LIABILITIES: | |||
| NON‐CURRENT LIABILITIES: | |||
| Loans | 7 and 22 | 114,694,578 | 218,458,349 |
| Bonds | 7 and 22 | 646,307,863 7,630,324 |
532,738,392 9,942,240 |
| Obligation under finance leases Other loans |
7, 22 and 23 7 and 22 |
53,936 | 90,166 |
| Other non‐current liabilities | 7 and 25 | 444,708,892 | 429,509,652 |
| Deferred tax liabilities | 18 | 116,937,919 | 130,113,975 |
| Provisions | 30 | 29,588,227 | 46,471,233 |
| Total Non‐Current Liabilities | 1,359,921,739 | 1,367,324,007 | |
| CURRENT LIABILITIES: | |||
| Loans | 7 and 22 | 56,774,364 | 55,175,849 |
| Bonds | 7 and 22 | 9,990,122 | 170,900,782 |
| Obligation under finance leases | 7, 22 and 23 | 4,185,507 | 3,383,796 |
| Other loans | 7 and 22 | 1,448,609 | 986,997 |
| Trade creditors | 7 and 27 | 1,143,639,351 | 1,090,451,413 |
| Other creditors | 7 and 28 | 90,860,537 | 92,477,002 |
| Taxes and contributions payable | 16 | 49,720,914 | 47,866,681 |
| Other current liabilities | 29 | 178,458,919 | 163,393,412 |
| Provisions | 30 | 2,717,989 | 2,228,330 |
| Total Current Liabilities | 1,537,796,312 | 1,626,864,262 | |
| TOTAL LIABILITIES | 2,897,718,051 | 2,994,188,269 | |
| TOTAL EQUITY AND LIABILITIES | 3,604,031,699 | 3,832,131,538 | |
The accompanying notes are part of these consolidated financial statements.
| Notes | 31 December 2013 | 31 December 2012 | |
|---|---|---|---|
| Sales | 33 | 4,627,967,634 | 4,496,799,850 |
| Services rendered | 33 | 42,578,232 | 34,866,216 |
| Investment income | 34 | 83,036 | (896,208) |
| Financial income | 35 | 5,865,448 | 6,268,194 |
| Other income | 36 | 442,428,755 | 428,589,697 |
| Cost of goods sold and materials consumed | 13 | (3,583,196,593) | (3,499,250,155) |
| Changes in stocks of finished goods and work in progress | 181,680 | (666,354) | |
| External supplies and services | 37 | (559,554,581) | (568,055,578) |
| Staff costs | 38 | (552,778,429) | (539,382,172) |
| Depreciation and amortisation | 8 and 9 | (176,833,990) | (183,719,428) |
| Provisions and impairment losses | 30 | (182,585,781) | (25,663,160) |
| Financial expenses | 35 | (73,240,790) | (82,586,817) |
| Other expenses | 39 | (59,610,246) | (34,281,691) |
| Share of results of joint ventures and associated undertakings | 5 | (2,894,152) | 1,014,532 |
| Profit/(Loss) before taxation | (71,589,777) | 33,036,926 | |
| Taxation | 40 | (10,841,985) | (23,750,914) |
| Profit/(Loss) after taxation | (82,431,762) | 9,286,012 | |
| Attributable to: | |||
| Equity holders of the Parent Company | (84,265,323) | 9,310,582 | |
| Non‐controlling interests | 21 | 1,833,561 | (24,570) |
| Profit/(Loss) per share | |||
| Basic | 42 | (0.093628) | 0.010345 |
| Diluted | 42 | (0.093628) | 0.010345 |
The accompanying notes are part of these consolidated financial statements.
(Translation of consolidated financialstatements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.)
(Amounts expressed in euro)
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Net Profit / (Loss) for the period Items that may be reclassified subsequently to profit or loss |
(82,431,762) | 9,286,012 |
| Exchange differences arising on translation of foreign operations | 392,504 | (125,867) |
| Participation in other comprehensive income (net of tax) related to joint ventures and associated companies included in consolidation by the equity method (Note 5) |
(6,114,301) | 2,324,633 |
| Changes in hedge and fair value reserves | (185,434) | (2,681,189) |
| Deferred taxes related with other components of comprehensive income | 74,162 | 706,717 |
| Other comprehensive income for the period | (5,833,069) | 224,294 |
| Total comprehensive income for the period | (88,264,831) | 9,510,306 |
| Attributable to: | ||
| Equity holders of Parent Company | (90,090,326) | 9,603,041 |
| Non controlling interests | 1,825,495 | (92,735) |
The accompanying notes are part of these consolidated financial statements.
(Translation of consolidated financialstatements originally issued in Portuguese. Incase of discrepancy the Portuguese version prevails.)
(Amounts expressed in euro)
| Attr ibut |
able Eq uity Hold to |
of P t Co ers aren |
mpa ny |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Rese Re d tain ed E arni rves an ngs |
||||||||||||
| Sha re Cap ital |
Ow n Sha res |
al Leg Res erve |
Cur renc y nsla Tra tion Res erve |
Hed ging Res erve |
Lega l res erve s in cord ac anc e with ticle ar 324 CS º C |
Oth Re er serv es and ed Re tain ings Earn |
al Tot |
Net fit/( Pro Loss ) |
al Tot |
Non trol ling ‐con inte rest s (No te 2 1) |
al Tot Equ ity |
|
| Bala at 1 Ja ry 2 012 nce as nua |
1,00 0,00 0,00 0 |
(320 ) ,000 ,000 |
139 ,614 ,881 |
336 ,811 |
1,59 5,20 5 |
320 ,000 ,000 |
(443 ) ,083 ,227 |
(12 1) 1,15 1,21 |
63,7 98,2 14 |
762 ,261 ,884 |
75,7 00,0 31 |
837 ,961 ,915 |
| al ehe nsiv e in e fo r th riod Tot co mpr com e pe |
‐ | ‐ | ‐ | (125 ,867 ) |
(1,9 06,3 07) |
‐ | 2,32 4,63 3 |
292 ,459 |
9,31 0,58 2 |
9,60 3,04 1 |
(92, 735 ) |
9,51 0,30 6 |
| App iatio n of prof it of 201 1: ropr Tran sfer le gal and ined ings to reta rese rves earn den ds dis trib uted Divi Inco di strib utio me n Oth es |
‐ ‐ ‐ ‐ |
‐ ‐ ‐ ‐ |
742 ,928 ‐ ‐ ‐ |
‐ ‐ ‐ ‐ |
‐ ‐ ‐ ‐ |
‐ ‐ ‐ ‐ |
63,0 55,2 86 (20, ) 000 ,000 ‐ 386 ,521 |
63,0 55,2 86 (20, ) 000 ,000 ‐ 386 ,521 |
(63, 798 ,214 ) ‐ ‐ ‐ |
‐ (20, ) 000 ,000 ‐ 386 ,521 |
‐ (157 ) ,074 (6,0 75) 15,6 16,2 57,2 76 |
‐ (20, ) 157 ,074 (6,0 75) 15,6 16,6 43,7 97 |
| Bala at 3 De 1 ber 201 2 nce as cem |
1,00 0,00 0,00 0 |
(320 ) ,000 ,000 |
140 ,357 ,809 |
210 ,944 |
(31 2) 1,10 |
320 ,000 ,000 |
(397 ) ,316 ,787 |
(77, ) 416 ,945 |
9,31 0,58 2 |
752 ,251 ,446 |
85,6 91,8 23 |
837 ,943 ,269 |
| Bala at 1 Ja ry 2 013 nce as nua |
1,00 0,00 0,00 0 |
(320 ) ,000 ,000 |
140 ,357 ,809 |
210 ,944 |
(31 2) 1,10 |
320 ,000 ,000 |
(397 ) ,316 ,787 |
(77, ) 416 ,945 |
9,31 0,58 2 |
752 ,251 ,446 |
85,6 91,8 23 |
837 ,943 ,269 |
| Tot al ehe nsiv e in e fo r th riod co mpr com e pe |
‐ | ‐ | ‐ | 417 ,629 |
(128 ,331 ) |
‐ | (6,1 14,3 01) |
(5,8 25,0 03) |
(84, 265 ,323 ) |
(90, 090 ,326 ) |
1,82 5,49 5 |
(88, 264 ,831 ) |
| n of prof it of App iatio 201 2: ropr Tran sfer le gal and ined ings to reta rese rves earn den ds dis trib uted Divi di strib Inco utio me n Oth ers |
‐ ‐ ‐ ‐ |
‐ ‐ ‐ ‐ |
284 ,660 ‐ ‐ ‐ |
‐ ‐ ‐ ‐ |
‐ ‐ ‐ ‐ |
‐ ‐ ‐ ‐ |
9,02 5,92 2 (40, ) 000 ,000 ‐ (159 ,639 ) |
9,02 5,92 2 (40, ) 000 ,000 ‐ (159 ,639 ) |
(9,3 10,5 82) ‐ ‐ ‐ |
‐ (40, ) 000 ,000 ‐ (159 ,639 ) |
‐ (190 ) ,744 (4,6 15) 20,4 1,60 6,00 8 |
‐ (40, ) 190 ,744 (4,6 15) 20,4 1,44 6,36 9 |
| Bala ber at 3 De 1 201 3 nce as cem |
1,00 0,00 0,00 0 |
(320 ) ,000 ,000 |
140 ,642 ,469 |
628 ,573 |
(439 ) ,433 |
320 ,000 ,000 |
(434 ) ,564 ,805 |
(114 ) ,375 ,665 |
(84, ) 265 ,323 |
622 ,001 ,481 |
84,3 12,1 67 |
706 ,313 ,648 |
Theaccompanying notes are part of these consolidated financial statements.
(Translation of consolidated financialstatements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.)
(Amounts expressed in euro)
| Notes | 31 December 2013 | 31 December 2012 | |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Cash receipts from trade debtors | 4,648,133,068 | 4,534,683,803 | |
| Cash paid to trade creditors | (3,748,317,814) | (3,548,977,855) | |
| Cash paid to employees | (544,956,191) | (540,060,743) | |
| Cash flow generated by operations | 354,859,063 | 445,645,205 | |
| Income taxes (paid) / received | (18,078,144) | (23,696,065) | |
| Other cash receipts and (payments) relating to operating activities | 15 | (21,243,312) | 4,304,369 |
| Net cash flow from operating activities (1) | 315,537,607 | 426,253,509 | |
| INVESTMENT ACTIVITIES | |||
| Cash receipts arising from: | |||
| Investments | 43 | 1,695,498 | 2,294,971 |
| Tangible assets | 9,234,977 | 1,711,291 | |
| Intangible assets | 625 | 43,796 | |
| Interests and similar income | 2,631,213 | 2,801,012 | |
| Loans granted | 19,448,722 | 12,703,190 | |
| Dividends | 110,867 | 304,131 | |
| 33,121,902 | 19,858,391 | ||
| Cash Payments arising from: | |||
| Investments | (14,938) | (13,094) | |
| Tangible assets | (127,609,002) | (92,916,312) | |
| Intangible assets | (36,252,775) | (19,919,041) | |
| Loans granted | (10,096,722) | (16,203,189) | |
| (173,973,437) | (129,051,636) | ||
| Net cash flow used in investment activities (2) | (140,851,535) | (109,193,245) | |
| FINANCING ACTIVITIES | |||
| Cash receipts arising from: | |||
| Loans obtained | 3,703,291,238 | 4,271,692,904 | |
| Capital increases,shareholder's loans and share premiums | 254,886 | 15,882,000 | |
| Coverage of losses | 399,810 | ‐ | |
| Others | 127,782 | ‐ | |
| 3,704,073,716 | 4,287,574,904 | ||
| Cash Payments arising from: | |||
| Loans obtained | (3,838,865,755) | (4,592,221,541) | |
| Interests and similar charges | (71,284,854) | (84,100,080) | |
| Dividends | (44,800,915) | (26,104,565) | |
| Others | (1,543,204) | (2,527,668) | |
| (3,956,494,728) | (4,704,953,854) | ||
| Net cash flow used in financing activities (3) | (252,421,012) | (417,378,950) | |
| Net increase/(decrease) in cash and cash equivalents (4) = (1) + (2) + (3) | (77,734,940) | (100,318,686) | |
| Effect of foreign exchange rate | 139,712 | (213,901) | |
| Cash and cash equivalents at the beginning of the period | 19 | 148,982,442 | 249,087,227 |
| Cash and cash equivalents at the end of the period | 19 | 71,107,790 | 148,982,442 |
The accompanying notes are part of these consolidated financial statements.
FOR THE PERIOD ENDED 31 DECEMBER 2013
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
(Amounts expressed in euro)
Sonae Investimentos, SGPS, S.A., has its head‐office at Rua João Mendonça nº 529, 4464‐501 Senhora da Hora, Portugal, and is the parent company of a group of companies, as detailed in Notes 4 to 6 the Sonae Investimentos Group ("Sonae Investimentos"). Sonae Investimentos operations and operating segments are described in the management report and in Note 44.
The principal accounting policies adopted in preparing the accompanying consolidated financial statements are as follows:
The accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union applicable to economic period beginning on 1 January 2013, issued by the International Accounting Standards Board ("IASB"), and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC") or by the previous Standing Interpretations Committee ("SIC"), as adopted by the European Union as at the consolidated financial statements issuance date.
The accompanying consolidated financial statements have been prepared from the books and accounting records of the Company, subsidiaries and joint ventures, adjusted in the consolidation process, on a going concern basis and under the historical cost convention, except for some financial instruments which are stated at fair value.
Up to the financial statements approval date, the following standards interpretations, amendments and revisions some of which become mandatory during the year 2013, have been endorsed by the European Union:
| With mandatory application on 1 January 2013: | Effective Date(for financial years beginning on/after |
|||
|---|---|---|---|---|
| IFRS 13 ‐ (Fair Value Measurement) | 01 Jan 2013 | |||
| IAS 19 ‐ Amendments (Employee Benefits) | 01 Jan 2013 | |||
| IAS 1 ‐ Amendments (Presentation of Items of Other Comprehensive | 01 Jul 2012 | |||
| Income) | ||||
| IFRS 7 ‐ Admendments (Disclosures of Financial Instruments) | 01 Jan 2013 | |||
| IFRIC 20 ‐ Interpretation (Stripping Costs in the Production Phase of a | ||||
| Surface Mine) | 01 Jan 2013 | |||
| IFRS 1 ‐ Amendments (Government Loans) | 01 Jan 2013 | |||
| Improvements of some IFRS (2009‐2011) | 01 Jan 2013 | |||
The application of these standards and interpretations had no material effect on the financial statements of the Group.
The following standards, interpretations, amendments and revisions have been at the date of approval of these financial statements, approved ("endorsed") by the European Union, whose application is mandatory in future financial years:
| With mandatory application after 2013: | Effective Date(for financial years beginning on/after) |
|---|---|
| IFRS 10 ‐ (Consolidated Financial Statements) (*) | 01 Jan 2014 |
| IFRS 11 ‐ (Joint arrangements) (*) | 01 Jan 2014 |
| IFRS 12 ‐ (Disclosures of Interests in Other Entities) (*) | 01 Jan 2014 |
| IAS 27 ‐ (Separate Financial Statements – revised in 2011 ) (*) | 01 Jan 2014 |
| IAS 28 ‐ (Investments in Associates and Joint Ventures) (*) | 01 Jan 2014 |
| Amendments to IFRS 10, IFRS 12 and IAS 27 (Investments Entities) | 01 Jan 2014 |
| IAS 32 ‐ Amendments (Offsetting Financial Assets and Financial Liabilities) | 01 Jan 2014 |
| Amendments to IAS 36 (Recoverable amount disclosures for Non‐Financial | |
| Assets) | 01 Jan 2014 |
| Amendments to IAS 39 (Reformulation of Derivatives and | |
| continuation of Hedge Accounting) | 01 Jan 2014 |
(*) In accordance with the EU Regulation which approved the adoption of IFRS 10, 11 and 12 and the amendments to IAS 27 and IAS 28, an entity shall use these standards no later than periods beginning on or after 1 January 2014. The early adoption is however permitted;
The Group did not proceed to earlier adoption of any of these standards on the financial statements for the year ended on the 31 December 2013, since their application is not yet mandatory. No significant impacts are expected in the financial statements resulting from the adoption of these standards, namely because the Group has amended the measurement of investments in jointly controlled entities by applying the equity method.
The main accounting policies adopted by Sonae Investimentos are as follows:
Investments in companies in which Sonae Investimentos owns, directly or indirectly, more than 50% of the voting rights at Shareholders' General Meetings or is able to establish financial and operational policies so as to benefit from its activities (definition of control normally used by Sonae), are included in the consolidated financial statements using the full consolidation method. Equity and net profit attributable to minority shareholders are shown separately, under the caption Non‐controlling interests, in the consolidated statement of financial position and in the consolidated income statement, respectively. Companies included in the consolidated financial statements are listed in Note 4.
The comprehensive income of an associated is attributable to the Sonae Investimentos Group Owners and non‐controlling interests, even if the situation results in a deficit balance at the level of non‐ controlling interests.
Assets and liabilities of each Sonae Investimentos subsidiary are measured at their fair value at the acquisition date or control assumption, such measurement can be completed within twelve months after the date of acquisition. The excess of the consideration transferred plus the fair value of any previously held interests and non‐controlling interests over the fair value of the identifiable net assets acquired is recognized as goodwill (Note 2.2.c)). Any excess of fair value of identifiable assets over consideration transferred, previously held interest and non‐controlling interests recognized as income in profit or loss for the period of acquisition in the caption "Other income", after reassessment of the estimated fair value attributed to the net assets acquired. The Sonae Group will choose on transaction‐by‐transaction basis, the fair measurement of non‐controlling interests, (i) according to the non‐controlling interests share assets, liabilities and contingent liabilities of the acquired, or (ii) according to their fair value.
The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from the effective date of gain of control or up to the effective date of loss of control, as appropriate.
Adjustments to the financial statements of Sonae Investimentos companies are performed, whenever necessary, in order to adapt accounting policies to those used by Sonae Investimentos. All intra‐group transactions, balances, income and expenses and distributed dividends are eliminated on the consolidation process.
Whenever Sonae Investimentos 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.
Investments in jointly controlled entities are recorded using the equity method. Investments in jointly controlled companies are classified as such based on shareholders' agreements that establish joint control.
Investments in associated companies (companies where Sonae Investimentos exercises significant influence but does not establish financial and operational policies – usually corresponding to holdings between 20% and 50% in a company's share capital) are accounted in accordance with the equity method.
Under the equity method, investments are recorded at cost, adjusted by the amount corresponding to Sonae Investimentos in comprehensive income (including net profit for the period) of jointly controlled entities and associates, against Sonae Investimentos comprehensive income or gains or losses for the year as applicable, and dividends received.
Any excess of the cost of acquisition over Sonae Investimentos's share in the fair value of the identifiable net assets acquired is recognized as goodwill (Note 2.2.c)), which is included in the caption Investment in jointly controlled and associated companies. Any excess of Sonae Investimentos's share in the fair value of the identifiable net assets acquired over cost are recognized as income in the profit or loss for the period of acquisition, after reassessment of the estimated fair value of the net assets acquired under the caption "Share of results of joint ventures and associated undertakings".
An assessment of investments in jointly controlled and associated companies is performed when there is an indication that the asset might be impaired being any impairment loss recorded in the income statement. Impairment losses recorded in prior years that are no longer justifiable are reversed.
When Sonae Investimentos's share of losses exceeds the carrying amount of the investment, the investment is reported at null value and recognition of losses is discontinued, unless Sonae is committed beyond the value of its investment. In these situations impairment is recorded for that amount.
Sonae Investimentos's share in unrealised gains arising from transactions with jointly controlled and associated companies is eliminated in proportion to Sonae Investimentos´s interest in the above mentioned entities against the investment on the same entity. Unrealised losses are as well eliminated, but only to the extent that there is no evidence of impairment of the asset transferred.
Investments in jointly controlled and associated companies are disclosed in Note 5.
The excess of consideration transferred in the acquisition of investments in subsidiaries, jointly controlled and associated companies plus the amount of any non‐controlling interests (in the case of affiliated companies) over Sonae Investimentos share in the fair value of the identifiable assets, liabilities and contingent liabilities of those companies at the date of acquisition, when positive, is shown as goodwill (Note 10) or as Investments in jointly controlled and associated entities (Note 5). The excess of the consideration transferred in the acquisition of investments in foreign companies the amounts of any non‐ controlling interests (in the case of affiliated companies) over the fair value of their identifiable assets, liabilities and contingent liabilities at the date of acquisition is calculated using the functional currency of each of those companies. Translation to Sonae Investimentos functional currency (Euro) is made using the closing exchange rate. Exchange rate differences arising from this translation are recorded and disclosed in "Currency translation reserves".
Future contingent consideration is recognised as a liability, at the acquisition‐date, according to its fair value, and any changes to its value are recorded as a change in the 'Goodwill', but only as long as they occur during the 'measurement period' (until 12 months after the acquisition‐date) and as long as they relate to facts and circumstances prior to that existed at the acquisition date, otherwise these changes must be recorded in profit or loss on the income statement.
Transactions regarding the acquisition of additional interests in a subsidiary after control is obtained, or the partial disposal of an investment in a subsidiary while control is retained, are accounted for as equity transactions impacting the shareholders´ funds captions, and without giving rise to any additional Goodwill and without any gain or loss recognised.
The moment a sales transaction generates a loss of control, assets and liabilities of the entity are derecognised, any interest retained in the entity sold is measured at fair value and any gain or loss calculated on the sale is recorded in results.
Goodwill is not amortised, but it is subject to impairment tests on an annual basis or whenever there are indications of impairment to check for impairment losses to be recognized. Net recoverable amount is determined based on business plans used by Sonae management or on valuation reports issued by independent entities namely for real estate assets. Impairment losses recognized in the period are recorded in the income statement under the caption "Provisions and impairment losses".
Impairment losses related with goodwill will not be reversed.
The goodwill, if negative is recorded as income in the profit or loss for the period, at the date of acquisition, after reassessment of the fair value of the identifiable assets, liabilities and contingent liabilities acquired.
Assets and liabilities denominated in foreign currencies in the financial statements of foreign companies are translated to euro using exchange rates at date of the statement of financial position. Profit and loss and cash flows are converted to euro using the average exchange rate for the period. Exchange rate differences originated after 1 January 2004 are recorded as equity under Translation reserves in "Other Reserves and retained earnings". Exchange rate differences that were originated prior to 1 January 2004 (date of transition to IFRS) were written‐off through "Retained earnings".
Goodwill and fair value adjustments arising from the acquisition of foreign companies are recorded as assets and liabilities of those companies and translated to euro using exchange rates at the statement of financial position date.
Whenever a foreign company is sold (totally or partially), accumulated exchange rate differences are recorded in the income statement as a gain or loss on the disposal, in the caption Investment income, when there is a control loss; in the case where there is no control loss, it is transferred to non‐controlling interests.
Exchange rates used on translation of foreign group, jointly controlled and associated companies are listed below:
| 31 December 2013 | 31 December 2012 | |||||
|---|---|---|---|---|---|---|
| End of period | Average of period | End of period | Average of period | |||
| Brazilian Real | 0.30697 | 0.35076 | 0.36988 | 0.39996 | ||
| Turquish Lira | 0.33778 | 0.39651 | 0.42461 | 0.43242 |
Tangible assets acquired up to 1 January 2004 (transition date to IFRS) are recorded at acquisition or production cost, or revalued acquisition cost, in accordance with generally accepted accounting principles in Portugal until that date, net of depreciation and accumulated impairment losses.
Tangible assets acquired after that date is recorded at acquisition cost, net of depreciation and accumulated impairment losses.
Depreciation is calculated on a straight line basis, according to the estimated life cycle for each group of goods, starting from the date the asset is available for use in the necessary conditions to operate as intended by the management, and recorded against the income statement caption "Depreciation and amortisation".
Impairment losses identified in the recoverable amounts of tangible assets are recorded in the year in which they arise, by a corresponding charge against, the caption 'Depreciation and amortisation' in the profit and loss statement.
The depreciation rates used correspond to the following estimated useful lives:
| Years | |
|---|---|
| Buildings | 10 to 50 |
| Plant and machinery | 10 to 20 |
| Vehicles | 4 to 5 |
| Tools | 4 to 8 |
| Fixture and fittings | 3 to 10 |
| Other tangible assets | 4 to 8 |
Maintenance and repair costs relating to tangible assets are recorded directly as expenses in the year they are incurred.
Tangible assets in progress represent fixed assets still under construction‐development and are stated at acquisition cost net of impairment losses. These assets are depreciated from the date they are completed or become ready for use.
Gains or losses on sale or disposal of tangible assets are calculated as the difference between the selling price and the carrying amount of the asset at the date of its sale‐disposal. These are recorded in the income statement under either "Other income" or "Other expenses".
Intangible assets are stated at acquisition or production cost, net of depreciation and accumulated impairment losses. Intangible assets are only recognized if it is probable that future economic benefits will flow from them, if they are controlled by Sonae Investimentos and if their cost can be reliably measured.
Expenditure on research associated with new technical knowledge is recorde as an expense recorded in the income statement when it is incurred.
Expenditure on development is recognized as an intangible asset if Sonae Investimentos 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 for Sonae is probable are capitalised as intangible assets.
The expenses incurred with the acquisition of client portfolio's (attributed value relating to the allocation of the purchasing price in business activity concentration) are stated as intangible assets and amortized on straight‐line bases, during the average estimated period of portfolio's client retention.
Brands and patents are recorded at their acquisition cost and are amortised on a straight‐line basis over their respective estimated useful life. When the estimated useful life is undetermined, they are not depreciated but are subject to annual impairment tests.
Amortisation is calculated on a straight‐line basis, as from the date the asset is first used, over the expected useful life which usually is between 3 and 7 years. It is recorded in the caption of "Amortizations and depreciations", in the income statement.
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.
The analysis of the transfer of risks and rewards of ownership of the asset takes into account several factors, including whether or not ownership is contractually conditioned to assume ownership of the asset, the value of minimum future payments over the contract, nature of the leased asset and the duration of the contract taking into consideration the possibility of renewal.
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 under finance lease contracts and the related liabilities, are recorded in accordance with the financial method. Under this method, the tangible assets, the correspondent accumulated depreciation and the related liability are recorded in accordance with the contractual financial plan at fair value or, if less, at the present value of payments. In addition, interests included in lease payments and the depreciation of the tangible assets are recorded as expenses in the profit and loss statement for the period to which they relate.
The existing situations where the Group is the lessee are operating leases and as such the lease payments are recognized as an expense on a straight line basis over the lease term.
For operating leases where Sonae Investimentos acts as lessor, the value of allocated goods is kept on Sonae Investimentos statement of financial position and income is recognized on a straight line basis over the period of the lease.
Government grants are recorded at fair value when there is reasonable assurance that they will be received and that Sonae Investimentos will comply with the conditions attaching to them.
Grants received as compensation for expenses, namely grants for personnel training, are recognized as income in the same period as the relevant expense.
Grants related to depreciable assets are disclosed as "Other non‐current liabilities" and are recognized as income on a straight‐line basis over the expected useful lives of those underlying assets.
Assets are assessed for impairment at each statement of financial position 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 recognized in the income statement under Provisions and impairment losses.
The recoverable amount is the higher of an asset's fair value net of costs to sell and its value in use. Fair value net of 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.
In situations where the use of the asset will be expectedly discontinued (stores to be closed on the remodelling processes)the Group performs a review of the asset´s useful life after considering its impact on the value of use of that asset far terms of impairment analysis, particularly on the net book value of the assets to derecognise.
Reversal of impairment losses recognized in prior exercises is only recorded when it is concluded that the impairment losses recognized for the asset no longer exist or have decreased. This analysis is performed whenever there is an indication that the impairment loss previously recognized has been reversed. The reversal is recorded in the income statement as Operational income. However, the increased carrying amount of an asset due to a reversal of an impairment loss is recognized to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognized for that asset in prior years.
Financial expenses relating to loans obtained are generally recognised as expenses on an accruals basis.
Financial expenses related to loans obtained for the acquisition, construction or production of fixed assets are capitalised as part of the cost of the assets. These expenses are capitalised starting from the time of preparation for the construction or development of the asset and are interrupted when the assets are ready to operate, at the end of the production or construction phases or when the associated project is suspended. Any income earned on funds temporarily invested pending their expenditure on the qualifying asset, is deducted from the financial expenses that qualify for capitalisation.
Consumer goods and raw materials are stated at the lower of cost deducted from discounts obtained and net realisable value. Cost is determined on a weighted average basis.
Differences between cost and net realisable value, if negative, are shown as expenses under the caption "Cost of goods sold and materials consumed".
Provisions are recorded when, and only when, Sonae Investimentos has an obligation (legal or implicit) 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 statement of financial position date to reflect the best estimate as of that date.
Restructuring provisions are recorded by Sonae Investimentos whenever a formal and detailed restructuring plan exists and that plan has been communicated to the parties involved.
Sonae Investimentos classifies the financial instruments in the categories presented and conciliated with the Consolidated Statement of financial position disclosed in Note 7.
Investments are classified into the following categories:
‐ Held to maturity;
‐ Investments measured at fair value through profit or loss;
‐ Available for sale.
Held to maturity investments are classified as non‐current assets unless they mature within 12 months of the statement of financial position date. Investments classified as held to maturity have defined maturities and Sonae Investimentos has the intention and ability to hold them until the maturity date.
The investments measured at the fair value through profit or loss include the investments held for trading that Sonae Investimentos acquires with the purpose of trading in the short term. They are classified in the consolidated statement of financial position as current investments.
Sonae Investimentos classifies as available‐for‐sale investments those that are neither included as investments measured at fair value through profit or loss neither as investments held to maturity. These assets are classified as non‐current assets, except if the sale is expected to occur within 12 months from the date of classification.
All purchases and sales of investments are recognized on the trade date, independently of the settlement date.
Investments are recorded at acquisition value, usually, which is the fair value of the consideration paid for them, including transaction costs apart from investment measured at fair value through results, in which the investments are initially recognized at fair value and transaction costs are recognized in the income statement.
After initial recognition, investments measured at fair value through profit or loss are subsequently revalued at fair value, without any deduction for transaction costs which may be incurred on sale, by reference to their listed market price at the statement of financial position date. Available‐for‐sale not listed and whose fair value cannot be reliably measured, are recorded at cost less impairment losses.
Gains or losses arising from a change in fair value of available‐for‐sale investments are recognized 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 recognized in equity is transferred to net profit or loss for the period.
Equity instruments classified as available for sale are considered to be impaired if there is a significant or prolonged decline in its fair value below its acquisition cost.
Changes in the fair value of investments measured at fair value through profit or loss are included in the consolidated income statement for the period under financial expenses or financial income.
Held to maturity investments are carried at amortised cost using the effective interest rate, net of capital reimbursements and interest income received.
Loans and non‐current accounts receivables are measured at amortised cost using the effective interest method, less any impairment losses.
Interest income is recognized by applying the effective interest rate, except for short‐term receivables when the recognition of interest would be immaterial.
These financial investments arise when Sonae Investimentos provides money, goods or services directly to a debtor with no intention of trading the receivable.
Loans and receivables are recorded as current assets, except when its maturity is greater than 12 months from the statement of financial position date, when they are classified as non‐current assets. Loans and receivables are included in the captions presented in Note 7.
Trade accounts receivables and other accounts receivable are recorded at their nominal value and presented in the consolidated statement of financial position net of eventual impairment losses, recognized under the allowance account Impairment losses on accounts receivable , in order to reflect its net realisable value. These captions, when classified as current, do not include interests because the effect of discounting would be immaterial.
Impairment is recognized if there is objective and measurable evidence that, as a result of one or more events that occurred, the balance will not be fully received. Therefore, each Sonae Investimentos company takes into consideration market information that indicates:
– significant financial difficulty of the issuer or counterparty;
– default or delinquency in interest or principal payments;
– it becoming probable that the borrower will enter bankruptcy or financial re‐organisation.
When it's not feasible to assess the impairment for every single financial asset, the impairment is assessed on a collective basis. Objective evidence of impairment of a portfolio of receivables could include Sonae Investimentos past experience of collecting payments, an increase in the number of delayed payments in the portfolio, as well as observable changes in national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate. If the receipt of the full amount is expected to be within one year the discount is considered null as it is immaterial.
Financial liabilities and equity instruments are classified and accounted for based on their contractual substance, independently from the legal form they assume.
Equity instruments are contracts that evidence a residual interest in the assets of Sonae Investimentos after deducting all of its liabilities. Equity instruments issued by Sonae are recorded at the proceeds received, net of direct issue costs.
Loans are recorded as liabilities at their nominal value, net of up‐front fees and commissions related to the issuance of those instruments. Financial expenses are calculated based on the effective interest rate and are recorded in the income statement on an accruals basis, in accordance with the accounting policy defined in Note 2.8. The portion of the effective interest charge relating to up‐front fees and commissions, if not paid in the period, is added to the book value of the loan.
Funding on the form of commercial paper are classified as non‐current, when they have guarantees of placing for a period exceeding one year and it is the intention of the Sonae Investimentos group to maintain the use of this form of financing for a period exceeding one year.
Accounts payable are stated at their nominal value, as they do not bear interests and the effect of discounting is considered immaterial.
Sonae Investimentos uses derivatives in the management of its financial risks to hedge such risks and‐or in order to optimise the funding costs.
Derivatives classified as cash flow hedging instruments are used by the Sonae Investimentos mainly to hedge interest risks on loans obtained and exchange rate. Conditions established for these cash flow hedging instruments are identical to those of the corresponding loans in terms of base rates, calculation rules, rate setting dates and repayment schedules of the loans and for these reasons they qualify as perfect hedges. The inefficiencies, if any, are accounted under "financial expenses" or "financial income" in the consolidated income statement.
Sonae Investimentos criteria for classifying a derivative instrument as a cash flow hedge instrument include:
– the hedge transaction is expected to be highly effective in offsetting changes in cash flows attributable to the hedged risk;
– the effectiveness of the hedge can be reliably measured;
– there is adequate documentation of the hedging relationships at the inception of the hedge;
– the transaction being hedged is highly probable.
Cash flow hedge instruments used by the Sonae Investimentos to hedge the exposure to changes in interest and exchange rates of its loans are initially accounted for at cost, if any, which corresponds to its fair value, and subsequently adjusted to their corresponding fair value. Changes in fair value of these cash flow hedge instruments are recorded in equity under the caption "Hedging reserves", and then recognized in the income statement over the same period in which the hedged instrument affects profit or loss.
The accounting of hedging derivative instruments is discontinued when the instrument matures or is sold. Whenever a derivative instrument can no longer be qualified as a hedging instrument, the fair value differences recorded in equity under the caption "Hedging reserve" are transferred to profit or loss of the period or to the carrying amount of the asset that resulted from the hedged forecast transaction or stay in equity if there is a high probability that the hedge transaction will occur. Subsequent changes in the revaluations are recorded in the income statement.
Sonae Investimentos also uses financial instruments with the purpose of cash flow hedging, that essentially refer to exchange rate hedging ("forwards") of loans and commercial operations. If they configure a perfect hedging relation, hedge accounting is used. In certain situations such as loans and other commercial operations, they do not configure perfect hedging relations, and so do not receive hedge accounting treatment , although they allows in a very significant way, the reduction of the loan and receivable‐payable exchange volatility, nominated in foreign currency.
Sonae Investimentos may agree to become part of a derivative transaction in order to hedge cash‐flows related to exchange rate risk. In some cases, these derivatives may not fulfil the criteria for hedging accounting under IAS 39, and if so changes in their fair value are recognized in the income statement.
In some derivative transactions Sonae does not apply "hedge accounting", although they intend to hedge cash‐flows (currency "forward", interest's rate option or derivatives including similar clauses). They are initially accounted for at value, and subsequently adjusted to the corresponding fair value, determined by specialized software. Changes in fair value of these instruments are recognized in the income statement under "Financial income" and "Financial expenses".
When embedded derivatives exist, they are accounted for as separate derivatives when the risks and the characteristics of the host contract, and these are not stated at fair value, gains and losses which are not realizable are recorded in the Income Statement.
Sonae Investimentos may agree to become part of a derivative transaction in order to fair value hedge some interest rate exposure. In these cases, derivatives are recorded at fair value through profit or loss and the effective portion of the hedging relationship is adjusted in the carrying amount of the hedged instrument, if not stated at fair value (namely loans recorded at amortised cost), through profit or loss.
Treasury shares are recorded at acquisition cost as a reduction to equity. Gains or losses arising from sales of treasury shares are recorded in "Reserves and retained earnings".
Cash and cash equivalents include cash on hand, cash at banks, term deposits and other treasury applications which mature in less than three months and are subject to insignificant risk of change in value.
In the consolidated statement of cash flows, cash and cash equivalents also include bank overdrafts, which are included in the statement of financial position caption "Other Loans".
All the amounts included in this caption can be reimbursed at demand as there are no pledges or guarantees over these assets.
The non‐current assets (or disposal group) are recorded as held for sale if it is expected that the book value will be recovered through the sale and not through the use in the operations. This condition is achieved only if the sale is highly probable and the asset (or disposal group) is available for the immediate sale in the actual conditions. Additionally, there must be in progress actions that should allow concluding the sale within 12 months counting from the classification´s date in this caption. The non‐current assets (or disposal group) recorded as held for sale are booked at the lower amount of the historical cost or the fair value deducted from costs, not being depreciated after being classified as held for sale.
Share‐based payments result from Deferred Performance Bonus Plans which were attributed by Sonae Investimentos, and are indexed to the evolution of Sonae SGPS, S.A. shares' price (Parent Company of Sonae Investimentos, SGPS, S.A.) 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 (usually in April of each year) and are subsequently re‐measured at the end of each reporting period based on the number of shares granted and the corresponding fair value at the closing date. These obligations are stated as staff costs and other current and non‐current liabilities, and are recorded on a straight line basis, between the date the shares are granted and their vesting date, taking into consideration the time elapsed between these dates when referring to shares as call options which can be net settled through down payment. In the case of equity‐settled share‐based payment transactions, these obligations are recognized as staff costs and stated in Reserves and are recorded on a straight line basis between the date the shares are granted and their vesting date.
Contingent assets are not recorded in the consolidated financial statements but disclosed when future economic benefits are probable.
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.
The tax charge for the year is determined based on the taxable income of companies included on consolidation and considers deferred taxation.
Current income tax is determined based on the taxable income of companies included on consolidation, in accordance with the tax rules in force in the respective country of incorporation.
Deferred taxes are calculated using the statement of financial position 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 re‐measured using the tax rates that have been enacted or substantively enacted and therefore are expected to apply when the temporary differences are expected to reverse.
Deferred tax assets are recognized only when it is probable that sufficient taxable profits will be available against which the deferred tax assets can be used, or when taxable temporary differences are recognized and expected to reverse in the same period. At each statement of financial position date a review is made of the deferred tax assets recognized, being reduced whenever their future use is no longer probable.
Deferred tax assets and liabilities are recorded in the income statement, except if they relate to items directly recorded in equity. In these cases the corresponding deferred tax is recorded in equity.
Revenue from the sale of goods is recognized 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 recognized 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 associated with extended warranties operations, which are granted for a period of 1 to 3 years, after the legally binding warranty of 2 years, by the Retail Segment, is recognized rateably over the warranty lifetime period. The revenue associated with warranties sold but for which the legal binding warranty hasn´t yet expired is accounted under the captions of the Statement of Financial Position "Other non‐current liabilities" and "other current liabilities "(Notes 25 and 29).
The deferral of revenue related with customer loyalty plans, awarding discounts on future purchases, by retail operating segments, is quantified taking into account the probability of exercising the above mentioned discounts and are deducted from revenue when they are generated. The corresponding liability is presented under the caption "Other creditors".
Dividends are recognized as income in the year they are attributed to the shareholders.
Income and expenses are recorded in the year to which they relate, independently of the date of the corresponding payment or receipt. Income and expenses for which their real amount is not known are estimated.
"Other current assets" and "other current liabilities" include income and expenses of the reporting year which will only be invoiced in the future. Those captions also include receipts and payments that have already occurred but will only correspond to income or expenses of future years, when they will be recognized in the income statement.
Transactions in currencies other than the euro, are translated to euro using the exchange rate as at the transaction date.
At each statement of financial position 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 statement of financial position, are recorded as income or expenses of the period, except for those related to non‐monetary assets or liabilities, for which adjustments to fair value are directly recorded under equity.
When Sonae wants to reduce currency exposure, it negotiates hedging currency derivatives (Note 2.11.g)).
Events after the statement of financial position date that provide additional information about conditions that existed at the statement of financial position date (adjusting events), are reflected in the consolidated financial statements. Events after the statement of financial position date that are non‐ adjusting events are disclosed in the notes when material.
The most significant accounting estimates reflected in the consolidated income statements include:
Estimates used are based on the best information available during the preparation of consolidated financial statements and are based on best knowledge of past and present events. Although future events are neither controlled by Sonae nor foreseeable, some could occur and have impact on the estimates. Changes to estimates that occur after the date of these consolidated financial statements, will be recognized in net income, in accordance with IAS 8, using a prospective methodology.
The main estimates and assumptions in relation to future events included in the preparation of consolidated financial statements are disclosed in the corresponding notes.
Information regarding operating segments identified is included in Note 44.
Portuguese commercial legislation requires that at least 5% of annual net profit must be appropriated to a legal reserve, until such reserve reaches at least 20% of the share capital. This reserve is not distributable, except in the case of liquidation of the Company, but it may be used to absorb losses, after all the other reserves are exhausted, or to increase the share capital.
The Hedging reserve reflects the changes in fair value of "cash flow" hedging derivatives that are considered as effective (Note 2.11.g)) and is not distributable or used to cover losses.
The currency translation reserve corresponds to exchange differences relating to the translation from the functional currencies of Sonae Investimentos foreign subsidiaries and joint ventures into euro, in accordance with the accounting policy described in Note 2.17.
Legal reserve in accordance with article 324 of CSC:
The reserves constituted according to Art. 324 of ("CSC"), reflect the value of treasury shares acquired in the period and comply with commercial legislation relating with legal reserves.
According to Portuguese commercial legislation the amount of distributable reserves is computed considering the Company's individual financial statements presented in accordance with International Financial Reporting Standards as adopted by the European Union.
Risk management general principles are approved by the Board of Directors, and its implementation is supervised by the Group's finance department.
The interest and exchange rate risk have a decisive importance in what concerns market risk management.
Derivatives are used to hedge certain exposures related to Sonae Investimentos market risk and, Sonae Investimentos does not enter into derivatives or other financial instruments for trading or speculative purposes.
Sonae Investimentos exposure to interest rates arises mainly from long term loans which bear interests at Euribor plus spread.
The interest rate sensitivity analysis is based on the following assumptions:
‐ Changes in market interest rates affect the interest income or expense of variable interest rate financial instruments (the interest payments of which are not designated as hedged items of cash flow hedges against interest rate risks). As a consequence, these instruments are included in the calculation of income‐related sensitivities;
‐ Changes in market interest rates only affect interest income or expense in relation to financial instruments with fixed interest rates if these are recognized at their fair value. As such, all financial instruments with fixed interest rates that are carried at amortized cost are not subject to interest rate risk as defined in IFRS 7;
‐ In the case of fair value hedges designed for hedging interest rate risks, when the changes in the fair values of the hedged item and the hedging instrument attributable to interest rate movements are offset almost completely in the income statement in the same period, these financial instruments are also not exposed to interest rate risk;
‐ Changes in the market interest rate of financial instruments that were designated as hedging instruments in a cash flow hedge (to hedge payment fluctuations resulting from interest rate movements) affect the hedging reserve in equity and are therefore taken into consideration in the equity‐related sensitivity;
‐ Changes in the fair values of derivative financial instruments and other financial assets and liabilities are estimated by discounting the future cash flows to net present values using appropriate market rates prevailing at the year end, and assuming a parallel shift in interest rate curves;
‐ For the purposes of sensitivity analysis, such analysis is performed based on all financial instruments outstanding during the year.
Under these assumptions, if interest rates of euro denominated financial instruments had been 75 basis points higher, the consolidated net profit before tax for the period ended as at 31 December 2013 would decrease by approximately 6.8 million euro (7.9 million euro as at 31 December 2012), considering the contractual fixing dates and excluding other effects arising from the company operations.
The impact on the financial statements of changes in exchange rate is immaterial, as the most part of the transactions are denominated in euro. Sonae Investimentos is mainly exposed to exchange rate risk through transactions relating to acquisitions of goods in international markets, which are in US Dollars.
The exchange risk management purpose is to provide a stable decision platform when deciding and negotiating the purchases of inventories establishing fixed exchange rates. The hedging accompanies all the purchase process, since procurement up to the formal agreement of purchase.
The exchange risk exposure is monitored through the purchase of forwards with the goal of minimizing the negative impacts of volatility in exposure level as a consequence of changes of the amounts of imports denominated in other currencies rather than euro.
| Assets | Liabilities | |||||
|---|---|---|---|---|---|---|
| 31 December 2013 | 31 December 2012 | 31 December 2013 | 31 December 2012 | |||
| Euro | 574,420 | 549,489 | 168,821 | 80,603 | ||
| Brazilian Real | 8,792,907 | 12,040,467 | 5,628,270 | 7,032,050 | ||
| British Pound | ‐ | ‐ | 13,478 | 152,474 | ||
| US Dollar | 1,455,138 | 761,504 | 17,608,887 | 9,196,314 | ||
| Other Currencies | 1,197 | 7,407 | ‐ | 2,578 |
As at 31 December 2013 and 2012 the assets and liabilities denominated in a currency different from the subsidiary functional currency where the following:
The amounts presented above, only include assets and liabilities expressed in different currency than the functional currency used by the affiliated or jointly controlled company. Therefore it does not represent any risk of financial statements translation. Due to the short‐term character of the majority of monetary assets and liabilities and the magnitude of its net value, the exposure to currency risk is immaterial and therefore a sensitivity analysis to changes in the exchange rate isn't presented.
The purpose of liquidity risk management is to ensure, at all times, that the group has the financial capacity to fulfil its commitments as they become due and to carry on its business activities and strategy, through the management of the trade‐off cost and maturity of debt.
Sonae Investimentos follows an active policy of re‐financing its debts by maintaining a high level of unused and available on demand resources to face short term needs and by increasing or maintaining an adequate debt maturity, according to the estimated cash‐flows, and to the capability of leveraging its statement of financial position. At the end of 2013, Sonae Investimentos´s average debt maturity was approximately 2.4 years (2.5 years as at December 2012).
Negotiating contractual terms which reduce the possibility of the lenders being able to demand an early termination is also considered as an important mean of managing liquidity risk. The group also assures, in its relationship with financial institutions, a high level of diversification of financing sources and counterparties, in order to ease the ability of entering new loan agreements and to minimize the effects of any relationship discontinuance.
A liquidity reserve in form of credit lines with its relationship banks is maintained by Sonae, to ensure the ability to meet its commitments without having to refinance itself in unfavorable terms. The value of loans maturing in 2014 is of 71 million euro (230 million euro maturing in 2013) and as at 31 December 2013 Sonae Investimentos had undrawn committed credit facilities of 328 million euro (189 million euro in 2012) cancellable within a previous notice of less than one year and 310 million euro (400 million euro in 2012) cancellable with a previous notice of no less than one year. Additionally, Sonae Investimentos held, as at 31 December 2013, cash and cash equivalents and current investments amounting to 72 million euro (163 million euro as at 31 December 2012). Consequentially, Sonae Investimentos expects to meet all its obligations by means of its operating cash flows and its financial assets as well as from drawing existing available credit lines, if needed.
The liquidity analysis of each class of financial liabilities is presented in the corresponding notes.
Sonae Investimentos is exposed to the credit risk in its current operational activity. The credit risk in the scope of its current operational activity is managed through a system of gathering financial and qualitative information from independent entities that supply risk information, in order to allow the assessment of credit risk from debtors. The credit risk from suppliers arises from advances made to or discounts billed to suppliers and are mitigated by the expectation of maintaining the commercial relationship. The amounts presented in the statement of financial position are net of impairment losses, thus reflect its fair value.
Sonae Investimentos is also exposed to the credit risk in its relationship with financial institutions, in result of bank deposits, debt instruments available facilities, derivatives, among others.
The credit risk is limited to financial institutions, by risk concentration management and by a selection of counterparties, which have a high national and international prestige and based on their respective rating notations taking into account the nature, maturity and size of the operations.
Group companies included in the consolidated financial statements, their head offices and percentage of share capital held by Sonae as at 31 December 2013 and 31 December 2012 are as follows:
| Percentage of capital held | |||||||
|---|---|---|---|---|---|---|---|
| 31 December 2013 | 31 December 2012 | ||||||
| Company | Head Office | Direct | Total* | Direct | Total* | ||
| Sonae Investimentos‐ SGPS, S.A. | Matosinhos | HOLDING | HOLDING | HOLDING | HOLDING | ||
| Arat Inmuebles, SA | a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% | |
| Azulino Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| BB Food Service, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Bertimóvel ‐ Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Bom Momento ‐ Restauração, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Canasta ‐ Empreendimentos Imobiliários, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| 1) | Carnes do Continente ‐ Industria e Distribuição Carnes, SA |
a) | Santarém | 100.00% | 100.00% | 100.00% | 100.00% |
| Chão Verde ‐ Sociedade de Gestão Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Citorres ‐ Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
|---|---|---|---|---|---|---|---|
| Contibomba ‐ Comércio e Distribuição de Combustíveis, SA |
a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Contimobe ‐ Imobiliária de Castelo de Paiva, SA | a) | Castelo de Paiva |
100.00% | 100.00% | 100.00% | 100.00% | |
| Continente Hipermercados, SA | a) | Lisbon | 100.00% | 100.00% | 100.00% | 100.00% | |
| Cumulativa ‐ Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Discovery Sports, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| 1) | Edições Book.it, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| 1) | Estevão Neves ‐ Hipermercados da Madeira, SA | a) | Funchal | 100.00% | 100.00% | 100.00% | 100.00% |
| Farmácia Selecção, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Fashion Division, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Fashion Division Canárias , SL | a) | Tenerife (Spain) |
100.00% | 100.00% | 100.00% | 100.00% | |
| Fozimo ‐ Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Fozmassimo ‐ Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Fundo de Investimento Imobiliário Fechado Imosede |
a) | Maia | 54.55% | 54.55% | 54.55% | 54.55% | |
| Fundo de Investimento Imobiliário Imosonae Dois | a) | Maia | 99.48% | 99.48% | 99.89% | 99.89% | |
| Igimo ‐ Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Iginha ‐ Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Imoconti ‐ Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Imoestrutura ‐ Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Imomuro ‐ Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Imoresultado ‐ Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Imosistema ‐ Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Infofield ‐ Informática, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Marcas MC, zRT | a) | Budapest (Hungry) |
100.00% | 100.00% | 100.00% | 100.00% | |
| MJLF ‐ Empreendimentos Imobiliários, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Modalfa ‐ Comércio e Serviços, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Modalloop – Vestuário e Calçado, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Modelo ‐ Distribuição de Materiais de Construção, SA |
b) | Maia | 50.00% | 50.00% | 50.00% | 50.00% | |
|---|---|---|---|---|---|---|---|
| Modelo Continente Hipermercados, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Modelo Continente International Trade, SA | a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% | |
| Modelo Hiper Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Modelo.com ‐ Vendas p/Correspond., SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| 1) | Peixes do Continente ‐ Indústria e Distribuição de Peixes, SA |
a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Pharmacontinente ‐ Saúde e Higiene, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Pharmaconcept – Atividades em Saúde, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Predicomercial ‐ Promoção Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| SDSR – Sports Division SR, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| 2) | SDSR – Sports Division 2, SA | a) | Matosinhos | 100.00% | 100.00% | ‐ | ‐ |
| Selifa ‐ Empreendimentos Imobiliários de Fafe, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sempre à Mão ‐ Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sesagest ‐ Proj.Gestão Imobiliária, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Socijofra ‐ Sociedade Imobiliária, SA | a) | Gondomar | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sociloures ‐ Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Soflorin, BV | a) | Amsterdam (Netherlands) |
100.00% | 100.00% | 100.00% | 100.00% | |
| Sonae Capital Brasil, Lda | a) | São Paulo (Brazil) |
100.00% | 100.00% | 100,00% | 100,00% | |
| Sonae MC – Modelo Continente, SGPS, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sonaecenter Serviços II, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sonaegest‐ Sociedade Gestora de Fundos de Investimento, SA |
a) | Maia | 60.00% | 60.00% | 60.00% | 60.00% | |
| Sonaerp – Retail Properties, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sonae Specialized Retail, SGPS, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sonae Retalho España ‐ Servicios Generales, SA | a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% | |
| SIAL Participações, Ltda | a) | São Paulo (Brazil) |
100.00% | 100.00% | 100.00% | 100.00% | |
| Sondis Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Sonvecap, BV | a) | Amsterdam (Netherlands) |
100.00% | 100.00% | 100.00% | 100.00% | |
|---|---|---|---|---|---|---|---|
| Sport Zone Canarias, SL | a) | Tenerife (Spain) |
51.00% | 51.00% | 51.00% | 51.00% | |
| Sport Zone España ‐ Comércio de Articulos de Deporte, SA |
a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% | |
| Sport Zone Sport Maiz.Per.Satis Ith.Ve tic Ltd Sti | a) | Istambul (Turkey) |
100.00% | 100.00% | 100.00% | 100.00% | |
| Têxtil do Marco, SA | a) | Marco de Canaveses |
92.76% | 92.76% | 92.76% | 92.76% | |
| 2) | Tlantic BV | a) | Amsterdam (Netherlands) |
77.66% | 77.66% | ‐ | ‐ |
| Tlantic Portugal ‐ Sistemas de Informação, SA | a) | Matosinhos | 77.76% | 77.76% | 100.00% | 100.00% | |
| Tlantic Sistemas de Informação, Ltda | a) | Porto Alegre (Brazil) |
77.66% | 77.66% | 100.00% | 100.00% | |
| 1) | Todos os Dias ‐ Com. Ret. Expl. C. Comer., SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Valor N, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Worten Canarias, S.L. | a) | Tenerife (Spain) |
51.00% | 51.00% | 51.00% | 51.00% | |
| Worten ‐ Equipamento para o Lar, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Worten España Distribución, S.L. | a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% | |
| Zippy – Comércio e Distribuição, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Zippy ‐ Comércio Y Distribución, SA | a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% | |
| Zíppy Cocuk Maiz.Dag.Satis Ith.Ve Tic Ltd Sti | a) | Istambul (Turkey) |
100.00% | 100.00% | 100.00% | 100.00% | |
| ZYEvolution – Investig.e Desenvolvimento, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
*the percentage of ownership total represents the total direct and indirect percentage on the share capital held by the Group.
a) Control held by majority of voting rights;
b) Control held by Management control;
1) Companies merged into Modelo Continente Hipermercados, SA, at 1 January 2013;
2) Company created during the period;
These entities were consolidated using the full consolidation method, considering that they are controlled by Sonae Investimentos SGPS, S.A.
Jointly controlled entities and associated companies included in the consolidated financial statements, their head offices and the percentage of share capital held by Sonae as at 31 December 2013 and 31 December 2012 are as follows:
| Percentage of capital held | |||||||
|---|---|---|---|---|---|---|---|
| 31 December 2013 | 31 December 2012 | Statment of financial position | |||||
| Company | Head Office | Direct | Total* | Direct | Total* | 31 December 2013 | 31 December 2012 |
| Raso SGPS, SA (consolidated) | Lisbon | 50.00% | 50.00% | 50.00% | 50.00% | 10,150,202 | 10,716,070 |
| Investments in joint ventures | 10,150,202 | 10,716,070 | |||||
| MDS SGPS, SA (consolidated) | Maia | 46.92% | 46.92% | 46.92% | 46.92% | 40,746,920 | 49,205,951 |
| Mundo VIP | Lisbon | 33.34% | 33.34% | 33.34% | 33.34% | ‐ | ‐ |
| Sempre a Postos ‐ Produtos Alimentares e Utilidades, Lda |
Lisbon | 25.00% | 25.00% | 25.00% | 25.00% | 899,945 | 897,831 |
| Investments in associated companies | 41,646,865 | 50,103,782 | |||||
| Total | 51,797,067 | 60,819,852 |
* the percentage of ownership total represents the total direct and indirect percentage on the share capital held by the Group.
Jointly controlled companies and associated companies were included in the consolidated financial statements by the equity method.
During the periods ended as at 31 December 2013 and 2012 movements of Investments in jointly controlled companies and associated companies are made up as follows:
| 31 December 2013 | 31 December 2012 | ||||||
|---|---|---|---|---|---|---|---|
| Proportion on equity |
Goodwill | Total investment |
Proportion on equity |
Goodwill | Total investment |
||
| Joint ventures and associated companies | |||||||
| Initial balance as at January,1 | 17,400,725 | 44,520,464 | 61,921,189 | 14,160,562 | 44,520,464 | 58,681,026 | |
| Acquisitions during the period | 1,000,000 | ‐ | 1,000,000 | ‐ | ‐ | ‐ | |
| Equity method: | |||||||
| Effect in gain or losses in joint controlled and associated companies |
(2,894,152) | ‐ | (2,894,152) | 1,014,532 | ‐ | 1,014,532 | |
| Distributed dividends | (14,332) | ‐ | (14,332) | (99,002) | ‐ | (99,002) | |
| Other effects on reserves | (6,114,301) | ‐ | (6,114,301) | 2,324,633 | ‐ | 2,324,633 | |
| 9,377,940 | 44,520,464 | 53,898,404 | 17,400,725 | 44,520,464 | 61,921,189 | ||
| Accumulated impairment losses (Note 30) | (311,583) | (1,789,754) | (2,101,337) | 688,417 | (1,789,754) | (1,101,337) | |
| 9,066,357 | 42,730,710 | 51,797,067 | 18,089,142 | 42,730,710 | 60,819,852 |
The amount under the caption "Other effects on reserves", results mainly from currency translation figures of companies with functional currency different from euro and the re‐measurement at fair value of the financial investment in Cooper Gay Sweet Crawford, Ltd. included in the subsidiary MDS, SGPS, SA. The valuation of this investment was performed based on a binding acquisition proposal received from an unrelated and knowledgeable entity of the sector in the last quarter of 2013, which was not considered appropriate by the board of directors of the company (Level 3).
The impairment analysis of these financial investments is based on the fair value estimate, based on discounted cash flows or based on its net asset value as applicable. Such estimate is based on the fair value computation of the value in use of its holdings by means of discounted cash flow models, whenever there is an indication that the asset might be impaired, namely from the distribution of dividends by the mentioned entities.
| 31 December 2013 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Assets | Liabilities | Equity | Income | Expenses | Profit/ (Loss) | |||
| Traveling | 67,413,721 | 38,709,241 | 28,704,479 | 42,891,148 | 44,041,371 | (1,150,223) | ||
| Insurance | 100,288,792 | 73,867,578 | 26,421,214 | 47,057,243 | 51,369,849 | (4,312,606) | ||
| Others | 12,140,682 | 11,125,907 | 1,014,775 | 59,239,099 | 59,374,124 | (135,025) | ||
| TOTAL | 179,843,195 | 123,702,727 | 56,140,468 | 149,187,490 | 154,785,344 | (5,597,854) | ||
| 31 December 2012 | ||||||||
| Assets | Liabilities | Equity | Income | Expenses | Profit/ (Loss) | |||
| Traveling | 65,247,647 | 35,392,945 | 29,854,702 | 42,764,046 | 48,411,033 | (5,646,987) | ||
| Insurance | 146,292,791 | 103,131,981 | 43,160,809 | 62,813,621 | 53,557,529 | 9,256,092 | ||
| Others | 12,966,266 | 11,959,946 | 1,006,320 | 63,374,796 | 63,518,277 | (143,481) | ||
| TOTAL | 224,506,704 | 150,484,873 | 74,021,831 | 168,952,463 | 165,486,840 | 3,465,624 |
Other non‐current investments, their head offices, percentage of share capital held and book value as at 31 December 2013 and 2012 are as follows:
| Percentage of capital held | |||||||
|---|---|---|---|---|---|---|---|
| 31 December 2013 | 31 December 2012 | Statment of financial position | |||||
| Company | Head Office | Direct | Total | Direct | Total | 31 December 2013 | 31 December 2012 |
| Dispar ‐ Distrib. de Participações, SGPS, SA | Lisbon | 14.28% | 14.28% | 14.28% | 14.28% | 9,976 | 9,976 |
| Insco ‐ Insular de Hipermerc., SA | Ponta Delgada | 10.00% | 10.00% | 10.00% | 10.00% | 748,197 | 748,197 |
| Other investments | 12,643,064 | 33,847,325 | |||||
| 13,401,237 | 34,605,498 |
Under the caption other non‐current investments there is an amount of 12,512,681 euro (33,716,476 euro as at 31 December 2012) related to amounts on an Escrow Account invested in superior rating funds and guarantees contractual liabilities assumed by Sonae Investimentos in the disposal of Sonae Distribuição Brasil, S.A. and for which provisions were recorded in the applicable situations (Note 30 and 31). The decrease in the amount of "Other Investments" from 2012 to 2013 is related to the use of the Escrow Account for payments related to contractual liabilities related with subsidiaries included in the above mentioned business (Note 30).
Although in accordance with the deadlines contractually established, the Escrow Account should have already been released by the buyer, that didn't happen as there are some points of disagreement on the use of the Escrow Account, namely as whether or not, to retain the Escrow Account for on‐going fiscal procedures that have not yet been decided (Note 31). It is the understanding of the Board of Directors, based on legal opinions of Brazilian and Portuguese lawyers, that the reason attends to Sonae Investimentos.
Other investments include investments in non‐listed companies which fair values cannot be reliably measured. As so, these investments are recorded at cost net of any impairment losses.
| Assets not | |||||||
|---|---|---|---|---|---|---|---|
| Financial assets | Loans and | Hedging | within the scope | ||||
| accounts | derivatives | of | |||||
| Notes | receivable | Available for sale | (Note 24) | Sub‐total | IFRS 7 | Total | |
| As at 31 December 2013 | |||||||
| Non‐current assets | |||||||
| Other investments | 6 | 12,512,681 | 888,556 | ‐ | 13,401,237 | ‐ | 13,401,237 |
| Other non‐current assets | 12 | 23,066,830 | ‐ | ‐ | 23,066,830 | 36,909 | 23,103,739 |
| 35,579,511 | 888,556 | ‐ | 36,468,067 | 36,909 | 36,504,976 | ||
| Current assets | |||||||
| Trade receivables | 14 | 43,070,196 | ‐ | ‐ | 43,070,196 | ‐ | 43,070,196 |
| Other debtors | 15 | 90,687,013 | ‐ | ‐ | 90,687,013 | ‐ | 90,687,013 |
| Other investments | 11 and 24 | 6,106 | ‐ | 35,999 | 42,105 | ‐ | 42,105 |
| Cash and cash equivalents | 19 | 71,510,332 | ‐ | ‐ | 71,510,332 | ‐ | 71,510,332 |
| 205,273,647 | ‐ | 35,999 | 205,309,646 | ‐ | 205,309,646 | ||
| 240,853,158 | 888,556 | 35,999 | 241,777,713 | 36,909 | 241,814,621 | ||
| As at 31 December 2012 | |||||||
| Non‐current assets | |||||||
| Other investments | 6 | 33,717,673 | 889,022 | ‐ | 34,605,498 | ‐ | 34,605,498 |
| Other non‐current assets | 12 | 34,338,152 | ‐ | ‐ | 34,338,152 | 91,662 | 34,429,814 |
| 68,055,825 | 889,022 | ‐ | 68,943,650 | 91,662 | 69,035,312 | ||
| Current assets | |||||||
| Trade receivables | 14 | 31,088,175 | ‐ | ‐ | 31,088,175 | ‐ | 31,088,175 |
| Other debtors | 15 | 51,947,177 | ‐ | ‐ | 51,947,177 | ‐ | 51,947,177 |
| Other investments | 11 and 24 | 862,387 | ‐ | 30,341 | 892,728 | ‐ | 892,728 |
| Cash and cash equivalents | 19 | 162,194,406 | ‐ | ‐ | 162,194,406 | ‐ | 162,194,406 |
| 246,092,145 | ‐ | 30,341 | 246,122,486 | ‐ | 246,122,486 |
314,147,970 889,022 30,341 315,066,136 91,662 315,157,798
| Financial liabilities Notes |
Financial liabilities recorded at amortised cost |
Hedging derivatives (Note 24) |
Sub‐total | Liabilities not within the scope of IFRS 7 |
Total | |
|---|---|---|---|---|---|---|
| As at 31 December 2013 | ||||||
| Non‐current liabilities | ||||||
| Loans | 22 | 114,694,578 | ‐ | 114,694,578 | ‐ | 114,694,578 |
| Bonds | 22 | 646,307,863 | ‐ | 646,307,863 | ‐ | 646,307,863 |
| Obligations under finance leases | 22 and 23 | 7,630,324 | ‐ | 7,630,324 | ‐ | 7,630,324 |
| Other loans | 22 | 53,936 | ‐ | 53,936 | ‐ | 53,936 |
| Other non‐current liabilities | 25 | 408,093,722 | ‐ | 408,093,722 | 36,615,170 | 444,708,892 |
| 1,176,780,423 | ‐ | 1,176,780,423 | 36,615,170 | 1,213,395,593 | ||
| Current liabilities | ||||||
| Loans | 22 | 56,774,364 | ‐ | 56,774,364 | ‐ | 56,774,364 |
| Bonds | 22 | 9,990,122 | ‐ | 9,990,122 | ‐ | 9,990,122 |
| Obligations under finance leases | 22 and 23 | 4,185,507 | ‐ | 4,185,507 | ‐ | 4,185,507 |
| Other loans | 22 and 24 | 33,466 | 1,415,143 | 1,448,609 | ‐ | 1,448,609 |
| Trade creditors | 27 | 1,143,639,351 | ‐ | 1,143,639,351 | ‐ | 1,143,639,351 |
| Other creditors | 28 | 90,860,537 | ‐ | 90,860,537 | ‐ | 90,860,537 |
| 1,305,483,347 | 1,415,143 | 1,306,898,490 | ‐ | 1,306,898,490 | ||
| 2,482,263,770 | 1,415,143 | 2,483,678,913 | 36,615,170 | 2,520,294,083 | ||
| As at 31 December 2012 | ||||||
| Non‐current liabilities | ||||||
| Loans | 22 | 218,458,349 | ‐ | 218,458,349 | ‐ | 218,458,349 |
| Bonds | 22 | 532,738,392 | ‐ | 532,738,392 | ‐ | 532,738,392 |
| Obligations under finance leases | 22 and 23 | 9,942,240 | ‐ | 9,942,240 | ‐ | 9,942,240 |
| Other loans | 22 | 90,166 | ‐ | 90,166 | ‐ | 90,166 |
| Other non‐current liabilities | 25 | 408,345,653 | ‐ | 408,345,653 | 21,163,999 | 429,509,652 |
| 1,169,574,800 | ‐ | 1,169,574,800 | 21,163,999 | 1,190,738,799 | ||
| Current liabilities | ||||||
| Loans | 22 | 55,175,849 | ‐ | 55,175,849 | ‐ | 55,175,849 |
| Bonds | 22 | 170,900,782 | ‐ | 170,900,782 | ‐ | 170,900,782 |
| Obligations under finance leases | 22 and 23 | 3,383,796 | ‐ | 3,383,796 | ‐ | 3,383,796 |
| Other loans | 22 and 24 | 33,466 | 953,531 | 986,997 | ‐ | 986,997 |
| Trade creditors | 27 | 1,090,451,413 | ‐ | 1,090,451,413 | ‐ | 1,090,451,413 |
| Other creditors | 28 | 92,477,002 | ‐ | 92,477,002 | ‐ | 92,477,002 |
| 1,412,422,308 | 953,531 | 1,413,375,839 | ‐ | 1,413,375,839 | ||
| 2,581,997,108 | 953,531 | 2,582,950,639 | 21,163,999 | 2,604,114,638 |
In 2013 the Group applied for the first time IFRS 13 ‐ Fair Value Measurement. This standard requires that the fair value is disclosed in accordance with the following hierarchy:
Level 1: fair value is determined based on active market prices for identical assets and liabilities;
Level 2: the fair value is determined based on other data, other than market prices identified in level 1 but they are possible to be observable, and
Level 3: fair value measurements derived from valuation techniques, whose main inputs are not based on observable market data.
| 31 December 2013 | |||||
|---|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 |
| ‐ | 35,999 | ‐ | ‐ | 30,341 | ‐ |
| ‐ | 35,999 | ‐ | ‐ | 30,341 | ‐ |
| ‐ | ‐ | ‐ | ‐ | ‐ | |
| ‐ | 1,415,143 | ‐ | ‐ | 953,531 | ‐ |
| ‐ | 1,415,143 | ‐ | ‐ | 953,531 | ‐ |
| 31 December 2012 |
During the periods ended as at 31 December 2013 and 2012 movements in tangible assets as well as depreciation and accumulated impairment losses are made up as follows:
| Tangible assets | |||||||
|---|---|---|---|---|---|---|---|
| Land and Buildings |
Plant and Machinery |
Vehicles | Fixtures and Fittings |
Other Tangible Assets |
Tangible assets in progress |
Tangible Assets | |
| Gross assets: | |||||||
| Opening balance as at 1 January 2012 | 1,651,284,310 | 1,156,118,956 | 20,908,117 | 108,073,700 | 38,430,751 | 28,062,620 | 3,002,878,454 |
| Capital Expenditure | 3,411,111 | 2,456,323 | 43,208 | 276,516 | 35,897 | 95,767,211 | 101,990,266 |
| Disposals | (2,886,204) | (41,197,931) | (917,616) | (7,331,067) | (1,329,376) | (2,834,690) | (56,496,884) |
| Exchange rate effect | ‐ | (134,837) | (5,821) | (67,925) | ‐ | ‐ | (208,583) |
| Transfers | 1,302,116 | 77,163,471 | 696,854 | 4,421,017 | 1,595,006 | (89,188,016) | (4,009,552) |
| Opening balance as at 1 January 2013 | 1,653,111,333 | 1,194,405,982 | 20,724,742 | 105,372,241 | 38,732,278 | 31,807,125 | 3,044,153,701 |
| Capital Expenditure | 2,974,773 | 1,577,629 | 59,666 | 161,116 | 50,404 | 115,008,893 | 119,832,481 |
| Disposals | (7,179,448) | (55,174,279) | (1,161,950) | (10,471,441) | (1,827,394) | (778,607) | (76,593,119) |
| Exchange rate effect | ‐ | (197,046) | (7,334) | (218,736) | ‐ | ‐ | (423,116) |
| Transfers | 8,276,962 | 93,705,442 | 1,181,774 | 6,814,306 | 2,567,100 | (115,542,433) | (2,996,849) |
| Closing balance as at 31 December 2013 | 1,657,183,620 | 1,234,317,728 | 20,796,898 | 101,657,486 | 39,522,388 | 30,494,978 | 3,083,973,098 |
| Accumulated depreciation and impairment losses | |||||||
| Opening balance as at 1 January 2012 | 256,086,860 | 527,857,301 | 16,793,593 | 76,578,812 | 31,463,571 | ‐ | 908,780,137 |
| Depreciation and impairment losses | 27,691,694 | 118,021,424 | 1,309,049 | 11,443,732 | 3,550,371 | ‐ | 162,016,270 |
| Disposals | (1,310,414) | (38,370,781) | (895,176) | (7,128,956) | (1,283,639) | ‐ | (48,988,966) |
| Exchange rate effect | ‐ | (85,103) | (2,563) | (46,388) | ‐ | ‐ | (134,054) |
| Transfers | ‐ | (661,856) | (322,631) | (2,239,707) | (80,349) | ‐ | (3,304,543) |
| Opening balance as at 1 January 2013 | 282,468,140 | 606,760,985 | 16,882,272 | 78,607,493 | 33,649,954 | ‐ | 1,018,368,844 |
| Depreciation | 26,439,759 | 117,295,490 | 1,217,849 | 10,073,745 | 2,657,388 | ‐ | 157,684,231 |
| Impairment losses (Note 30) | 100,465,106 | 53,244,344 | 32,556 | 525,201 | 117,297 | ‐ | 154,384,504 |
| Disposals | (136,883) | (50,654,616) | (1,126,655) | (9,992,770) | (1,793,518) | ‐ | (63,704,442) |
| Exchange rate effect | ‐ | (163,239) | (1,402) | (106,247) | ‐ | ‐ | (270,888) |
| Transfers | (184,396) | (937,805) | (40,397) | (1,883,043) | (27,334) | ‐ | (3,072,975) |
| Closing balance as at 31 December 2013 | 409,051,726 | 725,545,159 | 16,964,223 | 77,224,379 | 34,603,787 | ‐ | 1,263,389,274 |
| Carrying amount | |||||||
| As at 31 December 2012 | 1,370,643,193 | 587,644,997 | 3,842,470 | 26,764,748 | 5,082,324 | 31,807,125 | 2,025,784,857 |
| As at 31 December 2013 | 1,248,131,894 | 508,772,569 | 3,832,675 | 24,433,107 | 4,918,601 | 30,494,978 | 1,820,583,824 |
Investment in 2013 includes:
‐ Approximately 99.6 million euro of assets acquisition primarily associated with the opening and remodelling of stores; and
‐ and 6 million euro related to the business combination detailed in Note 10.
The caption "impairment losses" at 2013 can be detailed as follows:
| Impairments | 31 December 2013 |
|---|---|
| Layout change and rebranding of: | |
| Sonae SR stores | 43,746,620 |
| Sonae MC stores | 9,988,367 |
| Real estate impairment | 100,465,106 |
| Others | 184,411 |
| 154,384,504 |
The impairment losses recorded for real estate assets were based in external valuations made by an independent and specialized entity (Jones Lang LaSalle). These valuations were performed using the income method. For this purpose it was considered yields between 7.40% and 9.50%, For IFRS 13 purposes, this is a "Level 3" fair value measurement.
Major amounts included in the caption "tangible assets in progress" refer to the following projects:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Refurbishment and expansion of stores in Portugal | 17,595,991 | 22,221,243 |
| Refurbishment and expansion of stores in Spain | 1,297,219 | 842,420 |
| Projects "Modelo" and "Continente" stores for which advance payments were made |
11,532,400 | 8,274,617 |
| Others | 69,369 | 468,845 |
| 30,494,978 | 31,807,125 |
During the periods ended as at 31 December 2013 and 2012, movements in intangible assets as well as depreciation and accumulated impairment losses are made up as follows:
| Intangible assets | ||||||
|---|---|---|---|---|---|---|
| Premium paid | Others | Intangible | Total | |||
| Industrial | Software | for property | intangible | assets in | Intangible | |
| Gross cost: | property | occupation | assets | progress | Assets | |
| Opening balance as at 1 January 2012 | 101,358,773 | 154,550,982 | 14,779,372 | 3,478,973 | 15,500,704 | 289,668,804 |
| Capital expenditure | 247,675 | 13,633 | ‐ | 49,581 | 23,290,911 | 23,601,800 |
| Disposals | (222,932) | (853,427) | (746,047) | (49,581) | (718,959) | (2,590,946) |
| Exchange rate effect | (3,083) | (57,944) | ‐ | 26,199 | ‐ | (34,828) |
| Transfers | 1,024,973 | 15,289,988 | ‐ | (2,755,477) | (16,770,730) | (3,211,246) |
| Opening balance as at 1 January 2013 | 102,405,406 | 168,943,232 | 14,033,325 | 749,695 | 21,301,926 | 307,433,584 |
| Capital expenditure | 171,850 | 327,244 | ‐ | ‐ | 29,228,159 | 29,727,253 |
| Disposals | (140,436) | (171,600) | ‐ | ‐ | (243,556) | (555,592) |
| Exchange rate effect | (68,840) | (124,299) | ‐ | (30,611) | ‐ | (223,750) |
| Transfers | 795,884 | 20,668,844 | ‐ | ‐ | (22,575,204) | (1,110,476) |
| Closing balance as at 31 December 2013 | 103,163,864 | 189,643,421 | 14,033,325 | 719,084 | 27,711,325 | 335,271,019 |
| ‐ | ||||||
| Accumulated depreciation and impairment losses | ||||||
| Opening balance as at 1 January 2012 | 19,148,056 | 99,332,708 | 14,375,028 | 455,346 | ‐ | 133,311,138 |
| Depreciation of the period | 3,305,394 | 18,337,274 | ‐ | 60,490 | ‐ | 21,703,158 |
| Disposals | (217,696) | (799,481) | (746,047) | (49,581) | ‐ | (1,812,805) |
| Exchange rate effect | (2,101) | (25,092) | ‐ | 1,922 | ‐ | (25,271) |
| Transfers | 20,495 | (13,240) | ‐ | (372,514) | ‐ | (365,259) |
| Opening balance as at 1 January 2013 | 22,254,148 | 116,832,169 | 13,628,981 | 95,663 | ‐ | 152,810,961 |
| Depreciation of the period | 2,581,436 | 16,510,365 | ‐ | 57,958 | ‐ | 19,149,759 |
| Impairment losses (Note 30) | ‐ | 186 | ‐ | ‐ | ‐ | 186 |
| Disposals | (139,194) | (171,600) | ‐ | ‐ | ‐ | (310,794) |
| Exchange rate effect | (34,884) | (45,084) | ‐ | (13,990) | ‐ | (93,958) |
| Transfers | (14,030) | (2,576) | ‐ | ‐ | ‐ | (16,606) |
| Closing balance as at 31 December 2013 | 24,647,476 | 133,123,460 | 13,628,981 | 139,631 | ‐ | 171,539,548 |
| Carrying amount | ||||||
| As at 31 December 2012 | 80,151,258 | 52,111,063 | 404,344 | 654,032 | 21,301,926 | 154,622,623 |
| As at 31 December 2013 | 78,516,388 | 56,519,961 | 404,344 | 579,453 | 27,711,325 | 163,731,471 |
As at 31 December 2013 and 2012 intangible assets in progress were mainly related with software and software development projects.
Additionally the caption "Patents and other similar rights" includes the acquisition cost of a group of brands with indefinite useful lives among which the "Continente" brand, acquired in previous years, amounting to 75,000,000 euro (the same amount as at December 2012).
Sonae performs annual impairment tests on the value of brands, calculating for this purpose the recoverable amount of Sonae MC, which is determined, based on value in use, using for this purpose the latest business plans which are prepared through projected cash flows for periods of 5 years. The assumptions used are disclosed in Note 10.
The remaining amounts that make up the balance of intangible assets in progress relate mainly to projects and computer software.
Goodwill is allocated to each of the operating segments and within to each homogeneous group of cash generating units.
Goodwill is allocated to each operating segment, Food based retail (Sonae MC) and Specialized retail in Portugal (Sonae SR), being afterwards distributed by each homogenous group of cash generating units, namely to each insignia within each segment, and each of the properties in case of Retail real estate operating segment (Sonae RP).
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Sonae MC | 433,813,034 | 429,826,294 |
| Sonae SR | 60,704,202 | 62,030,352 |
| Sonae RP | 3,669,166 | 4,281,767 |
| Investment management | ‐ | 3,096,074 |
| 498,186,402 | 499,234,487 |
During the years ended 31 December 2013 and 2012, movements in the caption Goodwill as well as in the corresponding impairment losses, are as follows:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Gross value: | ||
| Opening balance | 501,821,164 | 501,821,164 |
| Goodwill generated in the period | 3,986,740 | ‐ |
| Closing balance | 505,807,904 | 501,821,164 |
| Accumulated impairment | ||
| losses: | ||
| Opening balance | 2,586,677 | 2,586,677 |
| Increases | 5,034,825 | ‐ |
| Closing balance | 7,621,502 | 2,586,677 |
| Carrying amount | 498,186,402 | 499,234,487 |
In 2013 a business combination took place involving the acquisition of 8 food retail stores in Madeira (Região Autónoma da Madeira), previously held by Jorge Sá Group. The impact on the financial statements can be presented as follows:
| At acquisition date | |
|---|---|
| Tangible Assets (Note 10) | 6,013,260 |
| Goodwill | 3,986,740 |
| Acquisition Value | 10,000,000 |
| Cash paid | 5,798,180 |
| Amount paid in income | 3,298,216 |
| Amount in debt | 903,604 |
Impairment tests on Goodwill are performed on an annual basis and whenever there are indications of Goodwill impairment. During the periods ended at 31 December 2013 and 2012, Sonae Investimentos tested for goodwill impairment, having as a result of that analysis, recorded impairment losses as follows:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Sonae SR | 1,326,150 | ‐ |
| Sonae RP | 612,601 | ‐ |
| Investment management | 3,096,074 | ‐ |
| 5,034,825 | ‐ |
The impairment of goodwill of Sonae SR results mainly of goodwill allocated to stores that closed during the period ended at 31 December 2013.
The impairment losses recorded on goodwill in Investment Management follows the outcome of impairment testing of a Retail insignia included in Investment Management segment, which led to the impairment of the entire goodwill allocated to this insignia in the amount of approximately 3 million euro.
The main assumptions used in the above mentioned business plans are detailed as follows for each of Sonae Investimentos operating segments.
For this purpose the Food Retail (Sonae MC) and Specialized Retail (Sonae SR) operating segments in Portugal use internal valuation of its business concepts, using annual planning methodologies, supported in business plans that consider cash flow projections for each unit which depend on detailed and properly supported assumptions. These plans take into consideration the impact of the main actions that will be carried out by each business concept as well as a study of the resources allocation of the company.
The recoverable value of cash generating units is determined based on its value in use, which is calculated taking into consideration the last approved business plans which are prepared using cash flow projections for periods of 5 years.
The case scenarios are elaborated with an average cost of capital and with a growth rate of cash‐flows in perpetuity that can be detailed as follows:
| 31 December 2013 | 31 December 2012 | ||||||
|---|---|---|---|---|---|---|---|
| Weighted average capital cost |
Growth rate in perpetuity |
Compound growth rate sales |
Weighted average capital cost |
Growth rate in perpetuity |
Compound growth rate sales |
||
| Sonae MC | 9% to 10% | <= 1% | 4% | 9% to 10% | <= 1% | 3% | |
| Sonae SR‐ Portugal | 9% to 11% | <= 1% | 6% | 9% to 11% | <= 1% | 4% | |
| Investment management | 8% to 10% | <= 1,5% | 6% | 8% to 10% | <= 1,5% | 5% |
The recoverable value of cash generating units on the specialized retail formats in Spain, is determined based on its value in use, which is calculated taking into consideration the approved business plans for periods of 10 years. Assuming this is the most realistic and appropriate deadline for the implementation of the strategy of internationalization of Sonae in specialized retail segment, taking into consideration not only the nature of the products in question (more discretionary character) but also the current macroeconomic conditions and restrictions on access to new financing, which limit an internationalization accelerated process. The analysis described above aims to demonstrate the recovery of non‐current assets and deferred tax assets of Sonae SR in Spain, since it does not have any value of goodwill allocated.
As at 31 December 2013 and 2012 this caption is made up as follows:
| 862,387 | 3,059,199 |
|---|---|
| 157 | 189 |
| (856,438) | (2,197,001) |
| 6,106 | 862,387 |
| ‐ | ‐ |
| 6,106 | 862,387 |
| 30,341 | 2,797,070 |
| 26,398 | ‐ |
| (20,740) | (2,766,729) |
| 35,999 | 30,341 |
| 42,105 | 892,728 |
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Loans granted to related parties | 8,665,429 | 18,976,002 |
| Accumulated impairment losses in loans granted to related parties (Note 30) | ‐ | (1,000,000) |
| 8,665,429 | 17,976,002 | |
| Trade accounts receivable and other debtors | ||
| Bails (a) | 5,725,333 | 5,919,711 |
| Legal deposits (b) | 818,011 | 973,963 |
| Recognition of the value to be received Wall Mart ( c) | 7,858,057 | 9,468,476 |
| Amount receivable for selling the Modelo Cont.Seguros | 2,423,530 | 2,344,124 |
| 25,490,360 | 36,682,276 | |
| Accumulated impairment losses in other debtors (Note 30) | (2,423,530) | (2,344,124) |
| Total financial instruments (Note 7) | 23,066,830 | 34,338,152 |
| Other non‐current assets | 36,909 | 91,662 |
| 23,103,739 | 34,429,814 |
Loans granted to related parties mainly refer to MDS SGPS, SA 8,665,429 euro (17,971,002 euro as at 31 December 2012). These loans bear interests at market rates and do not have a defined maturity. The fair value of these loans is estimated to be similar to its carrying amount.
Most significant values included in non‐current "Trade accounts receivable and other debtors" refer to:
It is the understanding of the Board of Directors and the Group attorneys that the amount paid will be recovered. The company already established legal proceedings against Carrefour Comércio e Indústria, Ltda., through society Wms – Supermarkets in Brazil (formerly Sonae Distribuição Brasil, S.A, sold to Wall Mart Group, as mentioned above) to recover the above mentioned amount (for Sonae Investimentos, by right of claim on the Wms). It's the Board of Directors and the Group attorneys understanding that the above mentioned amount is recoverable, since Carrefour has never proved the existence of the costs that it claims and which validate the usage of the above mentioned warranty, or through the warranty expiration date (according with Brazilian law).
According to Group attorneys, the amount improperly received by Carrefour for which a reimbursement will be requested (25,340,145.80 Brazilian real), will bear interests at the SELIC rate. It is expected that the legal proceedings will last up to 7 years, since its beginning in 2011.
As at 31 December 2013 and 2012, Inventories are as follows:
| 31 December 2012 |
|---|
| 831,499 |
| 566,507,747 |
| 318,157 |
| 187,377 |
| 567,844,780 |
| (43,160,752) |
| 524,684,028 |
Cost of goods sold as at 31 December 2013 and 2012 may be detailed as follows:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Opening balance | 567,339,246 | 676,197,262 |
| Exchange rate effect | (94,251) | 7,956 |
| Purchases | 3,656,218,555 | 3,390,646,639 |
| Adjustments | (9,394,346) | (9,441,668) |
| Closing balance | 620,322,326 | 567,339,246 |
| 3,593,746,878 | 3,490,070,943 | |
| Impairment losses (Note 30) | (10,550,285) | 9,179,212 |
| 3,583,196,593 | 3,499,250,155 | |
The amounts recorded under the caption "Adjustments" for the years ended 31 December 2013 and 2012 relate mainly to donations to social welfare institutions.
As at 31 December 2013 and 2012, trade accounts receivable are detailed as follows:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Trade accounts receivable | 43,121,487 | 31,787,666 |
| Doubtful receivables | 3,053,087 | 2,693,857 |
| 46,174,574 | 34,481,523 | |
| Accumulated impairment losses on Trade accounts receivable (Note 30) |
(3,104,378) | (3,393,348) |
| 43,070,196 | 31,088,175 |
Current trade accounts receivable caption includes 14,606,205 euro (13,773,931 euro as at 31 December 2012), related to gross sales to related companies.
Sonae Investimentos exposure to credit risk is mainly related to accounts receivable arising from its operational activity. The amounts presented on the statement of financial position are net of impairment losses that were estimated based on Sonae Investimentos past experience and on the assessment of current economic conditions. It's Sonae Investimentos understanding that the book value of these accounts receivable does not differ significantly from its fair value.
As at 31 December 2013 there is no indication that the debtors of trade accounts receivable not due will not fulfil their obligations on normal conditions, thus no impairment loss was recognized.
| Trade Receivables | ||||
|---|---|---|---|---|
| 31 December 2013 | 31 December 2012 | |||
| Not due | 17,558,563 | 11,931,338 | ||
| Due but not impaired | ||||
| 0 ‐ 90 days | 23,537,170 | 17,055,767 | ||
| + 90 days | 1,974,464 | 1,618,094 | ||
| Total | 25,511,634 | 18,673,861 | ||
| Due and impaired | ||||
| 0 ‐ 90 days | 10,777 | 504,507 | ||
| 90 ‐ 180 days | 47,502 | 13,690 | ||
| 180 ‐ 360 days | 102,871 | 87,786 | ||
| + 360 days | 2,943,228 | 3,270,341 | ||
| Total | 3,104,378 | 3,876,324 | ||
| 46,174,574 | 34,481,523 |
As at 31 December 2013 and 2012, the ageing of the trade receivables is as follows:
In determining the recoverability of trade receivables, Sonae Investimentos considers any change in the credit quality of the trade receivable from the date the credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the large number of customers. Accordingly, it is considered that the risk of not recovering the trade receivables is not higher than the allowance for doubtful receivables.
Additionally, Sonae considers that the maximum exposure to the credit risk is the amount presented in the consolidated statement of financial position.
As at 31 December 2013 and 2012, "Other debtors" are as follows:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Granted loans to related companies | 8,802,720 | 8,423,538 |
| Other debtors | ||
| Trade creditors ‐ debtor balances | 34,253,806 | 30,578,619 |
| Special regime for settlement of tax and social security debts | 22,327,147 | 12,047,569 |
| Deposit in favor of Cosec (a) | 11,798,127 | ‐ |
| VAT recoverable on real estate assets | 2,905,723 | 1,143,779 |
| Accounts receivable from the disposal of tangible fixed assets | 194,142 | 915,522 |
| Other current assets | 24,326,595 | 13,272,105 |
| 95,805,540 | 57,957,594 | |
| Accumulated impairment losses in receivables (Note 30) | (13,921,247) | (14,433,955) |
| Total of Financial Instruments (Note 7) | 90,687,013 | 51,947,177 |
a) Deposit in favour of COSEC during 2013, received in January 2014
Granted loans to related companies (mainly refers to the loan granted to Raso, SGPS, SA for 8,450,000 euro, 7,800,000 euro as at 31 December 2012) bear interests at market rates, do not have defined maturity but are deemed to be received within twelve months.
As at 31 December 2013, the amounts disclosed as 'Trade creditors ‐ debtor balances' relates to commercial discounts billed to suppliers to be net settled with future purchases.
The amount disclosed as 'Special regime for payment of tax and social security debts' corresponds to taxes paid which were previously disputed and subject to reimbursement claims. The tax litigations are still in progress, although following the payment the guarantees previously given where cancelled. No impairment loss was recorded since it's the Board of Directors understanding that the decisions over the appeals will be in favour of Sonae. Since 31 December 2012, the caption "Other debtors" increased, following the Group decision to benefit from the newly approved Special regime for payment of tax and social security debts, and the payment of approximately 17 million euro (Note 31).
As at 31 December 2013 and 2012, the "Other debtors" ageing, without impairment losses, is as follows:
| Other Debtors | |||
|---|---|---|---|
| 31 December 2013 31 December 2012 |
|||
| Not due | 47,965,374 | 24,551,147 | |
| Due but not impaired | |||
| 0 ‐ 90 days | 40,522,421 | 25,600,136 | |
| + 90 days | 2,199,218 | 2,133,647 | |
| Total | 42,721,639 | 27,733,783 | |
| Due and impaired | |||
| 0 ‐ 180 days | 434,163 | 1,371,983 | |
| 180 ‐ 360 days | 751,445 | 850,540 | |
| + 360 days | 12,735,639 | 11,873,679 | |
| Total | 13,921,247 | 14,096,202 | |
| 104,608,260 | 66,381,132 |
There is no indication that the debtors not due will not fulfill their obligations. The carrying amount of "Other debtors" is estimated to be approximately its fair value.
As at 31 December 2013 and 2012, Taxes recoverable and taxes and contributions payable are made up as follows:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Tax recoverable | ||
| Income taxation | 35,097,105 | 31,515,112 |
| VAT | 26,691,231 | 30,716,891 |
| Other taxes | 1,408,625 | 1,594,927 |
| 63,196,961 | 63,826,930 | |
| Taxes and contributions payable | ||
| Income taxation | 11,006,318 | 7,187,745 |
| VAT | 23,694,870 | 25,994,486 |
| Staff income taxes withheld | 4,516,646 | 4,443,734 |
| Social security contributions | 10,408,718 | 10,139,559 |
| Other taxes | 94,362 | 101,157 |
| 49,720,914 | 47,866,681 |
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Commercial discounts | 30,436,429 | 30,490,883 |
| Interests to be received | 1,585,231 | 1,141,142 |
| Commissions to be received | 2,627,215 | 1,926,548 |
| Rents | 6,019,706 | 6,687,441 |
| Condominium management fee's | 1,461,240 | 1,490,358 |
| Insurance premiums paid in advance | 5,778,700 | 5,076,606 |
| Insurance indemnities | 2,430,736 | 7,423,141 |
| Software licenses | 1,725,531 | 1,460,671 |
| Other current assets | 6,848,095 | 8,468,485 |
| 58,912,883 | 64,165,275 |
The caption "Commercial discounts" refers to promotional campaigns carried out in the Group stores and reimbursed by Sonae Investimentos suppliers.
The caption "Insurance indemnities" reflects the best estimate of Sonae, of the amount to be recovered from insurance institutions regarding a fire at one of "Continente" stores in Portimão. The decrease since 2012 is related with the partial payment of the above mentioned indemnity by the insurance institution in 2013.
Deferred tax assets and liabilities as at 31 December 2013 and 2012 are as follows, split between the different types of temporary differences:
| Deferred tax assets | Deferred tax liabilities | |||
|---|---|---|---|---|
| 31 December 2013 | 31 December 2012 | 31 December 2013 | 31 December 2012 | |
| Difference between fair value and acquisition cost | 5,911,741 | 3,779,408 | 21,229,003 | 30,285,857 |
| Amortisation and depreciation | 1,371,758 | 117,928 | 65,095,329 | 71,619,715 |
| Provisions and impairment losses not accepted for tax purposes | 37,206,940 | 19,872,171 | ‐ | ‐ |
| Write off of tangible and intangible assets | 1,661,602 | 3,340,298 | ‐ | ‐ |
| Valuation of hedging derivatives | 210,756 | 107,198 | 60,252 | 48,946 |
| Amortisation of goodwill for tax purposes | ‐ | ‐ | 25,128,058 | 23,732,055 |
| Revaluation of tangible assets | ‐ | ‐ | 1,534,310 | 1,727,983 |
| Tax losses carried forward | 61,353,838 | 93,593,647 | ‐ | ‐ |
| Reinvested capital gains/(losses) | ‐ | ‐ | 1,512,257 | 1,000,609 |
| Tax Benefits | 3,204,661 | ‐ | ‐ | ‐ |
| Others | 6,490,837 | 2,304,700 | 2,378,710 | 1,698,810 |
| 117,412,133 | 123,115,350 | 116,937,919 | 130,113,975 |
During the periods ended 31 December 2013 and 2012, movements in "Deferred tax assets and liabilities" are as follows:
| Deferred tax assets | Deferred tax liabilities | |||
|---|---|---|---|---|
| 31 December 2013 | 31 December 2012 | 31 December 2013 | 31 December 2012 | |
| Opening balance | 123,115,350 | 117,767,016 | 130,113,975 | 119,911,312 |
| Effects in net income (Note 40): | ||||
| Difference between fair value and acquisition cost | 2,293,557 | 376,452 | (8,097,209) | (747,757) |
| Amortisation and depreciation | 1,247,614 | 14,459 | (878,387) | 5,531,889 |
| Provisions and impairment losses not accepted for tax purposes | 19,373,016 | 1,142,804 | 463,067 | ‐ |
| Write‐off of tangible and intangible assets | (1,605,719) | (1,610,592) | ‐ | ‐ |
| Write‐off of deferred costs | ‐ | ‐ | (1,159,359) | 1,146,785 |
| Revaluation of tangible assets | ‐ | ‐ | (143,045) | (142,945) |
| Tax losses carried forward | (32,206,209) | 4,221,118 | ‐ | ‐ |
| Amortisation of goodwill for tax purposes | ‐ | ‐ | 1,333,298 | 1,396,003 |
| Reinvested capital gains/(losses) | ‐ | ‐ | 581,432 | (205,410) |
| Changes in tax rates | (3,198,398) | 734,663 | (6,786,085) | 3,640,629 |
| Tax Benefits | 3,204,661 | ‐ | ‐ | ‐ |
| Others | 5,084,705 | 336,943 | 1,490,902 | 166,392 |
| (5,806,774) | 5,215,847 | (13,195,386) | 10,785,586 | |
| Effects in equity: | ‐ | |||
| Valuation of hedging derivatives | 104,962 | 130,612 | 28,341 | (574,230) |
| Exchange rate effect | ‐ | ‐ | (10,065) | (8,693) |
| Others | (1,404) | 1,875 | 1,053 | ‐ |
| 103,558 | 132,487 | 19,329 | (582,923) | |
| Closing balance | 117,412,133 | 123,115,350 | 116,937,919 | 130,113,975 |
The caption "Tax losses carried forward" includes the reversal of deferred tax assets related to tax losses that have been recorded in previous periods in Worten Spain and Sport Zone Spain amounting 32.5 million euro, considering the existent risk in the recovery of those tax credits within a relevant time horizon. The deferred tax assets in question could only be recovered in the individual sphere of each company. Following the revision of these insignias business plans, as well as its rebranding and the change in expectations of the group for the development of these business's in Spain, the group decided on their annulment.
The rate used at 31 December 2013, in Portuguese companies, to calculate the deferred tax assets relating to tax losses carried forward was 23%, as a consequence of the IRC rate change from 25% to 23% from 2014 onwards. The rate used to calculate deferred taxes in temporary differences in Portuguese companies is 24.5% increased by the state surcharge in companies in which the expected reversal of those deferred taxes will occur when those rates will be applicable. For companies or branches located in other countries, were used rates applicable in each jurisdiction.
As at 31 December 2013 and 2012, and in accordance with the tax statements presented by companies that recorded deferred tax assets arising from tax losses carried forward and using exchange rates effective at that time, tax losses carried forward can be summarized as follows:
| 31 December 2013 | 31 December 2012 | |||||
|---|---|---|---|---|---|---|
| Tax losses carried forward |
Deferred tax assets |
Time limit | Tax losses carried forward |
Deferred tax assets | Time limit | |
| With limited time use | ||||||
| Generated in 2007 | ‐ | ‐ | 2013 | 1,223,112 | 305,778 | 2013 |
| Generated in 2008 | 1,219,236 | 280,424 | 2014 | 1,219,236 | 304,808 | 2014 |
| Generated in 2009 | 2,739 | 630 | 2015 | 3,523 | 881 | 2015 |
| Generated in 2010 | 99,670 | 22,924 | 2014 | 99,670 | 24,918 | 2014 |
| Generated in 2011 | 271,308 | 62,401 | 2015 | 286,255 | 71,564 | 2015 |
| Generated in 2012 | 87,055 | 20,023 | 2017 | 87,055 | 21,764 | 2017 |
| Generated in 2013 | ‐ | ‐ | 2018 | ‐ | ‐ | |
| 1,680,008 | 386,402 | 2,918,851 | 729,713 | |||
| With a time limit different from the above mentioned (a) |
203,224,787 | 60,967,436 | 309,546,450 | 92,863,934 | ||
| 204,904,795 | 61,353,838 | 312,465,301 | 93,593,647 |
(a) Includes, as at 31 December 2013, approximately 58 million euro (76 million euro as at 31 December 2012) related to deferred tax assets for which the carry forward period count hasn´t started. The decrease compared to the year ended 31 December 2012, is associated with the reversal of deferred tax assets in retail operations, in Spain.
As at 31 December 2013 and 2012, deferred tax assets resulting from tax losses carried forward were assessed against each company's business plans, which are regularly updated, and available tax planning opportunities. Deferred tax assets have only been recorded to the extent that future taxable profits will arise which might be offset against available tax losses or against deductible temporary differences.
As at 31 December 2013 deferred tax assets related to tax losses generated in current and previous years, by Modelo Continente Hipermercados, S.A. Spanish Branch of Retail operating segment, amount to 57.9 million euro (57.7 million euro as at 31 December 2012). The mentioned tax losses can be recovered within the Income Tax Group established in Spain, according to Spanish law. Modelo Continente Hipermercados, S.A. Spanish Branch, as at 31 December 2013 and 2012, was the dominant entity within the group of companies taxed in accordance with the Spanish regime for taxing groups of companies. It is the understanding of The Board of Directors, based on existing business plans, that the mentioned deferred tax assets are fully recoverable.
The recoverability of the deferred tax assets mentioned above, regarding Sonae operations in Spain, is conditioned by the fulfilment of the 10 year business plans, approved by the Board of Directors, for those markets and businesses that are part of the fiscal perimeter in Spain. These business plans were also used in the impairment analysis of other non‐current assets.
Additionally Spanish law allows the annual deduction, for tax purposes, of 5% of goodwill recognized on the acquisition of foreign based companies before 21 December 2007, however in 2012 and 2013 this rate was reduced to 1%. Sonae has accounted deferred tax liabilities relating to goodwill depreciation performed for tax purposes, generated with the acquisition of Continente Hipermercados (ex‐Carrefour Portugal).
In 2010 and 2011, Spanish Tax authorities notified Modelo Continente S.A. Spanish Branch of a decrease in 2008 and 2009 tax losses incurred, amounting to approximately 23.3 million euro, challenging the deduction of Goodwill depreciation, generated on the acquisition of Continente Hipermercados for each of the mentioned years. That branch appealed to the proper Spanish Authorities (Tribunal Económico ‐ Administrativo Central de Madrid) in 2010 and 2011 respectively, and it is the Board of Directors understanding that the decision will be favourable to the Group, thus maintaining the recognition of deferred tax assets and deferred tax liabilities related with Goodwill. In 2012 the Company interposed an appeal to the National Court in Spain ("Audiência Nacional Espanha"), due to a decision opposite to the claims and estimates of the Company, by the Economic and Administrative Central Court of Madrid, for the notification for fiscal year of 2008. As at 31 December 2013, tax losses arising from the depreciation of Goodwill, including 2008, amount to 83.7 million euro (79.1 million euro as at 31 December 2012). The company maintains recorded, related to this subject, deferred tax assets and deferred tax liabilities amounting to 25.1 million euro (23.7 million euro in December 2012).
As at 31 December 2013, there were tax losses carried forward, amounting to 175.9 million euro (54.7 million euro in 2012) for which no deferred tax assets were recognized due to uncertainties of their future use. These may be summarised as follows:
| 31 December 2013 | 31 December 2012 | |||||
|---|---|---|---|---|---|---|
| Tax losses carried forward |
Deferred tax credit | Time limit | Tax losses carried forward |
Deferred tax credit | Time limit | |
| With limited time use | ||||||
| Generated in 2007 | ‐ | ‐ | 2013 | 60,805 | 15,202 | 2013 |
| Generated in 2008 | 2,017,121 | 463,938 | 2014 | 3,135,429 | 783,858 | 2014 |
| Generated in 2009 | 4,531,833 | 1,042,321 | 2015 | 5,302,815 | 1,325,703 | 2015 |
| Generated in 2010 | 5,386,907 | 1,238,989 | 2014 | 5,386,907 | 1,346,727 | 2014 |
| Generated in 2011 | 4,292,265 | 987,221 | 2015 | 4,292,265 | 1,073,066 | 2015 |
| Generated in 2012 | 3,495,558 | 803,978 | 2017 | 3,557,841 | 889,460 | 2017 |
| Generated in 2013 | 98,018 | 22,544 | 2018 | ‐ | ‐ | |
| 19,821,702 | 4,558,991 | 21,736,062 | 5,434,016 | |||
| Without limited time use | 12,858,928 | 4,372,036 | 11,625,306 | 3,952,604 | ||
| With a time limit different from the above mentioned a) |
143,265,248 | 42,977,312 | 21,316,027 | 6,394,808 | ||
| 175,945,878 | 51,908,339 | 54,677,395 | 15,781,428 |
(a) The increase over the prior period is primarily associated with the reverse of deferred tax assets in the retail operations in Spain.
As at 31 December 2013 and 2012, cash and cash equivalents are as follows:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Cash at hand | 7,497,968 | 6,964,521 |
| Bank deposits | 64,012,364 | 115,130,218 |
| Treasury applications | ‐ | 40,099,667 |
| Cash and cash equivalents on the statement of financial position | ||
| (Note 7) | 71,510,332 | 162,194,406 |
| Bank overdrafts (Note 22) | (402,542) | (13,211,964) |
| Cash and cash equivalents on the statement of cash flows | 71,107,790 | 148,982,442 |
Bank overdrafts are disclosed in the statement of financial position under Current bank loans.
As at 31 December 2013, the share capital, which is fully subscribed and paid for, is made up of 1,000,000,000 ordinary shares, which do not have the right to a fixed dividend, with a nominal value of 1 euro each.
As at 31 December 2013 and 2012, the company's subscribed share capital are held as follows:
| Company | 31 December 2013 | 31 December 2012 |
|---|---|---|
| Sonae, SGPS, S.A. | 76.856% | 76.856% |
| Sonae Investments, BV | 13.142% | 13.142% |
| Sonae MC‐Modelo Continente, SGPS, SA | 10.000% | ‐ |
| Sonae Specialized Retail, SGPS, SA | ‐ | 10.000% |
| Libra Serviços, Lda | 0.002% | 0.002% |
As at 31 December 2013, Efanor Investimentos, SGPS, S.A. and its subsidiaries held 52.48% of the share capital of Sonae, SGPS, S.A.
As at 31 December 2013, Sonae Investimentos holds 10% of treasury shares. Following the mentioned acquisition free reserves amounting to the cost of the above mentioned shares were made unavailable, in accordance with commercial legislation (Art. 324 of "CSC"). The distribution of this reserve depends on the termination or disposal of the treasury shares.
Movements in non‐controlling interests during the periods ended as at 31 December 2013 and 2012 are as follows:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Opening balance as at 1 January | 85,691,823 | 75,700,031 |
| Dividends | (190,744) | (157,074) |
| Income distribution from investment funds | (4,620,415) | (6,015,675) |
| Increase of capital and premium on subsidiaries | ‐ | 1,166,629 |
| Increased shareholding by acquisitions | 1,209,335 | ‐ |
| Additional paid in capital | ‐ | 15,000,000 |
| Others | 388,607 | 22,482 |
| Profit for the period attributable to non‐controlling interests | 1,833,561 | (24,570) |
| Closing balance as at 31 December | 84,312,167 | 85,691,823 |
As at 31 December 2013 and 2012, Loans are made up as follows:
| 31 December 2013 | 31 December 2012 | |||
|---|---|---|---|---|
| Outstanding amount | Outstanding amount | |||
| Current | Non Current | Current | Non Current | |
| Bank loans | ||||
| Sonae Investimentos, SGPS, S.A. ‐ commercial paper | 32,500,000 | 65,000,000 | 28,500,000 | 147,500,000 |
| Subsidiary of Sonae Investimentos 2011/2016 | 20,000,000 | 45,000,000 | 10,000,000 | 65,000,000 |
| Others | 3,936,459 | 4,979,752 | 3,500,038 | 6,500,345 |
| 56,436,459 | 114,979,752 | 42,000,038 | 219,000,345 | |
| Bank overdrafts (Note 19) | 402,542 | ‐ | 13,211,964 | ‐ |
| Up‐front fees beared with the issuance of loans | (64,637) | (285,174) | (36,153) | (541,996) |
| Bank loans | 56,774,364 | 114,694,578 | 55,175,849 | 218,458,349 |
| Bonds | ||||
| Bonds Sonae SGPS / 2007 / 2015 | ‐ | 200,000,000 | ‐ | 200,000,000 |
| Bonds Sonae Investimentos / 2007 / 2015 | ‐ | 155,000,000 | 155,000,000 | 155,000,000 |
| Bonds Sonae Investimentos/ 2009/ 2014 | 10,000,000 | ‐ | 16,000,000 | 10,000,000 |
| Bonds Sonae Investimentos/ 2012/ 2017 | ‐ | 170,000,000 | ‐ | 170,000,000 |
| Bonds Sonae Investimentos / 2013/ 2018 | ‐ | 50,000,000 | ‐ | ‐ |
| Bonds Sonae Investimentos/ 2013‐ Eur 75M Floating R.Notes‐ 2018 | ‐ | 75,000,000 | ‐ | ‐ |
| Up‐front fees beared with the issuance of loans | (9,878) | (3,692,137) | (99,218) | (2,261,608) |
| Bonds | 9,990,122 | 646,307,863 | 170,900,782 | 532,738,392 |
| Other loans | 33,466 | 53,936 | 33,466 | 90,166 |
| Derivative instruments (Note 24) | 1,415,143 | ‐ | 953,531 | ‐ |
| Other loans | 1,448,609 | 53,936 | 986,997 | 90,166 |
| Obligations under finance leases (Note 23) | 4,185,507 | 7,630,324 | 3,383,796 | 9,942,240 |
| 72,398,602 | 768,686,701 | 230,447,424 | 761,229,147 |
The interest rate as at 31 December 2013 of bonds and loans was on average 2.83% (2.50% as at 31 December 2012). These bonds and bank loans bear interests at variable interest rates indexed to Euribor.
It's estimated that the carrying amount of the above mentioned loans does not differ significantly from its fair value. The loans fair value was determined by discounting estimated future cash flows. The face value loans and interests maturities are as follows (including obligations under financial leases):
| 31 December 2013 | 31 December 2012 | |||||
|---|---|---|---|---|---|---|
| Capital | Interests | Capital | Interests | |||
| N+1 | 71,057,974 | 23,774,491 | 229,629,264 | 23,864,734 | ||
| N+2 | 418,773,255 | 21,761,877 | 58,633,624 | 20,402,608 | ||
| N+3 | 130,598,965 | 14,990,797 | 417,084,216 | 18,556,579 | ||
| N+4 | 96,377,254 | 7,773,445 | 190,541,370 | 11,241,470 | ||
| N+5 | 125,975,817 | 3,775,753 | 96,149,353 | 3,045,007 | ||
| After N+5 | 938,721 | 12,980 | 1,624,188 | 36,717 | ||
| 843,721,986 | 72,089,343 | 993,662,015 | 77,147,115 |
The maturities above were estimated in accordance with the contractual terms of the loans, and taking into account Sonae's best estimated regarding their reimbursement date.
As at 31 December 2013 there are financial covenants included in borrowing agreements at market conditions. As at 31 December 2013 none of the mentioned covenants have been breached and it is the Board of Directors expectation that such covenants will not be breached.
As at 31 December 2013 and 2012, the available credit facilities are as follows:
| 31 December 2013 | 31 December 2012 | ||||
|---|---|---|---|---|---|
| Commitments of less than one year |
Commitments of more than one year |
Commitments of less than one year |
Commitments of more than one year |
||
| Unused credit facilities Agreed credit facilities |
327,760,000 360,260,000 |
310,000,000 375,000,000 |
188,763,449 230,260,000 |
400,000,000 547,500,000 |
As at 31 December 2013 and 2012, Obligations under finance leases are as follows:
| Obligations under finance leases | Minimum finance lease payments | Present value of minimum finance lease payments |
|||
|---|---|---|---|---|---|
| Amounts under finance leases: | 31 December 2013 | 31 December 2012 | 31 December 2013 | 31 December 2012 | |
| N+1 | 4,693,546 | 4,086,651 | 4,185,507 | 3,383,796 | |
| N+2 | 2,759,092 | 2,353,514 | 2,649,286 | 2,068,705 | |
| N+3 | 2,702,487 | 2,810,048 | 2,641,513 | 2,573,476 | |
| N+4 | 829,578 | 2,811,104 | 793,402 | 2,684,923 | |
| N+5 | 562,935 | 829,448 | 540,951 | 793,402 | |
| After N+5 | 1,025,969 | 1,588,707 | 1,005,172 | 1,821,734 | |
| 12,573,607 | 14,479,472 | 11,815,831 | 13,326,036 | ||
| Interests | (757,776) | (1,153,436) | |||
| 11,815,831 | 13,326,036 | ||||
| Current obligations under finance leases | 4,185,507 | 3,383,796 | |||
| Non‐current obligations under finance leases | 7,630,324 | 9,942,240 |
Finance leases contracts are agreed at market interest rates, have defined periods and generally include an option for the acquisition of the related assets at the end of the period of the agreement.
As at 31 December 2013 and 2012, the fair value of financial obligations under financial lease contracts is similar to its book value.
As at 31 December 2013 and 2012, the book value of assets acquired under finance leases can be detailed as follows:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Assets acquired under finance leases | ||
| Lands and buildings | 11,220,585 | 17,150,194 |
| Plant and Machinery | 776,317 | 937,117 |
| Fixture and Fittings | 2,660,688 | 5,425,716 |
| Total tangible assets | 14,657,589 | 23,513,027 |
As at 31 December 2013 the acquisition cost of these tangible assets amounted to 32,750,187 euro (36,552,269 euro as at 31 December 2012).
In what concerns financial risk management policy, Sonae Investimentos essentially uses exchange rate derivatives to hedge future cash flows that occur in the next 12 months.
Sonae entered into several exchange rate forwards in order to manage its exchange rate exposure.
As at 31 December 2013 there are no exchange rate derivatives which haven't been considered hedging instruments. The fair value of exchange rate derivatives hedging instruments, calculated based on present market value of equivalent financial instruments of exchange rate, is 1,415,143 euro as liabilities and 35,999 euro as assets (953,531 euro as liabilities and 30,341 euro as assets at 31 December 2012).
The computation of the fair value of these financial instruments was made taking into consideration the present value at statement of financial position date of the forward settlement amount in the maturity date of the contract. The settlement amount considered in the valuation, is equal to the currency notional amount (foreign currency) multiplied by the difference between the contracted forward exchange rate and the forward exchange market rate at that date as at the valuation date.
Losses in the period arising from changes in the fair value of instruments that do not qualify for hedging accounting treatment were recorded directly in the income statement in the captions "Financial income" or "Financial expenses".
Gains and losses for the year associated with the change in market value of derivative instruments are recorded under the caption "Hedging reserve" when considered cash flow hedging and when considered as fair value hedging are recorded under the caption "Financial income" or " Financial expenses".
The change in fair value of derivative instruments when considered speculation is recorded in the income statement under "Other Expenses".
As at 31 December 2013, the Group had no interest rate derivatives.
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Shareholders loans | 404,677,144 | 404,631,259 |
| Fixed assets suppliers | 1,087,500 | 1,137,500 |
| Other non‐current liabilities | 2,329,078 | 2,576,894 |
| Total of financial instruments (Note 7) | 408,093,722 | 408,345,653 |
| Share based payments (Note 26) | 4,529,203 | 2,655,169 |
| Deferred of revenue from the sale of warranties extention (2.16) | 25,679,570 | 14,550,263 |
| Accruals and deferrals | 6,406,397 | 3,958,567 |
| Other non‐current liabilities | 444,708,892 | 429,509,652 |
The caption "Shareholders loans" includes:
‐ A subordinate bond loan, with a fixed interest rate, repayable after 10 years issued by Sonae Investimentos at market conditions on 28 December 2010 amounting to 400 million euro corresponding to 8,000 bonds with a nominal value of 50,000 euro each. The fair value of this loan on 31 December 2013 is 41,495 euro (42,606 euro as at 31 December 2012) per obligation having been determined based on discounted cash flows method;
‐ Shareholders' loan granted by a minority shareholder to a subsidiary that bears interest at usual market rate. The fair value of this loan is similar to its book value, with no defined maturity.
As at 31 December 2013, the caption "Other non‐current liabilities" includes 661,980 euro (797,645 euro as at 31 December 2012) relating the estimated amounts to fulfil the legal and tax obligations of a Brazilian subsidiary which were considered appropriate to face up to future losses on lawsuits and for which legal deposits exist, which are recorded under the caption "Other non‐current assets" (Note 12), with no defined maturity.
The caption "Accruals and deferrals", includes an amount of approximately 3.4 million euro, associated with the linearization of rents on operating leases of specialized retail stores.
In 2013 and in previous years, in accordance with the remuneration policy described in the corporate governance report, Sonae Investimentos granted deferred performance bonuses to its directors and eligible employees based on shares to be acquired at nil cost or discounted, three years after they were attributed to the employee. The acquisition can be exercised during the period commencing on the third anniversary of the grant date and the end of that year. Sonae Investimentos has the right to deliver, instead of shares, the equivalent in cash. These rights only exist if the employee is employed by a company of Sonae Group at maturity date.
As at 31 December 2013 and 2012, the number of attributed shares and their fair value may be summarised as follows:
| Grant | Vesting | Number of | Number of shares | Fair Value | |||
|---|---|---|---|---|---|---|---|
| year | year | participants | 31 December 2013 | 31 December 2012 | 31 December 2013 | 31 December 2012 | |
| Shares | |||||||
| 2010 | 2013 | ‐ | ‐ | 729,799 | ‐ | 501,372 | |
| 2011 | 2014 | 50 | 3,147,700 | 3,131,398 | 3,301,937 | 2,151,270 | |
| 2012 | 2015 | 56 | 5,062,780 | 5,079,345 | 5,310,856 | 3,489,510 | |
| 2013 | 2016 | 59 | 2,631,763 | ‐ | 2,760,720 | ‐ | |
| Total | 10,842,243 | 8,940,542 | 11,373,513 | 6,142,152 |
As at 31 December 2013 and 2012 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:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Staff costs | 5,255,333 | 3,417,392 |
| Recorded in previous years | 2,645,955 | ‐260,851 |
| 7,901,288 | 3,156,541 | |
| Other non‐current liabilities (Note 25) | 4,529,203 | 2,655,169 |
| Other current liabilities (Note 29) | 3,372,085 | 501,372 |
| 7,901,288 | 3,156,541 |
The share based payment plan costs are recognized during the years between the grant and vesting date as staff costs.
As at 31 December 2013 and 2012, Trade creditors are as follows:
| Payable to | ||||
|---|---|---|---|---|
| 31 December 2013 | Up to 90 days | More than 90 days | ||
| Trade creditors ‐ current account | 1,018,758,065 | 1,018,611,420 | 146,645 | |
| Trade creditors ‐ invoice accruals | 124,881,286 | 124,881,286 | ‐ | |
| 1,143,639,351 | 1,143,492,706 | 146,645 | ||
| Payable to | ||||
| 31 December 2012 | Up to 90 days | More than 90 days | ||
| Trade creditors ‐ current account | 992,543,104 | 991,172,382 | 1,370,722 | |
| Trade creditors ‐ invoice accruals | 97,908,309 | 97,908,309 | ‐ | |
| 1,090,451,413 | 1,089,080,691 | 1,370,722 |
As at 31 December 2013 and 2012 this account includes amounts payable to suppliers resulting from Sonae Investimentos operating activity. The Board of Directors believes that the fair value of these balances does not differ significantly from its book value and the effect of discounting these amounts is not material.
Since the year 2010, a "confirming" program payments system was made available to a very limited number of suppliers enabling them to discount these payments in an early date. As at 31 December 2013 the "confirming" amounts to 79,077,211 euro (71,680,001 euro as at 31 December 2012).
| Payable to | ||||
|---|---|---|---|---|
| 31 December 2013 | Up to 90 days | 90 to 180 days | More than 180 days | |
| Fixed asset suppliers | 36,876,535 | 35,553,010 | 265,659 | 1,057,866 |
| Other debtors | 53,899,298 | 48,806,541 | 3,305 | 5,089,452 |
| 90,775,833 | 84,359,551 | 268,964 | 6,147,318 | |
| Related undertakings | 84,704 | |||
| 90,860,537 | ||||
| Payable to | ||||
| 31 December 2012 | Up to 90 days | 90 to 180 days | More than 180 days | |
| Fixed asset suppliers | 49,507,973 | 48,289,734 | 770,919 | 447,319 |
| Other debtors | 42,591,281 | 36,464,908 | 34,687 | 6,091,686 |
| 92,099,254 | 84,754,642 | 805,606 | 6,539,005 | |
| Related undertakings | 377,748 | |||
| 92,477,002 |
The caption "Other debtors" includes:
‐ 24,881,013 euro (22,632,350 euro as at 31 December 2012) of attributed discounts not yet redeemed related to loyalty card "Cartão Cliente";
‐ 13,229,762 euro (8,690,788 euro as at 31 December 2012) related to vouchers, gift cards and discount tickets not yet redeemed;
‐ 4,320,249 (5,208,150 euro as at 31 December 2012) related to amounts payable to Sonae Distribuição Brasil. S.A. buyer as result of responsibilities assumed with that entity (Note 31).
As at 31 December 2013 and 2012, this caption includes payable amounts to other creditors and fixed assets suppliers that do not bear interests. The Board of Directors believes that the fair value of these payables is similar to its book value and the result of discounting these amounts is immaterial.
As at 31 December 2013 and 2012, "Other current liabilities" are made up as follows:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Staff costs | 93,231,418 | 88,329,450 |
| Interests payable | 3,645,639 | 4,934,351 |
| Marketing expenses | 16,922,857 | 13,825,089 |
| Other external supplies and services | 44,092,252 | 40,786,512 |
| Accrued income ‐ rents | 4,165,598 | 2,643,727 |
| Real estate municipality tax | 2,507,148 | 3,276,643 |
| Deferred of revenue from the sale of warranties extention (Note 2.16) | 3,532,918 | ‐ |
| Share based payments (Note 26) | 3,372,085 | 501,372 |
| Others | 6,989,005 | 9,096,268 |
| 178,458,919 | 163,393,412 |
The caption "Staff costs" refers mainly to payroll amounts to be paid during the next year as holiday and holiday pay.
Movements in Provisions and impairment losses over the period ended 31 December 2013 and 2012 are as follows:
| Caption | Balance as at 1 January 2013 |
Increase | Decrease | Balance as at 31 December 2013 |
|---|---|---|---|---|
| Accumulated impairment losses on investments (Note 5) | 1,101,337 | 1,000,000 | ‐ | 2,101,337 |
| Accumulated impairment losses on tangible assets (Note 8) | ‐ | 154,384,504 | (1,064,302) | 153,320,202 |
| Accumulated impairment losses on intangible assets (Note 9) | 1,496,933 | 186 | ‐ | 1,497,119 |
| Accumulated impairment losses on other non current assets (Note 12) |
3,344,124 | 79,406 | (1,000,000) | 2,423,530 |
| Accumulated impairment losses on trade accounts receivable (Note 14) |
3,393,348 | 610,185 | (899,155) | 3,104,378 |
| Accumulated impairment losses on other debtors (Note 15) |
14,433,955 | 5,211,385 | (5,724,093) | 13,921,247 |
| Accumulated impairment losses on inventories (Note 13) | 43,160,752 | ‐ | (10,518,670) | 32,642,082 |
| Non current provisions | 46,471,233 | 11,414,278 | (28,297,284) | 29,588,227 |
| Current provisions | 2,228,330 | 1,236,000 | (746,341) | 2,717,989 |
| 115,630,012 | 173,935,944 | (48,249,845) | 241,316,111 | |
| Balance as at | Balance as at |
| Caption | 1 January 2012 | Increase | Decrease | 31 December 2012 |
|---|---|---|---|---|
| Accumulated impairment losses on investments (Note 5) | ‐ | 1,101,337 | ‐ | 1,101,337 |
| Accumulated impairment losses on intangible assets (Note 9) | 1,496,933 | ‐ | ‐ | 1,496,933 |
| Accumulated impairment losses on other non current assets (Note 12) |
1,450,000 | 1,894,124 | ‐ | 3,344,124 |
| Accumulated impairment losses on trade accounts receivable (Note 14) |
4,294,755 | 1,097,614 | (1,999,021) | 3,393,348 |
| Accumulated impairment losses on other debtors (Note 15) | 20,041,011 | 7,594,587 | (13,201,643) | 14,433,955 |
| Accumulated impairment losses on inventories (Note 13) | 33,972,326 | 9,188,426 | ‐ | 43,160,752 |
| Non current provisions | 35,325,262 | 16,295,100 | (5,149,129) | 46,471,233 |
| Current provisions | 2,249,330 | ‐ | (21,000) | 2,228,330 |
| 98,829,617 | 37,171,188 | (20,370,793) | 115,630,012 |
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Provisions and impairment losses | 182,585,781 | 25,663,160 |
| Provisions for financial investments (Note 12) (a) | 1,000,000 | 1,101,337 |
| Goodwill (Note 10) | (5,034,825) | ‐ |
| Recorded in cost of goods sold (Note 13) | ‐ | 9,188,426 |
| Others | (4,615,012) | 1,218,265 |
| 173,935,944 | 37,171,188 | |
(a) Transfer of impairment losses of "Other non‐current assets".
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Provisions and impairment losses reversal (Note 36) | (11,359,391) | (10,455,344) |
| Direct use of impairments to accounts receivable | (1,157,319) | (7,479,661) |
| Direct use of Brazil provisions | (19,183,612) | ‐ |
| Direct use and reversals recorded in inventories | (10,550,285) | ‐ |
| Provisions for financial investments | (1,000,000) | ‐ |
| Direct use and reversals recorded in fixed assets tangible | (1,064,302) | ‐ |
| Oher responsibilities | (3,934,936) | (2,435,788) |
| (48,249,845) | (20,370,793) |
The caption non‐current provisions includes 13,470,170 euro (24,423,571 euro as at 31 December 2012) relating to non‐current contingencies assumed by the company, when selling the subsidiary Sonae Distribuição Brasil, S.A. in 2005. This provision is being used as costs are incurred, and it is recorded taking into account the best estimate of costs to be incurred which results from a significant number of civil and labour lawsuits of reduced amount. During the period Sonae Investimentos updated its estimate, following the results of the last conference process conducted with the buyer of the former subsidiary in Brazil.
The caption non‐current provisions and the movement in the period in this caption, also includes the estimated liabilities incurred by the Group on the sale of warranty extension programs on products traded by the Specialized Retail operating segment in the amount of 15,126,215 euro (19,316,820 euro as at 31 December 2012). These extensions are granted for a period of one to three years after the end of the legal mandatory warranty provided by the manufacturers.
As at 31 December 2013 and 2012, contingent liabilities to which Sonae Investimentos is exposed can be detailed as follows:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Guarantees and securities given: | ||
| on tax claims | 757,936,484 | 473,475,718 |
| on judicial claims | 140,502 | 219,222 |
| on municipal claims | 6,284,639 | 6,095,992 |
| for proper agrrement fulfillment | 15,880,490 | 13,884,084 |
| other guarantees | 5,365,571 | 12,323,171 |
The main tax claims, for which bank guarantees or sureties were provided, can be detailed as follows:
‐ Retail operating segment subsidiaries of the Company, Sonae MV and Sonae SR, granted guarantees or sureties in favour of the Portuguese Tax Administration, associated with tax claims for additional VAT payment amounting to 375 million euro (193.9 million euro as at 31 December 2012) related to the period from 2004 to 2009, which the Company has presented, or has the intention of presenting, a tax appeal. The increase in the value of guarantees and securities provided in relation to the previous year, mainly result from additional tax assessments over 2008 and 2009. Portuguese tax authorities claim that the Company should have invoiced VAT related to promotional discounts invoiced to suppliers which depend on the purchases made by the Group during the year, as it considers that the discounts correspond to services rendered by the company. Tax authorities also claim that the company should not have deducted VAT from discount vouchers used by its non‐corporate clients.
‐ Sureties in the amount of, approximately, 60 million euro as a result of a tax appeal presented by the Company concerning an additional tax assessment by Tax authorities, relating to 31 December 2005, following the correction of taxable income for that period as Tax authorities did not accept the recognition of tax losses incurred after the liquidation of a subsidiary of Sonae Investimentos, since it considered that the cover of losses in that subsidiary should not be part of its acquisition cost, which is not in accordance with previous assessments of Tax Authorities.
‐ Sureties in the amount of, approximately 50 million euro, following a tax appeal presented by the Company concerning additional tax assessments made by Tax authorities, relating to 31 December 2002, which refer to the non‐acceptance by Tax authorities of tax losses arising on the sale and liquidation of a subsidiary of the Group.
‐ Fiscal lawsuit related to rent tax, concerning a subsidiary of the Company in Brazil, in the amount of, approximately, 22.4 million euro (65.6 million Brazilian real), which is being judged by a tax court, for which there were granted guarantees in the amount of 37.5 million euro (122 million Brazilian real). The difference between the value of the contingency and the value of the guarantee relates with the update of the related responsibility.
b) Contingent liabilities related to tax claims paid under regularization programs of tax debts
Within the framework of regularization of tax debts to Tax Authorities, (Outstanding Debts Settlement of Tax and Social Security ‐ Decree of Law 151‐A/2013 e Decree of Law 248‐A), the Group made tax payments in the amount of, approximately, 22 million euro (12 million euro to 31 December 2012), having the respective guarantees been eliminated. The related tax appeals continue in courts, having the maximum contingencies been reduced through the elimination of fines and interests related with these tax assessments.
As permitted by law, the Group maintains the legal proceedings, in order to establish the recovery of those amounts.
c) Contingent liabilities related to discontinued activities in subsidiaries in Brazil
‐ In addition to the previously disclosed guarantees, as a consequence of the sale of a subsidiary in Brazil, Sonae guaranteed to the buyer of the subsidiary all the losses incurred by that company arising on unfavourable decisions not open for appeal, concerning tax lawsuits on transactions that took place before the sale date (13 December 2005) and that exceed 40 million euro. As at 31 December 2013, the amount claimed by the Brazilian Tax Authorities, concerning the tax lawsuits still in progress, which the company's lawyers assess as having a high probability of loss, plus the amounts already paid (28.3 million euro) related to programmes for the Brazilian State of tax recovery, amount to near 37.8 million euro (39.3 million euro at 31 December 2012). Furthermore, there are other tax assessments totalling 61.3 million euro (61.3 million euro at 31 December 2012) for which the Board of Directors, based on its lawyers' assessment, understands will not imply future losses to the former subsidiary.
No provision has been recorded to face risks arising from events related to guarantees given, as the Board of Directors considers that no liabilities will result for Sonae Investimentos.
As at 31 December 2013 an amount of 96,087,877 euro (92,526,430 euro as at 31 December 2012) was recorded as cost for the period concerning rents due to operational lease contacts, mainly referring to leased real estate. These values do not include contingent rents, as considered immaterial.
Additionally, as at 31 December 2013, Sonae Investimentos had operational lease contracts, as lessee, whose minimum lease payments had the following payment schedule:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Due in: | ||
| N+1 automatically renewal | 8,896,084 | 10,661,090 |
| N+1 | 85,576,411 | 87,479,783 |
| N+2 | 76,320,112 | 83,108,629 |
| N+3 | 69,037,970 | 71,299,599 |
| N+4 | 62,317,838 | 63,980,933 |
| N+5 | 57,119,616 | 56,466,720 |
| After N+5 | 501,777,848 | 507,626,299 |
| 861,045,879 | 880,623,053 |
During 2013, it was recognized as profit the amount of 7,669,678 euro (6,439,742 euro as at 31 December 2012) related to rents received from operational leases, mainly related with commercial galleries explored by others in stores property of Sonae Investimentos.
Additionally, as at 31 December 2013, Sonae Investimentos had operational lease contracts, as lessor, who's minimum lease payments had the following payment schedule:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Due in: | ||
| N+1 automatically renewal | 3,465,641 | 2,896,976 |
| N+1 | 3,674,722 | 3,592,921 |
| N+2 | 3,136,169 | 3,006,610 |
| N+3 | 2,524,155 | 2,159,609 |
| N+4 | 2,178,600 | 1,627,963 |
| N+5 | 1,649,953 | 1,226,365 |
| After N+5 | 2,214,665 | 1,075,010 |
| 18,843,905 | 15,585,454 |
As at 31 December 2013 and 2012, turnover is made up as follows:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Sale of goods | 4,627,967,634 | 4,496,799,850 |
| Services rendered | 42,578,232 | 34,866,216 |
| 4,670,545,866 | 4,531,666,066 |
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Dividends | 96,536 | 205,129 |
| Others | (13,500) | ‐ |
| Gains / (losses) on the sale of investments in subsidiaries |
‐ | ‐ |
| Impairment losses on investments in associated companies Impairment losses on investments available for sale |
‐ ‐ |
(1,101,337) ‐ |
| Impairment of reversal/(losses) on investments | ‐ | (1,101,337) |
| 83,036 | (896,208) |
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Expenses | ||
| Interests payable | ||
| related with bank loans and overdrafts | (9,044,515) | (11,812,611) |
| related with non convertible bonds | (16,535,181) | (21,134,856) |
| related with other loans | (32,444,444) | (32,533,333) |
| related with financial leases | (345,473) | (246,159) |
| others | (2,675,636) | (3,313,635) |
| (61,045,249) | (69,040,594) | |
| Exchange losses | (2,489,988) | (1,815,255) |
| Up front fees and commissions related to loans | (6,200,119) | (5,710,473) |
| Others | (3,505,434) | (6,020,495) |
| (73,240,790) | (82,586,817) | |
| Income | ||
| Interests receivable | ||
| related with bank deposits | 694,486 | 1,375,738 |
| others | 1,866,270 | 2,006,981 |
| 2,560,756 | 3,382,719 | |
| Exchange gains | 3,085,587 | 2,388,112 |
| Other financial income | 219,105 | 497,363 |
| 5,865,448 | 6,268,194 | |
| Net financial expenses | (67,375,342) | (76,318,623) |
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Supplementary income | 380,781,217 | 370,860,267 |
| Prompt payment discounts received | 26,352,964 | 26,106,600 |
| Exchange differences | 14,969,078 | 9,114,717 |
| Own work capitalised | 4,856,027 | 4,289,211 |
| Gains on sales of assets | 1,141,123 | 2,652,795 |
| Impairment losses and provisions reversals | 11,359,391 | 10,455,344 |
| Benefits from contractual penalties | 118,769 | 147,015 |
| Subsidies | 419,044 | 271,687 |
| Others | 2,431,140 | 4,692,060 |
| 442,428,755 | 428,589,697 |
Supplementary income relates mainly to promotional campaigns carried out in Sonae Investimentos stores reimbursed by its suppliers; ii) receipts from suppliers regarding product placement in preferred locations, and iii) discounts for prompt payment obtained.
The caption "Own work capitalized" includes 4,856,027 euro (4,289,211 euro as at 31 December 2012), relating to software development conducted by a Brazilian subsidiary.
The caption "Gains on disposals of assets" includes about 2.5 million euro in 2012, related with the estimated indemnity by the insurance company for the fire on a "Continente" store in Portimão (Note 17).
As at 31 December 2013 and 2012, External supplies and services are as follows:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Advertising expenses | 102,321,626 | 109,225,866 |
| Rents | 130,485,134 | 133,040,282 |
| Transports | 52,597,162 | 50,288,673 |
| Electricity | 53,032,476 | 58,799,425 |
| Services | 40,138,050 | 38,364,365 |
| Maintenance | 22,939,926 | 21,998,991 |
| Costs with automatic payment terminals | 22,901,030 | 23,644,296 |
| Subcontracts | 5,019,217 | 5,315,718 |
| Security | 20,538,218 | 22,785,493 |
| Cleaning up services | 19,615,624 | 20,687,014 |
| Communications | 9,507,847 | 9,438,144 |
| Travel expenses | 8,147,496 | 6,657,384 |
| Insurances | 6,871,198 | 5,398,722 |
| Consumables | 16,430,752 | 15,660,106 |
| Home delivery | 5,395,933 | 5,749,667 |
| Others | 43,612,891 | 41,001,433 |
| 559,554,581 | 568,055,578 | |
| 31 December 2013 | 31 December 2012 | ||
|---|---|---|---|
| Salaries | 438,114,311 | 424,294,919 | |
| Social security contributions | 90,504,839 | 87,878,020 | |
| Insurance | 8,629,118 | 8,014,640 | |
| Welfare | 3,933,479 | 3,354,114 | |
| Other staff costs | 11,596,681 | 15,840,479 | |
| 552,778,429 | 539,382,172 |
As at 31 December 2013 and 2012, "Other operational expenses" are as follows:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Exchange differences | 14,760,438 | 9,134,218 |
| Donations | 7,690,640 | 8,446,725 |
| Losses on the disposal of assets | 4,423,142 | 1,260,463 |
| Municipal property tax | 2,262,676 | 2,686,479 |
| Other taxes | 7,992,050 | 6,749,067 |
| Doubtful debts written‐off | 168,938 | 1,013,780 |
| Others | 22,312,362 | 4,990,959 |
| 59,610,246 | 34,281,691 |
The caption "Others", for the year ended as at 31 December 2013, includes approximately 12 million euro relating Sonae Investimentos participation in Galp/Cartão Continente promotional program.
As at 31 December 2013 and 2012, Income tax is as follows:
| 31 dezembro 2013 | 31 dezembro 2012 | |
|---|---|---|
| Imposto corrente | 18,230,597 | 18,181,176 |
| Imposto diferido (Nota 18) | (7,388,612) | 5,569,738 |
| 10,841,985 | 23,750,914 |
The reconciliation between the profit before income tax and the tax charge for the years ended 31 December 2013 and 2012 is as follows:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Profit before income tax | (71,589,777) | 33,036,926 |
| Difference between capital (losses)/gains for accounting and tax purposes | (286,478) | (1,195,456) |
| Gains or losses in jointly controlled and associated companies (Note 5) | 2,894,152 | (1,014,532) |
| Donations unforeseen or beyond the legal limits | 1,750,209 | ‐ |
| Impairment of goodwill | 5,034,825 | ‐ |
| Provisions and impairment losses not accepted for tax purposes | 21,947,499 | 17,995,461 |
| Taxable Profit | (40,249,570) | 48,822,399 |
| Use of tax losses that have not originated deferred tax assets | ‐ | ‐ |
| Recognition of tax losses that have not originated deferred tax assets |
26,001,210 | 28,846,279 |
| (14,248,360) | 77,668,678 | |
| Income tax rate in Portugal | 25.00% | 25.00% |
| (3,562,090) | 19,417,169 | |
| Effect of different income tax rates in other countries | (13,035,729) | (7,553,320) |
| Effect of the write‐off of deferred taxes (Note 18) | 32,850,671 | ‐ |
| Effect of increases or decreases in deferred taxes | ‐ | 1,529,317 |
| Use of tax benefits | (7,694,392) | (2,669,211) |
| Under/(over) Income tax estimates | (2,708,169) | 1,717,240 |
| Effect of change in tax income rate in the calculation of deferred taxes | (3,587,687) | ‐ |
| Autonomous taxes and tax benefits | 1,771,029 | 1,512,099 |
| Municipality surcharge | 3,925,743 | 7,249,321 |
| Others | 2,882,609 | 2,548,299 |
| Income tax | 10,841,985 | 23,750,914 |
Balances and transactions with related parties during the periods ended 31 December 2013 and 2012 are as follows:
| Sales and services rendered | Purchases and services obtained | |||
|---|---|---|---|---|
| Transactions | 31 December 2013 | 31 December 2012 | 31 December 2013 | 31 December 2012 |
| Parent company | 1,158,871 | 1,037,410 | 3,018,919 | 1,783,059 |
| Jointly controlled companies | 1,448,942 | 1,405,041 | 5,119,483 | 3,757,299 |
| Associated companies | 33,867,669 | 33,596,428 | 375,137 | 359,998 |
| Other related parties (1) | 64,181,251 | 60,837,478 | 61,971,666 | 71,548,720 |
| 100,656,733 | 96,876,357 | 70,485,205 | 77,449,076 | |
| Interest income | Interest expenses | |||
| Transactions | 31 December 2013 | 31 December 2012 | 31 December 2013 | 31 December 2012 |
| Parent company | 6,862 | 30,671 | 30,523,295 | 30,608,959 |
| Jointly controlled companies | 420,342 | 357,634 | ‐ | ‐ |
| Associated companies | 509,156 | 1,097,928 | ‐ | ‐ |
| Other related parties (1) | 640 | 78,254 | 4,465,421 | 5,118,327 |
| 937,000 | 1,564,487 | 34,988,716 | 35,727,286 | |
| Accounts receivable | Accounts payable | |||
| Balances | 31 December 2013 | 31 December 2012 | 31 December 2013 | 31 December 2012 |
| Parent company | 316,058 | 404,416 | 3,416,512 | 2,306,676 |
| Jointly controlled companies | 245,146 | 315,594 | 401,443 | 405,529 |
| Associated companies | 8,316,882 | 6,039,723 | 440,164 | 412,093 |
| Other related parties (1) | 19,270,829 | 18,464,066 | 16,666,471 | 22,117,155 |
28,148,915 25,223,799 20,924,590 25,241,453
| Loans | |||||
|---|---|---|---|---|---|
| Obtained | Granted | ||||
| Balances | 31 December 2013 | 31 December 2012 | 31 December 2013 | 31 December 2012 | |
| Parent company (Note 25) | 400,000,000 | 400,000,000 | ‐ | ‐ | |
| Jointly controlled companies | ‐ | ‐ | 8,591,454 | 7,939,822 | |
| Associated companies | ‐ | ‐ | 8,868,720 | 19,451,742 | |
| Other related parties (1) | 4,700,993 | 4,616,289 | ‐ | ‐ | |
| 404,700,993 | 404,616,289 | 17,460,174 | 27,391,564 |
1) "Other related parties" are considered to be related party affiliates or companies under joint control of Efanor SGPS, SA that are not included in Sonae Investimentos, including companies belonging to the Sonae Group, Sonae Indústria and Sonae Capital, and minority shareholders of subsidiaries of the Group.
The amounts recorded as loans granted from other related parties represent borrowings from shareholders of subsidiary companies which bear interests at market rates.
Granted loans to associated companies, refer to loans granted to associates Mundo VIP (1,000,000 euro as at 31 December 2012) and MDS, SGPS, SA (8,868,720 euro as at 31 December 2013, 18,451,742 euro as at 31 December 2012).
Members of the Board of Directors and strategic direction remuneration, in all companies within Sonae Investimentos perimeter, in the years ended 31 December 2013 and 2012, can be detailed as follows:
| 31 December 2013 | 31 December 2012 | ||||
|---|---|---|---|---|---|
| Board of Directors | Strategic direction (a) | Board of Directors | Strategic direction (a) | ||
| Short‐term employee benefits | ‐ | 7,332,621 | ‐ | 6,610,085 | |
| Share‐based payments | ‐ | 2,780,400 | ‐ | 1,775,224 | |
| ‐ | 10,113,021 | ‐ | 8,385,309 |
(a) Includes personnel responsible for the strategic management of Sonae Investimentos main companies (excluding members of the Board of Directors of Sonae Investimentos).
Earnings per share for the periods ended 31 December 2013 and 2012, were calculated taking into consideration the following amounts:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Net profit | ||
| Net profit taken into consideration to calculate basic earnings per share (consolidated profit for the period) |
(84,265,323) | 9,310,582 |
| Effect of dilutive potential shares Interest related to convertible bonds (net of tax) |
‐ ‐ |
‐ ‐ |
| Net profit taken into consideration to calculate diluted earnings per share |
(84,265,323) | 9,310,582 |
| Number of shares | ||
| Weighted average number of shares used to calculated basic earnings per share |
900,000,000 | 900,000,000 |
| Effect of dilutive potential ordinary shares from convertible bonds | ‐ | ‐ |
| Weighted average number of shares used to calculated diluted earnings per share |
900,000,000 | 900,000,000 |
| Earnings per share (basic and diluted) | (0.093628) | 0.010345 |
As at 31 December 2013 and 2012 there are no dilutive effects on the number of outstanding shares.
As at 31 December 2013 and 2012, cash receipts related to investments are as follows:
| 31 December 2013 | 31 December 2012 | |
|---|---|---|
| Receipts | ||
| Funding application in Bradesco and Citybank | 887,022 | 2,182,230 |
| Disposal of Imosonae II fund units | 808,476 | ‐ |
| Others | ‐ | 112,741 |
| 1,695,498 | 2,294,971 |
In retail, the group has three segments:
‐ Sonae MC is our food retail unit, operating 465 stores and 83 stores operated under franchise and joint venture agreements under Continente, Continente Modelo, Continente Bom Dia, Meu Super business concepts and even some adjacent business concepts Bom Bocado, Book.it and Wells.
‐ Sonae SR is our specialised retail unit, with a presence in the electronics, sports and fashion market operating 521 stores and 51 stores operated under franchise agreements under the Worten, Sport Zone, MO and Zippy business concepts.
‐ Sonae RP is our retail real estate unit which actively manages retail real estate properties of Sonae, composed principally of stores operating under the brand Continente and under other brands of Sonae SR.
The Investment Management operating segment includes a company that operates in the retail DIY products, building and garden (Maxmat), a travel agency (Geostar), insurance brokers (MDS), nevertheless the Group decided to include this operating segment in "Others, eliminations and adjustments".
These operating segments have been identified taking into consideration that each of these segments has separate identifiable revenues and costs, separate financial information is produced, and its operating results are reviewed by management on which it makes decisions.
The main operating segment information for the periods ended 31 December 2013 and 2012 can be detailed as follows:
| Turnover | 31 December 2013 | Inter‐segment income |
31 December 2012 | Inter‐segment income |
||
|---|---|---|---|---|---|---|
| Sonae MC | 3,415,473,893 | (4,566,804) | 3,281,052,311 | (3,296,830) | ||
| Sonae SR | 1,210,380,000 | (29,775,266) | 1,209,409,361 | (29,172,960) | ||
| Sonae RP | 123,971,896 | (109,508,732) | 119,889,493 | (108,478,175) | ||
| Others, eliminations and adjustments | (79,279,923) | ‐ | (78,685,099) | ‐ | ||
| Total consolidated | 4,670,545,866 | (143,850,802) | 4,531,666,066 | (140,947,965) | ||
| Depreciation and amortisation | Provisions and impairment losses | EBIT | ||||
| 31 December 2013 | 31 December 2012 | 31 December 2013 | 31 December 2012 | 31 December 2013 | 31 December 2012 | |
| Sonae MC | 84,247,677 | 85,667,321 | 1,913,099 | 5,815,517 | 174,072,149 | 160,701,736 |
| Sonae SR | 58,035,246 | 63,353,286 | 3,875,180 | 2,836,009 | (70,078,091) | (106,822,684) |
Sonae RP 29,978,301 31,152,308 338,359 35,070 84,631,674 75,988,596 Others, eliminations and adjustments 4,572,766 3,546,513 5,587,044 1,976,565 (8,519,562) (3,615,891) Total direct consolidated 176,833,990 183,719,428 11,713,682 10,663,160 180,106,170 126,251,757
| Investment (CAPEX) | Invested capital | ||||
|---|---|---|---|---|---|
| 31 December 2013 31 December 2012 |
31 December 2013 | 31 December 2012 | |||
| Sonae MC | 103,121,235 | 77,516,635 | 409,505,851 | 325,940,419 | |
| Sonae SR | 32,386,892 | 33,558,073 | 100,910,578 | 258,068,203 | |
| Sonae RP | 18,582,717 | 15,507,647 | 1,253,629,991 | 1,334,747,641 | |
| Others, eliminations and adjustments | (708,647) | (990,287) | 95,243,365 | 110,644,711 | |
| Total consolidated | 153,382,198 | 125,592,068 | 1,859,289,785 | 2,029,400,975 |
The caption "Others, eliminations and adjustments" can be analysed as follows:
| Turnover | EBIT | ||||
|---|---|---|---|---|---|
| 31 December 2013 | 31 December 2012 | 31 December 2013 | 31 December 2012 | ||
| Inter‐segment income | (143,850,802) | (140,947,965) | ‐ | ‐ | |
| Equity method | ‐ | ‐ | (2,894,152) | 1,014,532 | |
| Others | 64,570,879 | 62,262,866 | (5,625,410) | (4,630,423) | |
| Others, eliminations and adjustments | (79,279,923) | (78,685,099) | (8,519,562) | (3,615,891) | |
| Investment (Capex) | Invested capital | ||||
| 31 December 2013 | 31 December 2012 | 31 December 2013 | 31 December 2012 | ||
| Investments and loans granted | ‐ | ‐ | 60,462,496 | 78,795,854 | |
| Others | (708,647) | (990,287) | 34,780,869 | 31,848,857 | |
| Others, eliminations and adjustments | (708,647) | (990,287) | 95,243,365 | 110,644,711 |
Glossary:
Net Invested capital = Total net debt + total shareholder funds
Other eliminations and adjustments = Intra‐groups + consolidation adjustments + contributions from other companies not included in the disclosed segments by do not fit in any reportable segment.
Investments (CAPEX) = Investments in tangible and intangible assets and investments in acquisitions;
In the Management Report, and for the purposes of calculating financial indicators as EBIT, EBITDA and underlying EBITDA the consolidated income statement is divided between Direct Income and Indirect Income.
The Indirect Income includes: (i) impairment of real estate assets for retail, (ii) decreases in goodwill, (iii) provisions (net of tax) for possible future liabilities, and impairments related to non‐core investments, businesses and discontinued assets (or to be discontinued / repositioned), (iv) valuation results based on the methodology "mark‐to‐market" of other current investments that will be sold or traded in the near future and (v) other irrelevant issues. The value of EBITDA is only calculated in the direct income component, excluding the indirect contributions.
The reconciliation between consolidated income and direct‐indirect income for the periods ended 31 December 2013 and 2012 can be summarised as follows:
| 31 December 2013 | 31 December 2012 | ||||||
|---|---|---|---|---|---|---|---|
| Consolidated accounts |
Indirect income | Direct income | Consolidated accounts |
Indirect income | Direct income | ||
| Turnover | 4,670,545,866 | ‐ | 4,670,545,866 | 4,531,666,066 | ‐ | 4,531,666,066 | |
| Investment income | |||||||
| Dividends and other adjustments | 96,536 | 96,536 | ‐ | 205,129 | 205,129 | ‐ | |
| Impairment losses | ‐ | ‐ | ‐ | (1,101,337) | (1,101,337) | ‐ | |
| Others | (13,500) | ‐ | (13,500) | ‐ | (1,000,000) | 1,000,000 | |
| Other income | |||||||
| Impairment losses reversal | 11,446,018 | ‐ | 11,446,018 | 10,455,344 | ‐ | 10,455,344 | |
| Others | 430,982,737 | (2,296,855) | 433,279,592 | 418,134,353 | ‐ | 418,134,353 | |
| Total income | 5,113,057,657 | (2,200,319) | 5,115,257,976 | 4,959,359,555 | (1,896,208) | 4,961,255,763 | |
| Total expenses | (4,754,958,169) | (11,248,187) | (4,743,709,982) | (4,627,826,200) | ‐ | (4,627,826,200) | |
| Depreciation and amortisation | (176,833,990) | ‐ | (176,833,990) | (183,719,428) | ‐ | (183,719,428) | |
| Non‐recurring impairment losses over inventories | ‐ | ‐ | ‐ | (13,809,750) | ‐ | (13,809,750) | |
| Provisions and impairment | |||||||
| Provisions for warranty extensions | ‐ | ‐ | ‐ | (75,245) | ‐ | (75,245) | |
| Goodwill impairment (Note 10) | (5,034,825) | (5,034,825) | ‐ | ‐ | ‐ | ‐ | |
| Unusual provisions and impairments | (155,025,977) | (155,025,977) | ‐ | (906,000) | ‐ | (906,000) | |
| Others | (22,524,979) | (10,811,297) | (11,713,682) | (24,681,915) | (15,000,000) | (9,681,915) | |
| Profit before financial results and share of results in associated companies |
(1,320,283) | (184,320,605) | 183,000,322 | 108,341,017 | (16,896,208) | 125,237,225 | |
| Financial profit/(loss) | (67,375,342) | (96,536) | (67,278,806) | (76,318,623) | (205,129) | (76,113,494) | |
| Share of results in joint ventures and associated undertakings |
|||||||
| MDS | (2,344,730) | ‐ | (2,344,730) | 3,813,283 | ‐ | 3,813,283 | |
| Raso | (565,868) | ‐ | (565,868) | (2,813,084) | ‐ | (2,813,084) | |
| Others | 16,446 | ‐ | 16,446 | 14,333 | ‐ | 14,333 | |
| Profit before taxation | (71,589,777) | (184,417,141) | 112,827,364 | 33,036,926 | (17,101,337) | 50,138,263 | |
| Income tax | (10,841,985) | 13,653,705 | (24,495,690) | (23,750,914) | ‐ | (23,750,914) | |
| Profit/(Loss) after taxation | (82,431,762) | (170,763,436) | 88,331,674 | 9,286,012 | (17,101,337) | 26,387,349 | |
| Attributable to equity holders of Sonae | (84,265,323) | (170,763,436) | 86,498,113 | 9,310,582 | (17,101,337) | 26,411,919 | |
| Non‐controlling interests | 1,833,561 | ‐ | 1,833,561 | (24,570) | ‐ | (24,570) | |
| "Underlying" EBITDA (a) | 361,911,327 | 323,947,261 | |||||
| EBITDA (b) | 357,221,324 | 322,988,751 | |||||
| Direct EBIT (c) | 180,106,170 | 126,251,757 |
(a) EBITDA = total direct income ‐ total direct expenses ‐ reversal of direct impairment losses + Share of results in joint ventures and associated undertakings
(b) "Underlying" EBITDA = total direct income ‐ total expenses ‐ reversal of impairment losses;
(c) Direct EBIT = Direct EBT ‐ financial results;
(d) Direct EBT = Direct results before non‐controlling interests and taxes;
(e) Direct income = Results excluding contributions to indirect income;
(f) Indirect income = Includes results arising from: (i) impairment of real estate assets for retail, (ii) decrease in goodwill, (iii) provisions (net of tax) for possible future liabilities and impairments related with non‐core financial investments, businesses, discontinued assets (or be discontinued / repositioned), (iv) valuation results based on the methodology "mark‐to‐market" of other current investments that will be sold or traded in the near future and (v) other irrelevant issues.
Indirect income can be analysed as follows:
| Indirect income | 31 December 2013 | 31 December 2012 |
|---|---|---|
| Provision for contingencies in Brazil (Note 30) | (11,414,278) | (15,000,000) |
| Change of "layout" and "rebranding" (Note 8): | ‐ | ‐ |
| Specialized retail stores | (43,746,620) | ‐ |
| Food based retail stores | (9,988,367) | ‐ |
| Impairment of Real Estate (Note 8) | (100,465,106) | ‐ |
| Impairment of goodwill | (5,034,825) | ‐ |
| Impairment of financial investments and loans granted to associates | ‐ | (2,101,337) |
| Others | (114,240) | ‐ |
| Total | (170,763,436) | (17,101,337) |
The accompanying consolidated financial statements were approved by the Board of Directors on 17 March 2014 nevertheless they are still subject to approval at the Shareholders Annual General Meeting.
The Board of Directors,
Duarte Paulo Teixeira de Azevedo (Presidente)
Ângelo Gabriel Ribeirinho dos Santos Paupério
(Translation of individual financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
| ASSETS | Notes | 31.December.2013 | 31.December.2012 |
|---|---|---|---|
| NON‐CURRENT ASSETS: | |||
| Tangible assets | 6 | 30 | 60 |
| Intangible assets | 6 | 455 | 1,225 |
| Investments | 5 | 2,388,661,291 | 2,653,628,614 |
| Deferred tax | 7 | 6,485 | 28,070 |
| Other non‐current assets | 4 , 8 | 1,186,256,030 | 1,092,008,435 |
| Total non‐current assets | 3,574,924,291 | 3,745,666,404 | |
| CURRENT ASSETS: | |||
| Trade account receivables | 4 , 9 | 394,432 | 1,688,043 |
| Other debtors | 4 , 10 | 165,613,555 | 179,156,814 |
| Taxes recoverable | 11 | 34,066,038 | 30,428,987 |
| Other current assets | 4 , 12 | 4,417,840 | 3,353,995 |
| Cash and cash equivalents | 4 , 13 | 6,623,141 | 94,502,364 |
| Total current assets | 211,115,006 | 309,130,203 | |
| TOTAL ASSETS | 3,786,039,297 | 4,054,796,607 | |
| EQUITY AND LIABILITIES | |||
| EQUITY: | |||
| Share capital | 14 | 1,000,000,000 | 1,000,000,000 |
| Legal reserves | 15 | 140,642,469 | 140,357,809 |
| Hedging reserve, fair value reserve and other reserves | 16 | 1,154,433,557 | 1,189,025,023 |
| Profit for the year | 11,906,939 | 5,693,194 | |
| TOTAL EQUITY | 2,306,982,965 | 2,335,076,026 | |
| LIABILITIES: | |||
| NON‐CURRENT LIABILITIES: | |||
| Bonds | 4 , 17 | 646,307,863 | 532,738,392 |
| Bank loans | 4 , 17 | 66,666,347 | 152,484,985 |
| Other non‐current liabilities | 4 , 18 | 400,000,000 | 400,000,000 |
| Defered tax | 7 | ‐ | 237 |
| Total non‐current liabilities | 1,112,974,210 | 1,085,223,614 | |
| CURRENT LIABILITIES: | |||
| Bonds | 4 , 17 | 9,990,122 | 170,900,782 |
| Bank loans | 4 , 17 | 35,825,666 | 31,827,393 |
| Trade accounts payable | 4 , 19 | 34,775 | 37,634 |
| Other creditors | 4 , 20 | 309,433,073 | 421,462,150 |
| Taxes and contributions payable | 11 | 2,579,178 | 2,831,463 |
| Other current liabilities | 4 , 21 | 8,219,308 | 7,437,545 |
| Total current liabilities | 366,082,122 | 634,496,967 | |
| TOTAL EQUITY AND LIABILITIES | 3,786,039,297 | 4,054,796,607 |
The accompanying notes are part of these individual financial statements.
(Translation of individual financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
(Amounts expressed in euro)
| Notes | 31.December.2013 | 31.December.2012 | |
|---|---|---|---|
| Services rendered | 25 | 870,539 | 2,018,202 |
| Gains or losses on investments | 22, 26 | 43,924,710 | 39,372,600 |
| Financial income | 27 | 45,939,541 | 50,252,857 |
| Other income | 28 | 762,164 | 497,634 |
| External supplies and services | 29 | (4,187,083) | (2,759,408) |
| Staff costs | (33,190) | (178,141) | |
| Depreciation and amortisation | 6 | (793) | (2,457) |
| Provisions and impairment losses | 22 | (88,387) | (1,894,124) |
| Financial expense | 27 | (78,912,820) | (82,595,663) |
| Other expenses | 30 | (340,039) | (441,410) |
| Profit/(Loss) before taxation | 7,934,642 | 4,270,090 | |
| Taxation | 31 | 3,972,297 | 1,423,104 |
| Profit/(Loss) after taxation | 11,906,939 | 5,693,194 | |
| Profit/(Loss) pershare | 32 | 0.0132 | 0.0063 |
The accompanying notes are part of these individual financial statements.
(Translation of the individual financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
(Amounts expressed in euro)
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Net Profit / (Loss) for the year | 11,906,939 | 5,693,194 |
| Total comprehensive income for the year | 11,906,939 | 5,693,194 |
The accompanying notes are part of these individual financial statements.
(Translation of the individual financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
| Oth nd ine d e ing eta er re ser ves a r arn s |
||||||||
|---|---|---|---|---|---|---|---|---|
| No tes |
Sh ita l are c ap |
Leg al r ese rve |
Leg al r s in ese rve ord ith acc anc w e icle 3 24 f art o Co ial mm erc Co ani Co de mp es |
Oth er re ser ves |
al he Tot ot r nd res erv es a ed ain ret nin ear gs |
it/ Ne P rof (Lo ss) t |
Tot al |
|
| Bal t 1 Ja 201 2 anc a e s a nua ry |
1,0 00, 000 ,00 0 |
139 ,61 4,8 81 |
320 ,00 0,0 00 |
874 ,90 9,3 92 |
1,1 94, 909 ,39 2 |
14, 858 ,55 9 |
2,3 49, 382 ,83 2 |
|
| al reh for the Tot siv e i co mp en nco me yea r |
‐ | ‐ | ‐ | ‐ | ‐ | 5,6 93, 194 |
5,6 93, 194 |
|
| of fit of Ap iat ion 201 1: pro pr pro nsf l l re and oth Tra to er ega ser ves er res erv es ide nds d ibu ted Div istr |
15 | ‐ ‐ |
742 ,92 8 ‐ |
‐ ‐ |
‐ (5, 9) 884 ,36 |
‐ (5, 9) 884 ,36 |
(74 28) 2,9 (14 31) ,11 5,6 |
‐ ( 0) 20, 000 ,00 |
| Bal mb t 3 D 1 201 2 anc a e s a ece er |
1,0 00, 000 ,00 0 |
140 ,35 7,8 09 |
320 ,00 0,0 00 |
869 ,02 5,0 23 |
1,1 89, 025 ,02 3 |
5,6 93, 194 |
2,3 35, 076 ,02 6 |
|
| Bal t 1 Ja 201 3 anc a e s a nua ry |
1,0 00, 000 ,00 0 |
140 ,35 7,8 09 |
320 ,00 0,0 00 |
869 ,02 5,0 23 |
1,1 89, 025 ,02 3 |
5,6 93, 194 |
2,3 35, 076 ,02 6 |
|
| al reh for the Tot siv e i co mp en nco me yea r |
‐ | ‐ | ‐ | ‐ | ‐ | 11, 906 ,93 9 |
11, 906 ,93 9 |
|
| of fit of Ap iat ion 201 2: pro pr pro nsf l l re and oth Tra to er ega ser ves er res erv es ide nds d ibu ted Div istr |
14, 15 14 |
‐ ‐ |
284 ,66 0 ‐ |
‐ ‐ |
‐ ( 6) 34, 591 ,46 |
‐ ( 6) 34, 591 ,46 |
( 0) 284 ,66 (5, 4) 408 ,53 |
‐ (4 ) 0,0 00, 000 |
| Bal mb t 3 D 1 201 3 anc a e s a ece er |
1,0 00, 000 ,00 0 |
140 ,64 2,4 69 |
320 ,00 0,0 00 |
834 ,43 3,5 57 |
1,1 54, 433 ,55 7 |
11, 906 ,93 9 |
2,3 06, 982 ,96 5 |
Theaccompanying notes are part of these individual financial statements.
(Translation of the individual financial statements originally issued in Portuguese.
| Notes | 31.December.2013 | 31.December.2012 | |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Cash receipts from trade debtors | 2,088,593 | (736,289) | |
| Cash paid to trade creditors | (3,043,718) | (2,658,154) | |
| Cash paid to employees | (341,006) | (325,962) | |
| Cash flow generated by operations | (1,296,131) | (3,720,405) | |
| Income taxes (paid) / received | 3,199,888 | 2,567,625 | |
| Other cash receipts and (payments) relating to operating activities | (9,966,044) | 646,653 | |
| Net cash flow from operating activities (1) | (8,062,287) | (506,127) | |
| INVESTMENT ACTIVITIES | |||
| Cash receipts arising from: | |||
| Investments | 33 | 191,445,350 | ‐ |
| Tangible assets | 20 | ‐ | |
| Interest and similar income | 44,709,903 | 60,366,445 | |
| Dividends | 26 | 125,286,679 | 24,646,376 |
| Others | 26 | 17,368,661 | 26,827,561 |
| Loans granted | 2,403,140,710 | 1,937,115,766 | |
| 2,781,951,323 | 2,048,956,148 | ||
| Cash payments arising from: | |||
| Investments | 33 | (25,208,658) | (15,610,000) |
| Tangible assets | ‐ | (492) | |
| Loans granted | (2,476,871,261) | (1,456,599,516) | |
| (2,502,079,919) | (1,472,210,008) | ||
| Net cash used in investment activities (2) | 279,871,404 | 576,746,140 | |
| FINANCING ACTIVITIES | |||
| Cash receipts arising from: | |||
| Loans obtained | 6,393,115,811 | 7,493,285,369 | |
| 6,393,115,811 | 7,493,285,369 | ||
| Cash payments arising from: | |||
| Loans obtained | (6,632,599,171) | (8,001,157,977) | |
| Interest and similar charges | (80,203,253) | (86,025,081) | |
| Dividends | 14 | (40,000,000) | (20,000,000) |
| (6,752,802,424) | (8,107,183,058) | ||
| Net cash used in financing activities (3) | (359,686,613) | (613,897,689) | |
| Net increase in cash and cash equivalents (4) = (1) + (2) + (3) | (87,877,496) | (37,657,676) | |
| Cash and cash equivalents at the beginning of the year | 13 | 94,500,637 | 132,158,313 |
| Cash and cash equivalents at the end of the year | 13 | 6,623,141 | 94,500,637 |
The accompanying notes are part of these individual financial statements.
(Translation of individual financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
(Amounts expressed in euro)
SONAE INVESTIMENTOS, SGPS, SA, "the Company" or "Sonae Investimentos" it's a Portuguese Corporation, with head‐ office in Rua João Mendonça nº 529, 4464‐501 Senhora da Hora, Matosinhos, Portugal.
The Company's main activity is the management of shareholdings (Note 5).
The company financial statements are presented as required by Commercial Companies Code. According to Decree‐Law 158/2009 of 13 July, the Company financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
Consolidated financial statements are also presented in accordance with applicable legislation.
The significant accounting policies adopted in preparing the accompanying individual financial statements are as follows:
The accompanying financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union. This standards were issued by the International Accounting Standards Board ("IASB") and interpretations issued by International Financial Reporting Interpretations Committee ("IFRIC") or by the previous Standing Interpretations Committee ("SIC"), that have been adopted by the European Union.
The accompanying financial statements have been prepared from the books and accounting records on a going concern basis and under the historical cost convention, except for financial instruments which are stated at fair value.
Up to the approval date of these financial statements, the European Union endorsed standards, interpretations, amendments and revisions, some of which have become effective during the year 2012. These changes are presented in Note 2 of the notes to the consolidated financial statements. The adoption, during 2012 of the mentioned standards did not produce impacts on the Company financial statements, since they aren't applicable to the Individual financial statements of the Company.
Additionally there are standards that have been approved for adoption in the periods started at or after 1 January 2013, which were not adopted by the Company in advance. No material impacts in the individual financial statements of the company will arise from the adoption of these standards.
Tangible assets are recorded at acquisition cost net of depreciation and accumulated impairment losses.
Depreciation charges for the year are calculated on a straight line basis over the useful life of each asset in the caption Depreciation and amortisation.
The impairment losses in the realisable value of tangible assets are recorded in the year they arise in the caption of the Income Statement ‐ "Provisions and impairment losses".
Intangible assets are stated at acquisition cost, net of amortisation and accumulated impairment losses. Intangible assets are only recognized if it is probable that future economic benefits will flow from them, if they are controlled by the Company and if their cost can be reliably measured.
Depreciation charges for the year are calculated on a straight line basis over the useful life of each asset in the caption Depreciation and amortization.
Borrowing costs are usually recognized as an expense in the period in which they are incurred on an accruals basis in accordance with effective interest rate method.
The Company classifies the financial instruments in the categories presented and conciliated with the statement of financial position disclosed in Note 4.
Equity investments in subsidiaries and associates are accounted for accordingly with IAS 27, at acquisition cost net of impairment losses.
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 statement of financial position 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.
The investments measured at fair value through profit or loss include the investments held for trading that the company acquires for sale in a short period of time, and are classified in the statement of financial position as current assets.
The Company classifies as available for sale those investments that are neither included as investments measured at fair value through profit or loss nor as investments held to maturity. These assets are classified as non‐current assets, except if the sale is expected to occur within 12 months from the date of classification.
All purchases and sales of investments are recognized on the trade date, independently of the settlement date.
Investments are initially recorded at acquisition cost, which is the fair value of the consideration paid for them. In the case of Investments held to maturity or available for sale investments, transaction costs are included in the acquisition costs.
After its initial recording, investments measured at fair value through profit or loss and available for sale investments are subsequently carried at fair values, by reference to their quoted market value at statement of financial position date, without any deduction for transaction costs which may be incurred on sale. 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 recognized directly in equity, under Fair value reserve, in the caption Other reserves, 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 recognized in equity is transferred to net profit or loss.
Gains or losses arising from a change in fair value of investments measured at fair value through profit or loss are recorded in the Income statement captions financial expenses or financial income.
Held to maturity investments are carried at amortized cost using the effective interest rate, net of capital reimbursements and interest income received.
Loans and accounts receivable are recorded at amortized cost using the effective rate method net of accumulated impairment losses, in order to reflect its realisable value.
Interest income is recognized by applying the effective interest rate, except for short‐term receivables when the recognition of interest would be immaterial.
These financial instruments emerge when the Company provides money or services to its subsidiaries and associates with no intention of trading those assets.
Loans and receivables are recorded as current assets, except when its maturity is greater than 12 months from the statement of financial position date, situations when they are classified as non‐current assets. Loans and receivables are included in the captions presented in Note 4.
Receivables are stated at net realisable value corresponding to their nominal value less impairment losses, recorded under the caption "Provisions and impairment losses" in accounts receivable.
Impairment is recognized if there is objective and measurable evidence that, as a result of one or more events that occurred, the balance will not be fully received.
For financial assets carried at amortized cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate. If the receipt of the full amount is expected to be within one year the effect of the discount will be considered immaterial.
Financial liabilities and equity instruments are classified and accounted for based on their contractual substance, independently from the legal form they assume.
f) Loans
Loans are recorded as liabilities at their nominal value, net of up‐front fees and commissions related to the issuance of those instruments. Financial expenses are calculated based on the effective interest rate and are recorded in the income statement on an accruals basis, in accordance with the accounting policy defined in Note 2.7. 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. There is no discount, as it is immaterial.
The Company uses derivatives in the management of its financial risks to hedge such risks. Derivatives are not used for trading purposes.
Derivatives classified as cash flow hedge instruments are used by the Company mainly to hedge interest rate risks on loans obtained. Conditions established for these cash flow hedge instruments are identical to those of the corresponding loans in terms of base rates, calculation rules, rate setting dates and repayment schedules of the loans and for these reasons they qualify as perfect hedges. The gain or loss relating to the ineffective portion of the hedge, if any, is recorded in the Income Statement under Financial Income or Financial Expenses.
The Company's criteria for classifying a derivative instrument as a cash flow hedge instrument include:
Cash flow hedge instruments used by the Company to hedge the exposure to changes in interest of its loans are initially accounted for at cost, if any which corresponds to its fair value, and subsequently adjusted to their corresponding fair value. Changes in fair value of these cash flow hedge instruments are recorded in equity under the caption Hedging reserves, included in the caption Reserves and Retained earnings, and then recorded in the income statement over the same period in which the hedged instrument is recognized in profit or loss.
Hedge accounting of derivative instruments is discontinued when the instrument matures or is sold. Whenever a derivative instrument can no longer be qualified as a hedging instrument, the fair value differences recorded in equity under the caption Hedging reserve included in the caption Reserves and Retained earnings, 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.
The fair value of these instruments is estimated by the Company using specific software based on the discounted cash flow of the difference between the fixed interest rate of the fixed leg and the indexed variable interest rate inherent to the variable leg, through the use of interest rate curves taken from Bloomberg.
When embedded derivatives exist, they are accounted for as separate derivatives when the risks and the characteristics are not closely related to economic risks and characteristics of the host instruments, and this is not stated at fair value through profit or loss.
In specific situations, the Company hires exchange rate derivatives. In these circumstances, and although these derivatives are hired to hedge the risk associated with the variation of future cash flows, these derivatives are usually measured at fair value through the income statement.
Treasury shares are recorded at acquisition cost as a reduction to equity. Gains or losses arising from sales of treasury shares are directly recorded in other reserves.
Cash and cash equivalents include cash on hand, cash at bank, term deposits and other treasury applications which mature in less than three months and are subject to insignificant risk of change in value.
In the cash flows statement, cash and cash equivalents also include bank overdrafts, which are included in the statement of financial position caption of current bank loans.
The effective interest rate method is a method of calculating the amortized cost of a financial asset or liability and of allocating interest income or expense until the maturity of the financial instrument.
Financial assets, other than Investments measured at fair value through profit or loss, are assessed for indicators of impairment at each statement of financial position date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.
For non‐quoted equity instruments determining whether the investment is impaired requires an estimation of the value in use of the investment. The value in use calculation requires the entity to estimate the future cash flows expected to arise for the entity and a suitable discount rate in order to calculate present value.
For financial assets carried at amortized cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.
For investments in subsidiaries (equity investments and loans granted to subsidiaries, jointly controlled companies and associated companies) the impairment analysis is based on the fair value estimate, based on discounted cash flows or based on its net asset value as applicable.
The above mentioned estimate is based on the fair value computation of the value in use of its holdings by means of discounted cash flow models, whenever there is an indication that the asset might be impaired, namely from the distribution of dividends by the mentioned entities.
It is the Board of Directors understanding that the use of the above mentioned methodology is adequate to conclude on the eventual existence of financial investments impairment as it incorporates the best available information as at the date of the financial statements.
If, in a subsequent period, the amount of the impairment loss decreases and that decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.
In respect of equity investments classified as available for sale, impairment losses previously recognized through profit or loss are not reversed. Any increase in fair value subsequent to an impairment loss is recognized directly in equity.
Contingent liabilities are not recorded in the financial statements. Instead they are disclosed in the notes to the financial statements, unless the probability of a cash outflow is remote, in which case, no disclosure is made.
Contingent assets are not recorded in the financial statements but disclosed when future economic benefits are probable.
Revenue from services rendered is recognized in the income statement in the period they are performed.
Dividends are recognized as income in the year they are attributed to the shareholders.
Income and expenses are recorded in the year to which they relate, independently of the date of the corresponding payment or receipt. Income and expenses for which their real amount is not known are estimated.
Other current assets and other current liabilities include income and expenses of the reporting year which will only be invoiced in the future. Those captions also include receipts and payments that have already occurred but that correspond to income or expenses of future years, when they will be recognized in the income statement.
Events after the statement of financial position 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 statement of financial position 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 used are based on the best information available during the preparation of these financial statements and are based on the best knowledge of past and present events. Although future events, are not controlled by the Company are not foreseeable, some could occur and have impact on the estimates. Therefore and due to this uncertainty the outcome of the transactions being estimated may differ from the initial estimate. Changes to the estimates used by management that occur after the approval date of these consolidated financial statements, will be recognized in net income prospectively, in accordance with IAS 8.
The main estimates and assumptions in relation to future events included in the preparation of these financial statements are disclosed in the correspondent notes, if applicable.
Share‐based payments result from deferred performance bonus plans that are referenced to the evolution of the Sonae, SGPS, SA shares' price (parent company of Sonae Investimentos, SGPS, SA).
The value of these responsibilities is determined at the time of assignment (usually in March of each year) and subsequently updated at the end of each reporting period depending on the number of shares allotted and the fair value of the reporting date. The responsibility is recorded on staff costs and other current liabilities, linearly between the attribution date and the vesting date, in proportion to the time between those dates.
Sonae Investimentos is taxed in accordance with Special Regime of Taxing Groups of Companies (Parent company). Each company included in this regime records income tax for the year in its individual accounts in the caption "Group companies". When a subsidiary contributes with a tax loss, it reflects, in its individual accounts, the amount of tax corresponding to the loss to be compensated by the profits of the other companies covered by this regime.
Deferred taxes are calculated using the statement of financial position 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 expected to apply in the periods when the temporary differences are expected to reverse.
Deferred tax assets are recognized only when it is probable that sufficient taxable profits will be available against which the deferred tax assets can be used, or when taxable temporary differences are recognized and expected to reverse in the same period. At each statement of financial position date an assessment of the deferred tax assets recognized is made, being reduced whenever their future use is no longer probable.
Deferred tax assets and liabilities are recorded in the income statement, except if they relate to items directly recorded in equity. In these cases the corresponding deferred tax is recorded in Equity.
Risk management general principles are approved by the Board of Directors, and its implementation is supervised by the Group's finance department.
The interest and exchange rate risk have a decisive importance in what concerns market risk management.
Sonae Investimentos exposure to the interest rate risk arises mainly from the long term loans which bear interests indexed to Euribor.
The interest rate sensitivity analysis is based on the following assumptions:
‐ Changes in market interest rates affect the interest income or expense of variable interest financial instruments (the interest payments of which are not designated as hedged items of cash flow hedges against interest rate risks). As a consequence, they are included in the calculation of income‐related sensitivities;
‐ Changes in market interest rates only affect interest income or expense in relation to financial instruments with fixed interest rates if these are recognized at their fair value. As such, all financial instruments with fixed interest rates that are carried at amortised cost are not subject to interest rate risk as defined in IFRS 7;
‐ In the case of fair value hedges designed for hedging interest rate risks, when the changes in the fair values of the hedged item and the hedging instrument attributable to interest rate movements are offset almost completely in the income statement in the same period, these financial instruments are also not exposed to interest rate risk;
‐ Changes in the market interest rate of financial instruments that were designated as hedging instruments in a cash flow hedge (to hedge payment fluctuations resulting from interest rate movements) affect the hedging reserve in equity and are therefore taken into consideration in the equity‐related sensitivity calculation with impact in equity (other reserves);
‐ Changes in the fair values of derivative financial instruments and other financial assets and liabilities are estimated by discounting the future cash flows to net present values using appropriate market rates prevailing at the year end, and assuming a parallel shift in interest rate curves;
‐ For the purposes of sensitivity analysis, such analysis is performed based on all financial instruments outstanding during the year.
Under these assumptions, if interest rates of euro denominated financial instruments had been 75 basis points higher, the net profit before tax for the period ended as at 31 December 2013 would increase by approximately 1.4 million euro (1.8 million euro as at 31 December 2012), considering the contractual fixing dates and excluding other effects arising from the company operations.
The impact on the financial statements of changes in exchange rate is immaterial, as the most part of the assets and liabilities are denominated in euro.
The purpose of liquidity risk management is to ensure, at all times, that the group has the financial capacity to fulfill its commitments as they become due and to carry on its business activities and strategy, through the management of the trade off cost and maturity of debt.
Sonae Investimentos is primarily exposed to credit risk in its dealings with financing companies in which it participates.
Sonae Investimentos is also exposed to the credit risk in its relationship with financial institutions, in result of bank deposits, debt instruments available facilities, derivates, among others.
The credit risk is limited to financial institutions, by risk concentration management and by a selection of counterparties, which have a high national and international prestige and based on their respective rating notations taking into account the nature, maturity and size of the operations.
The accounting policies disclosed in Note 2.5 as at 31 December 2013, have been applied to the line items below:
| Financial Assets | 31.December.2013 | ||||
|---|---|---|---|---|---|
| Loans and | Assets not | ||||
| Notes | accounts | Sub Total | within scope | Total | |
| receivable | of IFRS 7 | ||||
| Non‐current assets | |||||
| Other non‐current assets | 8 | 1,186,256,030 | 1,186,256,030 | ‐ | 1,186,256,030 |
| 1,186,256,030 | 1,186,256,030 | ‐ | 1,186,256,030 | ||
| Current assets | |||||
| Trade accounts receivables | 9 | 394,432 | 394,432 | ‐ | 394,432 |
| Other debtors | 10 | 165,613,555 | 165,613,555 | ‐ | 165,613,555 |
| Other current assets | 12 | 2,353,427 | 2,353,427 | 2,064,413 | 4,417,840 |
| Cash and cash equivalents | 13 | 6,623,141 | 6,623,141 | ‐ | 6,623,141 |
| 174,984,555 | 174,984,555 | 2,064,413 | 177,048,968 | ||
| 1,361,240,585 | 1,361,240,585 | 2,064,413 | 1,363,304,998 | ||
| Financial Liabilities | 31.December.2013 | ||||
| Other | Liabilities not | ||||
| Notes | financial | Sub Total | within scope | Total | |
| liabilities | of IFRS 7 | ||||
| Non‐current liabilities | |||||
| Bonds | 17 | 646,307,863 | 646,307,863 | ‐ | 646,307,863 |
| Bank loans | 17 | 66,666,347 | 66,666,347 | ‐ | 66,666,347 |
| Other non‐current liabilities | 18 | 400,000,000 | 400,000,000 | ‐ | 400,000,000 |
| 1,112,974,210 | 1,112,974,210 | ‐ | 1,112,974,210 | ||
| Current liabilities | |||||
| Bonds | 17 | 9,990,122 | 9,990,122 | ‐ | 9,990,122 |
| Bank loans | 17 | 35,825,666 | 35,825,666 | ‐ | 35,825,666 |
| Trade accounts payable | 19 | 34,775 | 34,775 | ‐ | 34,775 |
| Other payables accounts | 20 | 309,433,073 | 309,433,073 | ‐ | 309,433,073 |
| Other current liabilities | 21 | 8,219,308 | 8,219,308 | ‐ | 8,219,308 |
| 363,502,944 | 363,502,944 | ‐ | 363,502,944 | ||
| 1,476,477,154 | 1,476,477,154 | ‐ | 1,476,477,154 |
The accounting policies disclosed in note 2.5 as at 31 December 2012, have been applied to the items below classified as follows:
| Financial Assets | 31.December.2012 | ||||
|---|---|---|---|---|---|
| Loans and | Assets not | ||||
| Notes | accounts | Sub Total | within scope | Total | |
| receivable | of IFRS 7 | ||||
| Non‐current assets | |||||
| Other non‐current assets | 8 | 1,092,008,435 | 1,092,008,435 | ‐ | 1,092,008,435 |
| 1,092,008,435 | 1,092,008,435 | ‐ | 1,092,008,435 | ||
| Current assets | |||||
| Trade accounts receivables | 9 | 1,688,043 | 1,688,043 | ‐ | 1,688,043 |
| Other debtors | 10 | 179,156,814 | 179,156,814 | ‐ | 179,156,814 |
| Other current assets | 12 | 1,213,320 | 1,213,320 | 2,140,675 | 3,353,995 |
| Cash and cash equivalents | 13 | 94,502,364 | 94,502,364 | ‐ | 94,502,364 |
| 276,560,541 | 276,560,541 | 2,140,675 | 278,701,216 | ||
| 1,368,568,976 | 1,368,568,976 | 2,140,675 | 1,370,709,651 | ||
| Financial Liabilities | 31.December.2012 | ||||
| Other | Liabilities not | ||||
| Notes | financial | Sub Total | within scope | Total | |
| liabilities | of IFRS 7 | ||||
| Non‐current liabilities | |||||
| Bonds | 17 | 532,738,392 | 532,738,392 | ‐ | 532,738,392 |
| Bank loans | 17 | 152,484,985 | 152,484,985 | ‐ | 152,484,985 |
| Other non‐current liabilities | 18 | 400,000,000 | 400,000,000 | ‐ | 400,000,000 |
| 1,085,223,377 | 1,085,223,377 | ‐ | 1,085,223,377 | ||
| Current liabilities |
Bonds 17 170,900,782 170,900,782 ‐ 170,900,782 Bank loans 17 31,827,393 31,827,393 ‐ 31,827,393 Trade accounts payable 19 37,634 37,634 ‐ 37,634 Other payables accounts 20 421,462,150 421,462,150 ‐ 421,462,150 Other current liabilities 21 7,128,369 7,128,369 309,176 7,437,545
631,356,328 631,356,328 309,176 631,665,504 1,716,579,705 1,716,579,705 309,176 1,716,888,881
| 31.December.2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Acquisition cost | Amount of | ||||||||
| Accumulated | statement of | ||||||||
| Companies | % held | Opening balance | Increases | Decreases | Final balance | impairment | financial position |
||
| Azulino ‐ Imobiliária, SA | 100.00% | 498,025 | ‐ | ‐ | 498,025 | ‐ | 498,025 | ||
| Bertimóvel ‐ Sociedade Imobiliária, SA | 100.00% | 2,265,000 | ‐ | ‐ | 2,265,000 | 700,000 | 1,565,000 | ||
| Canasta ‐ Empreendimentos Imobiliários, SA | 100.00% | 1,669,375 | ‐ | ‐ | 1,669,375 | 1,557,375 | 112,000 | ||
| Chão Verde ‐ Sociedade de Gestão Imobiliária, SA | 100.00% | 2,394,591 | ‐ | ‐ | 2,394,591 | 2,394,591 | ‐ | ||
| Citorres ‐ Sociedade Imobiliária, SA | 100.00% | 477,848 | ‐ | ‐ | 477,848 | ‐ | 477,848 | ||
| Contimobe ‐ Imobiliária do Castelo de Paiva, SA | 100.00% | 231,318,722 | ‐ | ‐ | 231,318,722 | 29,818,722 | 201,500,000 | ||
| Cumulativa ‐ Sociedade Imobiliária, SA | 100.00% | 2,390,191 | ‐ | ‐ | 2,390,191 | 945,191 | 1,445,000 | ||
| Fozimo ‐ Sociedade Imobiliária, SA | 100.00% | 24,940 | ‐ | ‐ | 24,940 | ‐ | 24,940 | ||
| Fozmassimo ‐ Sociedade Imobiliária, SA | 100.00% | 6,264,902 | ‐ | 1,220,000 (4) | 5,044,902 | 2,248,554 | 2,796,348 | ||
| Fundo de Investimento Imobiliário Fechado Imosede | 54.55% | 64,415,021 | ‐ | ‐ | 64,415,021 | ‐ | 64,415,021 | ||
| Fundo de Investimento Imobiliário Imosonae Dois | 74.94% | 108,755,437 | 5,033 (1) | ‐ | 108,760,470 | ‐ | 108,760,470 | ||
| Igimo ‐ Sociedade Imobiliária, SA | 100.00% | 220,000 | ‐ | ‐ | 220,000 | 69,338 | 150,662 | ||
| Iginha ‐ Sociedade Imobiliária, SA | 100.00% | 1,359,000 | ‐ | ‐ | 1,359,000 | ‐ | 1,359,000 | ||
| Imoconti ‐ Sociedade Imobiliária, SA | 100.00% | 380,000 | ‐ | ‐ | 380,000 | ‐ | 380,000 | ||
| Imoestrutura ‐ Sociedade Imobiliária,SA | 100.00% | 24,940 | ‐ | ‐ | 24,940 | ‐ | 24,940 | ||
| Imomuro ‐ Sociedade Imobiliária, SA | 100.00% | 1,099,940 | 330,000 (2) | ‐ | 1,429,940 | 506,055 | 923,885 | ||
| Imoresultado ‐ Sociedade Imobiliária, SA | 100.00% | 109,736 | ‐ | ‐ | 109,736 | ‐ | 109,736 | ||
| Imosistema ‐ Sociedade Imobiliária, SA | 100.00% | 280,000 | ‐ | ‐ | 280,000 | ‐ | 280,000 | ||
| MDS, SGPS, SA | 46.92% | 51,000,000 | ‐ | ‐ | 51,000,000 | ‐ | 51,000,000 | ||
| MJLF ‐ Empreendimentos Imobiliários, SA | 100.00% | 1,809,397 | ‐ | ‐ | 1,809,397 | 1,619,397 | 190,000 | ||
| Modelo ‐ Distribuição de Materiais de Construção, SA | 50.00% | 24,790,614 | ‐ | ‐ | 24,790,614 | 3,280,000 | 21,510,614 | ||
| Modelo Hiper Imobiliária, SA | 100.00% | 10,655,164 | ‐ | ‐ | 10,655,164 | 642,516 | 10,012,648 | ||
| Modelo.Com ‐ Vendas por Correspondência, SA | 100.00% | 12,637,016 | ‐ | ‐ | 12,637,016 | ‐ | 12,637,016 | ||
| Mundo Vip ‐ Operadores Turísticos, SA | 33.34% | 1,101,337 | 1,000,000 (2) | ‐ | 2,101,337 | 2,101,337 | ‐ | ||
| Predicomercial ‐ Promoção Imobiliária, SA | 100.00% | 6,372,293 | ‐ | ‐ | 6,372,293 | ‐ | 6,372,293 | ||
| Raso, SGPS, SA | 50.00% | 24,500,000 | ‐ | ‐ | 24,500,000 | 9,026,000 | 15,474,000 | ||
| Selifa ‐ Sociedade de Empreendimentos Imobililiários, SA | 100.00% | 1,513,379 | ‐ | ‐ | 1,513,379 | 948,379 | 565,000 | ||
| Sempre à Mão ‐ Sociedade Imobiliária, SA | 100.00% | 2,130,558 | 8,500,000 (2) | ‐ | 10,630,558 | 6,898,157 | 3,732,401 | ||
| Sesagest ‐ Projectos e Gestão Imobiliária, SA | 100.00% | 36,677,088 | ‐ | ‐ | 36,677,088 | ‐ | 36,677,088 | ||
| Socijofra ‐ Sociedade Imobiliária, SA | 100.00% | 550,000 | ‐ | ‐ | 550,000 | ‐ | 550,000 | ||
| Sociloures ‐ Sociedade Imobiliária, SA | 100.00% | 10,000,000 | 2,350,000 (2) | ‐ | 12,350,000 | 10,000,000 | 2,350,000 | ||
| Soflorin, BV | 100.00% | 257,309,037 | ‐ | ‐ | 257,309,037 | 68,580,000 | 188,729,037 | ||
| Sonae ‐ Specialized Retail, SGPS, SA | 100.00% | 1,050,000,000 | ‐ | ‐ | 1,050,000,000 | ‐ | 1,050,000,000 | ||
| Sonae Capital Brasil, SA | 37.00% | 19,600,307 | ‐ | ‐ | 19,600,307 | 17,734,537 | 1,865,770 | ||
| Sonae Center Serviços II, SA | 100.00% | 58,032,319 | ‐ | ‐ | 58,032,319 | ‐ | 58,032,319 | ||
| Sonae MC ‐ Modelo Continente, SGPS, SA | 41.96% | 600,000,000 | 13,348,625 (2) | 189,650,350 (4) | 423,698,275 | ‐ | 423,698,275 | ||
| Sonaegest ‐ Soc. Gest. de Fundos de Investimentos, SA | 40.00% | 384,351 | ‐ | ‐ | 384,351 | ‐ | 384,351 | ||
| Sonaerp ‐ Retail Properties, SA | 100.00% | 114,495,350 | ‐ | ‐ | 114,495,350 | ‐ | 114,495,350 | ||
| Sondis Imobiliária, SA | 100.00% | 474,940 | ‐ | ‐ | 474,940 | ‐ | 474,940 | ||
| Sonvecap, BV | 100.00% | 3,000,000 | ‐ | ‐ | 3,000,000 | ‐ | 3,000,000 | ||
| Tlantic Portugal ‐ Sistemas de Informação, SA | ‐ | 1,068,316 | 675,000 (2) | 1,743,316 (3) (5) | ‐ | ‐ | ‐ | ||
| Valor N, SA | 100.00% | 2,087,315 | ‐ | ‐ | ‐ | 2,087,315 | ‐ | 2,087,315 | |
| Total | 2,714,136,448 | 26,208,658 | 192,613,666 | 2,547,731,440 | 159,070,149 | 2,388,661,291 |
(1) Acquisition;
(2) Capital contribution in order to cover losses;
(3) Disposal to related party;
(4) Capital decrease;
(5) Refund supplementary capital contribution;
During 2013 the company recorded impairments on investments as described on note 26.
| 31.December.2012 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Acquisition cost | Accumulated | Amount of statement of |
||||||
| Companies | % held | Opening balance | Increases | Decreases | Final balance | impairment | financial position |
|
| Azulino ‐ Imobiliária, SA | 100.00% | 498,025 | ‐ | ‐ | 498,025 | ‐ | 498,025 | |
| Bertimóvel ‐ Sociedade Imobiliária, SA | 100.00% | 2,115,000 | 150,000 (1) | ‐ | 2,265,000 | 700,000 | 1,565,000 | |
| Canasta ‐ Empreendimentos Imobiliários, SA | 100.00% | 1,669,375 | ‐ | ‐ | 1,669,375 | 1,557,375 | 112,000 | |
| Chão Verde ‐ Sociedade de Gestão Imobiliária, SA | 100.00% | 2,244,591 | 150,000 (2) | ‐ | 2,394,591 | 1,094,591 | 1,300,000 | |
| Citorres ‐ Sociedade Imobiliária, SA | 100.00% | 477,848 | ‐ | ‐ | 477,848 | ‐ | 477,848 | |
| Contimobe ‐ Imobiliária do Castelo de Paiva, SA | 100.00% | 231,318,722 | ‐ | ‐ | 231,318,722 | 29,818,722 | 201,500,000 | |
| Cumulativa ‐ Sociedade Imobiliária, SA | 100.00% | 2,355,191 | 35,000 (1) | ‐ | 2,390,191 | 945,191 | 1,445,000 | |
| Fozimo ‐ Sociedade Imobiliária, SA | 100.00% | 24,940 | ‐ | ‐ | 24,940 | ‐ | 24,940 | |
| Fozmassimo ‐ Sociedade Imobiliária, SA | 100.00% | 6,264,902 | ‐ | ‐ | 6,264,902 | 964,902 | 5,300,000 | |
| Fundo de Investimento Imobiliário Fechado Imosede | 54.55% | 64,415,021 | ‐ | ‐ | 64,415,021 | ‐ | 64,415,021 | |
| Fundo de Investimento Imobiliário Imosonae Dois | 74.94% | 108,755,437 | ‐ | ‐ | 108,755,437 | ‐ | 108,755,437 | |
| Igimo ‐ Sociedade Imobiliária, SA | 100.00% | 220,000 | ‐ | ‐ | 220,000 | ‐ | 220,000 | |
| Iginha ‐ Sociedade Imobiliária, SA | 100.00% | 1,359,000 | ‐ | ‐ | 1,359,000 | ‐ | 1,359,000 | |
| Imoconti ‐ Sociedade Imobiliária, SA | 100.00% | 380,000 | ‐ | ‐ | 380,000 | ‐ | 380,000 | |
| Imoestrutura ‐ Sociedade Imobiliária,SA | 100.00% | 24,940 | ‐ | ‐ | 24,940 | ‐ | 24,940 | |
| Imomuro ‐ Sociedade Imobiliária, SA | 100.00% | 999,940 | 100,000 (1) | ‐ | 1,099,940 | 439,940 | 660,000 | |
| Imoresultado ‐ Sociedade Imobiliária, SA | 100.00% | 109,736 | ‐ | ‐ | 109,736 | ‐ | 109,736 | |
| Imosistema ‐ Sociedade Imobiliária, SA | 100.00% | 280,000 | ‐ | ‐ | 280,000 | ‐ | 280,000 | |
| MDS, SGPS, SA | 46.92% | 51,000,000 | ‐ | ‐ | 51,000,000 | ‐ | 51,000,000 | |
| MJLF ‐ Empreendimentos Imobiliários, SA | 100.00% | 1,809,397 | ‐ | ‐ | 1,809,397 | 1,619,397 | 190,000 | |
| Modelo ‐ Distribuição de Materiais de Construção, SA | 50.00% | 9,790,614 | 15,000,000 (2) | ‐ | 24,790,614 | ‐ | 24,790,614 | |
| Modelo Hiper Imobiliária, SA | 100.00% | 10,655,164 | ‐ | ‐ | 10,655,164 | ‐ | 10,655,164 | |
| Modelo.Com ‐ Vendas por Correspondência, SA | 100.00% | 12,637,016 | ‐ | ‐ | 12,637,016 | ‐ | 12,637,016 | |
| Mundo Vip ‐ Operadores Turísticos, SA | 33.34% | 1,101,337 | ‐ | ‐ | 1,101,337 | 1,101,337 | ‐ | |
| Predicomercial ‐ Promoção Imobiliária, SA | 100.00% | 6,372,293 | ‐ | ‐ | 6,372,293 | ‐ | 6,372,293 | |
| Raso, SGPS, SA | 50.00% | 24,500,000 | ‐ | ‐ | 24,500,000 | 9,026,000 | 15,474,000 | |
| Selifa ‐ Sociedade de Empreendimentos Imobililiários, SA | 100.00% | 1,513,379 | ‐ | ‐ | 1,513,379 | 948,379 | 565,000 | |
| Sempre à Mão ‐ Sociedade Imobiliária, SA | 100.00% | 2,130,558 | ‐ | ‐ | 2,130,558 | ‐ | 2,130,558 | |
| Sesagest ‐ Projectos e Gestão Imobiliária, SA | 100.00% | 36,677,088 | ‐ | ‐ | 36,677,088 | ‐ | 36,677,088 | |
| Socijofra ‐ Sociedade Imobiliária, SA | 100.00% | 550,000 | ‐ | ‐ | 550,000 | ‐ | 550,000 | |
| Sociloures ‐ Sociedade Imobiliária, SA | 100.00% | 10,000,000 | ‐ | ‐ | 10,000,000 | ‐ | 10,000,000 | |
| Soflorin, BV | 100.00% | 257,309,037 | ‐ | ‐ | 257,309,037 | ‐ | 257,309,037 | |
| Sonae ‐ Specialized Retail, SGPS, SA | 100.00% | 1,050,000,000 | ‐ | ‐ | 1,050,000,000 | ‐ | 1,050,000,000 | |
| Sonae Capital Brasil, SA | 37.00% | 19,600,307 | ‐ | ‐ | 19,600,307 | 12,292,000 | 7,308,307 | |
| Sonae Center Serviços II, SA | 100.00% | 58,032,319 | ‐ | ‐ | 58,032,319 | ‐ | 58,032,319 | |
| Sonae MC ‐ Modelo Continente, SGPS, SA | 41.96% | 600,000,000 | ‐ | ‐ | 600,000,000 | ‐ | 600,000,000 | |
| Sonaegest ‐ Soc. Gest. de Fundos de Investimentos, SA | 40.00% | 384,351 | ‐ | ‐ | 384,351 | ‐ | 384,351 | |
| Sonaerp ‐ Retail Properties, SA | 100.00% | 114,495,350 | ‐ | ‐ | 114,495,350 | ‐ | 114,495,350 | |
| Sondis Imobiliária, SA | 100.00% | 474,940 | ‐ | ‐ | 474,940 | ‐ | 474,940 | |
| Sonvecap, BV | 100.00% | 3,000,000 | ‐ | ‐ | 3,000,000 | ‐ | 3,000,000 | |
| Tlantic Portugal ‐ Sistemas de Informação, SA | 100.00% | 893,316 | 175,000 (1) | ‐ | 1,068,316 | ‐ | 1,068,316 | |
| Valor N, SA | 100.00% | 2,087,315 | ‐ | ‐ | 2,087,315 | ‐ | 2,087,315 | |
| Total | 2,698,526,448 | 15,610,000 | ‐ | 2,714,136,448 | 60,507,834 | 2,653,628,614 |
(1) Capital contribution in order to cover losses;
(2) Supplementary capital contribution
During 2012 the company recorded impairments on investments as described on note 26.
During the years ended 31 December 2013 and 2012, movements in tangible assets as well as depreciation and accumulated impairment losses, are as follows:
| Vehicles | Fixtures and fittings |
Others | In progress | Total | |
|---|---|---|---|---|---|
| Gross cost | |||||
| Opening balance as at 1 January 2012 | 19,062 | 24,455 | 679 | ‐ | 44,196 |
| Decrease | ‐ | (1,600) | ‐ | ‐ | (1,600) |
| Opening balance as at 1 January 2013 | 19,062 | 22,855 | 679 | ‐ | 42,596 |
| Decrease | ‐ | (71) | ‐ | ‐ | (71) |
| Closing balance as at 31 December 2013 | 19,062 | 22,784 | 679 | ‐ | 42,525 |
| Accumulated depreciation | |||||
| Opening balance as at 1 January 2012 | 19,062 | 24,369 | 679 | ‐ | 44,110 |
| Increase | ‐ | 26 | ‐ | ‐ | 26 |
| Decrease | ‐ | (1,600) | ‐ | ‐ | (1,600) |
| Opening balance as at 1 January 2013 | 19,062 | 22,795 | 679 | ‐ | 42,536 |
| Increase | ‐ | 23 | ‐ | ‐ | 23 |
| Decrease | ‐ | (64) | ‐ | ‐ | (64) |
| Closing balance as at 31 December 2013 | 19,062 | 22,754 | 679 | ‐ | 42,495 |
| Carrying amount | |||||
| As at 31 December 2012 | ‐ | 60 | ‐ | ‐ | 60 |
| As at 31 December 2013 | ‐ | 30 | ‐ | ‐ | 30 |
During the periods ended 31 December 2013 and 2012, movements in intangible assets as well as depreciation and accumulated impairment losses, are as follows:
| Gross cost | Patents and othersimilar rights |
Software | Total intangible assets |
|---|---|---|---|
| Opening balance as at 1 January 2012 | 1,413,704 | 479 | 1,414,183 |
| Transfers and write‐offs | ‐ | (479) | (479) |
| Opening balance as at 1 January 2013 | 1,413,704 | ‐ | 1,413,704 |
| Closing balance as at 31 December 2013 | 1,413,704 | ‐ | 1,413,704 |
| Accumulated depreciation | |||
| Opening balance as at 1 January 2012 | 1,410,048 | 479 | 1,410,527 |
| Increase | 2,431 | ‐ | 2,431 |
| Transfers and write‐offs | ‐ | (479) | (479) |
| Opening balance as at 1 January 2013 | 1,412,479 | ‐ | 1,412,479 |
| Increase | 770 | ‐ | 770 |
| Closing balance as at 31 December 2013 | 1,413,249 | ‐ | 1,413,249 |
| Carrying amount | |||
| As at 31 December 2012 | 1,225 | ‐ | 1,225 |
| As at 31 December 2013 | 455 | ‐ | 455 |
Deferred tax assets and liabilities as at 31 December 2013 and 2012 are as follows, split between the different types of temporary differences:
| Assets | ||||
|---|---|---|---|---|
| 31.December.2013 | 31.December.2012 | |||
| Others | 6,485 | 28,070 | ||
| 6,485 | 28,070 | |||
| Liabilities | ||||
| 31.December.2013 | 31.December.2012 | |||
| Differences between amortisations for accounting and |
‐ | 237 | ||
| ‐ | 237 | |||
During the periods ended 31 December 2013 and 2012, movements in deferred tax assets and liabilities are as follows:
| Assets | Liabilities | ||||
|---|---|---|---|---|---|
| 31.December.2013 | 31.December.2012 | 31.December.2013 | 31.December.2012 | ||
| Opening balance | 28,070 | 82,690 | 237 | 784 | |
| Effects on income: | |||||
| Others | (21,585) | (54,620) | (237) | (547) | |
| (21,585) | (54,620) | (237) | (547) | ||
| Final balance | 6,485 | 28,070 | ‐ | 237 |
As at 31 December 2013 and 2012 the non‐current assets were as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Loans granted (Note 35) | 1,186,256,030 | 1,092,008,435 |
| Other debtors | ‐ | ‐ |
| 1,186,256,030 | 1,092,008,435 |
The loans granted have a long term maturity, bear interests at market rates indexed to Euribor and their fair value is similar to their carrying amount.
The impairment of loans granted to group companies is assessed in accordance with note 2.5.I.
During 2012 an impairment over the loan granted to the associated Mundo Vip – Operadores Turísticos, SA was recognised amounting to 1,000,000 euro. According shareholders resolution of Mundo VIP‐ Operadores Turísticos, SA was made to cover losses by incorporating loan, the impairment was annulled during 2013.
As at 31 December 2013 and 2012 the other loans granted are no past due or impaired.
The caption "Other debtors" includes an receivable amount related to the sale of a subsidiary, for which an additional impairment amounting to 79,406 euro was recorded (894,124 euro in 2012), the total amounting of the impairment is 2,423,530 euro (Nota 22).
Trade accounts receivable amounted to 394,432 euro and 1,688,043 euro as at 31 December 2013 and 2012 respectively, and include balances arising solely from services rendered to group companies.
Up to the statement of financial position date there are no due accounts receivable and there were no impairment losses recorded, as there are no indications that clients will not fulfill their obligations.
As at 31 December 2013 and 2012, this caption is as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Short term loans (Note 35) | 109,909,849 | 129,359,208 |
| Interests charged but not received | 17,840,280 | 18,415,191 |
| Taxes ‐ Special Regime for taxation of groups | 23,264,933 | 26,447,000 |
| Special regime for payment of tax and social securaty debts (DL 248‐A/2002, of 14th |
4,373,135 | 4,778,747 |
| Special regime for payment of tax and social securaty debts (DL 151‐A/2013, of 31October) |
2,988,618 | ‐ |
| Others | 7,236,740 | 156,668 |
| 165,613,555 | 179,156,814 |
Loans granted to group companies return interest at variable market rates indexed to Euribor and have a maturity less than one year.
The amount of 23,264,933 euro recorded in the caption "Taxes ‐ Special Regime for taxation of groups of companies", 21,651,461 euro (26,447,000 euro as at 31 December 2012) are related to income tax for the period relates to amounts to be received from subsidiaries (included in the above mentioned taxation regime).
The amount disclosed as 'Special regime for payment of tax and social security debts' (DL 248‐A/2002, of 14 November and DL 151‐A/2013, of 31 October) relates to taxes paid which were previously disputed and subject to reimbursement claims. The tax litigations are still in progress, although, following the payment, the guarantees previously given were canceled. No impairment loss was recorded since it is Sonae Investimentos understanding that the decisions over the appeals will be favorable to the Company.
The caption "Others" includes the amount of 6,679,649 euro, related to a payment on behalf of a subsidiary.
There were no past due assets thus no impairment loss was recognized as at 31 December 2013 and 2012. The fair value of loans granted is similar to its carrying amount.
As at 31 December 2013 and 2012, taxes recoverable and taxes and contributions payable are made up as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Income tax | 34,066,038 | 30,428,987 |
| Assets | 34,066,038 | 30,428,987 |
| 31.December.2013 | 31.December.2012 | |
| Income tax | 1,893,202 | 1,893,202 |
| Value added tax | 16,794 | 280,567 |
| Social security | 886 | 397 |
| Withholding tax | 593,297 | 588,319 |
| Others | 74,999 | 68,978 |
| Liabilities | 2,579,178 | 2,831,463 |
The amount recorded under the caption "Assets" relates to income tax receivables, still not reimbursed.
As at 31 December 2013 and 2012, the caption other current assets can be detailed as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Interests receivable | 779,196 | 130,719 |
| Indemnity interests | 765,605 | 765,605 |
| Guarantees | 688,069 | 271,996 |
| Management fees | 120,557 | 45,000 |
| Accrued income | 2,353,427 | 1,213,320 |
| Insurances | 209,874 | 229,343 |
| Costs with credit facilities | 1,854,539 | 1,905,427 |
| Others | ‐ | 5,905 |
| Prepayments | 2,064,413 | 2,140,675 |
| 4,417,840 | 3,353,995 |
As at 31 December 2013 and 2012, cash and cash equivalents can be detailed as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Cash in hand | 550 | 550 |
| Bank deposits | 6,622,591 | 54,402,147 |
| Other treasury applications | ‐ | 40,099,667 |
| Cash and cash equivalents on the balance sheet | 6,623,141 | 94,502,364 |
| Bank overdrafts (Note 17) | ‐ | (1,727) |
| Cash and cash equivalents on the cash flow statement | 6,623,141 | 94,500,637 |
Bank overdrafts are disclosed in the statement of financial position under the caption short term bank loans.
As at 31 December 2013, the share capital, which is fully subscribed and paid for, is made up by 1,000,000,000 ordinary shares (1,000,000,000 as at 31 December 2012), with a nominal value of 1 euro each.
During 2013 a subsidiary company, Sonae – Specialized Retail, SGPS, SA, disposal all 100,000,000 shares of Sonae Investimentos to other subsidiary company, Sonae MC – Modelo Continente, SGPS, SA . These shares are considered as treasury shares under the Commercial Companies Code, reason why the underlying rights to these shares are suspended.
As deliberated in the Shareholders Annual General Meeting held on 24th April 2013, the net income for the year ended 31st December 2012, in the amount of 5,693,194 euro, was transferred to legal reserves (284,660 euro) and the remaining amount paid in dividends (5,408,534 euro). In this General Meeting the distribution of free reserves amounting to 34,591,466 euro was also approved.
As at 31 December 2013 and 2012, the subscribed share capital was held as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Sonae, SGPS, SA | 76.8556% | 76.8556% |
| Sonae Investments BV | 13.1419% | 13.1419% |
| Sonae MC ‐ Modelo Continente, SGPS, SA | 10.0000% | ‐ |
| Sonae ‐ Specialized Retail, SGPS, SA | ‐ | 10.0000% |
| Libra Serviços, Sociedade Unipessoal, Lda | 0.0025% | 0.0025% |
As at 31 December 2013 Efanor Investimentos, SGPS, SA and affiliated companies held 52.48% of Sonae's share capital.
The company has set up legal reserves in accordance with Commercial Companies Code. In 2013 and 2012, respectively, 284,660 euro and 742,928 euro was transferred from profit for the year to legal reserves.
As at 31 December 2013 and 2012, the other reserves detail is as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Legal Reserves in accordance with article 324 of | ||
| Commercial Companies Code | 320,000,000 | 320,000,000 |
| Supplementary capital | 372,000,000 | 372,000,000 |
| Other reserves | 462,433,557 | 497,025,023 |
| 1,154,433,557 | 1,189,025,023 |
Following the acquisition of Sonae Investimentos SGPS, SA shares by a subsidiary company, free reserves amounting to the cost of the above mentioned shares were made unavailable, under article 324 of the Commercial Companies Code. The distribution of this reserve depends on the termination or disposal of the treasury shares.
As at 31 December 2013 and 2012, this caption included the following loans:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Bonds Sonae Investimentos / agosto 2007/2015 | 200,000,000 | 200,000,000 |
| Bonds Sonae Investimentos / setembro 2007/2015 | 155,000,000 | 155,000,000 |
| Bonds Sonae Investimentos / 2009/2014 | ‐ | 10,000,000 |
| Bonds Sonae Investimentos / 2012/2017 | 170,000,000 | 170,000,000 |
| Bonds Sonae Investimentos / junho 2013/2018 | 50,000,000 | ‐ |
| Bonds Sonae Investimentos / dezembro 2013/2018 | 75,000,000 | ‐ |
| Up‐front fees not yet charged to income statement | (3,692,137) | (2,261,608) |
| Bond loans | 646,307,863 | 532,738,392 |
| Commercial paper | 65,000,000 | 147,500,000 |
| Other bank loans | 1,666,667 | 5,000,000 |
| Up‐front fees not yet charged to income statement | (320) | (15,015) |
| Bank loans | 66,666,347 | 152,484,985 |
| Non‐current loans | 712,974,210 | 685,223,377 |
| 31.December.2013 | 31.December.2012 | |
| Bonds Sonae Investimentos / 2009/2014 | 10,000,000 | 16,000,000 |
| Bonds Sonae Investimentos / setembro 2007/2015 | ‐ | 155,000,000 |
| Up‐front fees not yet charged to income statement | (9,878) | (99,218) |
| Bond loans | 9,990,122 | 170,900,782 |
| Commercial paper | 32,500,000 | 28,500,000 |
| Other bank loans | 3,333,333 | 3,333,333 |
| Up‐front fees not yet charged to income statement | (7,667) | (7,667) |
| Bank overdrafts (note 13) | ‐ | 1,727 |
| Bank loans | 35,825,666 | 31,827,393 |
| Current loans | 45,815,788 | 202,728,175 |
The carrying value from all the loans does not differ significantly from its fair value. The calculation method used for estimating the fair value of loans is based on the discounted cash flows model. All loans mentioned bear interest at variable rates indexed to market benchmarks.
| 31.December.2013 | 31.December.2012 | |||
|---|---|---|---|---|
| Capital | Interests | Capital | Interests | |
| 2013 | ‐ | ‐ | 202,835,060 | 20,550,643 |
| 2014 | 45,833,333 | 21,343,193 | 35,833,333 | 17,210,696 |
| 2015 | 394,166,667 | 20,131,098 | 394,166,667 | 16,417,350 |
| 2016 | 102,500,000 | 14,152,177 | 162,500,000 | 10,158,633 |
| 2017 | 95,000,000 | 7,703,485 | 95,000,000 | 2,999,815 |
| After 2017 | 125,000,000 | 3,745,160 | ‐ | ‐ |
| 762,500,000 | 67,075,113 | 890,335,060 | 67,337,137 |
Loans and interests shall be reimbursed as follows:
As at 31 December 2013 and 2012 the amount of the available credit facilities in order to manage liquidity risk, can be summarized as follows:
| 31.December.2013 | 31.December.2012 | |||
|---|---|---|---|---|
| Commitments of less than one year |
Commitments of more than one year |
Commitments of less than one year |
Commitments of more than one year |
|
| Agreed credit facilities amounts | 338,000,000 | 375,000,000 | 202,000,000 | 547,500,000 |
| Available credit facilities amounts | 305,500,000 | 310,000,000 | 173,500,000 | 400,000,000 |
The interest rate as at 31 December 2013 of the bonds and bank loans was, on average, 2.79% (2.40% as at 31 December 2012).
As at 31 December 2013 and 2012 this caption includes a subordinate bond loan, repayable in 10 years issued by Sonae Investimentos at market conditions. On 28 December 2010 amounting to 400,000,000 euro, relating 8,000 bonds with nominal value of 50,000 euro each, bearing fixed interest rates, with full reimbursement in the end of the loan period.
As at 31 December 2013 the fair value of this bond loan is 41,495 euro (42,606 euro as at 31 December 2012) per bond, and was determined based on discounted cash flows method.
As at 31 December 2013 and 2012 the trade accounts payable caption presents amounts payable within 90 days, arising on the normal course of activity.
As at 31 December 2013 and 2012, this caption is as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Short term loans (Note 35) | 290,898,588 | 402,548,615 |
| Taxes ‐ Special Regime for taxation of groups of companies |
18,534,082 | 18,872,865 |
| Others | 403 | 40,670 |
| 309,433,073 | 421,462,150 |
The amount of 18,534,082 euro recorded in the caption "Taxes‐Special Regime for taxation of groups of companies", 15,377,695 euro (18,872,865 euro as at 31 December 2012) relates to the amounts to be paid to subsidiaries, included in the mentioned taxation regime, for the calculated income tax of the period.
As at 31 December 2013 and 2012 other current liabilities were made up as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Deferred performance bonuses | ‐ | 309,176 |
| Accrued interests | 5,682,153 | 5,643,276 |
| Guarantees | 2,243,020 | 1,130,783 |
| Others | 294,135 | 354,310 |
| Accruals | 8,219,308 | 7,437,545 |
Movements in provisions and accumulated impairment losses for the year ended as at 31 December 2013 are as follows:
| Opening balance | Increases | Transfer | Closing balance | |
|---|---|---|---|---|
| Investments impairment ( Notes 5 and 26) | 60,507,834 | 97,562,315 | 1,000,000 | 159,070,149 |
| Other non‐current assets impairment (Notes 8 and 26) | 3,344,124 | 79,406 | (1,000,000) | 2,423,530 |
| Other current assets impairment | ‐ | 8,981 | ‐ | 8,981 |
The increase in the caption investments impairment was recorded in income statement in the caption investments income / losses.
As at 31 December 2013 and 2012 the contingent liabilities were detailed as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Guarantees rendered: | ||
| related to tax claims awaiting outcome | ||
| Guarantees provided by financial institutions | 90,476,241 | 95,349,401 |
| Guarantees provided by parent company | 215,016,937 | 172,973,984 |
| related to local and municipal claims awaiting outcome | 28,938 | 28,938 |
| others | 10,633,113 | 10,883,112 |
| Guarantees given in favour of subsidiaries (a) |
62,961,055 | 62,641,328 |
a) Guarantees given to Tax Authorities in favour of subsidiaries to suspend claims from tax authorities.
The caption Guarantees provided on tax claims includes guarantees granted to Tax Authorities regarding income tax. The most significant amounts relate to an additional tax assessment made by Tax Authorities, relating the taxable period ending 2005, regarding the covering of losses made by the Company in a subsidiary, having Tax Authorities not considered the usage of taxable losses on this operation and subsequent liquidation of the Company's subsidiary, which is not in accordance with previous assessments made by Tax Authorities. The Company has presented an appeal against this tax claim, being the Board of Directors understanding, based on its advisors assessment, that such appeal will be favorable.
No provision has been recorded for these additional tax assessments, to which some guarantees were provided, as the Board of Directors considers that their outcome will be favorable, therefore with no additional liabilities to the Company.
Within the framework of regularization of tax debts to Tax Authorities (Outstanding Debts Settlement of Tax and Social Security ‐ Decree of Law Decree of Law 248‐A and 151‐A/2013), the Company made tax payments in the amount of 7,361,753 euro (4,778,747 euro to 31 December 2012), having the respective guarantees been canceled and the related tax appeals continued in courts.
Following the disposal of a Brazilian subsidiary company, the group guaranteed to that subsidiary company buyer all the losses it will have as consequence of tax additional assessments as it is described in the Note of Contingent assets and liabilities in the Consolidated financial statements.
Main transactions and balances with related parties as at 31 December 2013 and 2012 are detailed as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Transactions: | ||
| Subsidiaries | ‐ | 1,000,000 |
| Associated companies | 870,539 | 1,018,202 |
| Services rended | 870,539 | 2,018,202 |
| Parent company | 2,289,592 | 1,162,677 |
| Subsidiaries | 47 | 54 |
| Jointly controlled companies | 2,332 | ‐ |
| Associated companies | 42,331 | 37,498 |
| Other related parties | 4,010 | 870 |
| Purchases and services obtained | 2,338,312 | 1,201,099 |
| Parent company | 149,604 | 186,336 |
| Subsidiaries | 574,228 | 300,731 |
| Associated companies | 240 | 240 |
| Other income | 724,072 | 487,307 |
| Subsidiaries | 44,355,931 | 47,929,276 |
| Jointly controlled companies | 420,342 | 357,634 |
| Associated companies | 509,156 | 1,097,928 |
| Interest income | 45,285,429 | 49,384,838 |
| Parent company | 30,516,353 | 30,608,475 |
| Subsidiaries | 15,316,713 | 12,416,437 |
| Other related parties | 4,297,883 | 4,278,133 |
| Interest expenses | 50,130,949 | 47,303,045 |
| Subsidiaries | 125,286,679 | 24,646,376 |
| Dividend income | 125,286,679 | 24,646,376 |
| Associated companies | 300,000 | ‐ |
| Investments disposal | 300,000 | ‐ |
| Subsidiaries | 17,368,661 | 26,827,561 |
| Income from Investment Fund Participation Units | 17,368,661 | 26,827,561 |
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Balance: | ||
| Parent company | 137,119 | 72,094 |
| Subsidiaries | 49,319,490 | 45,931,390 |
| Jointly controlled companies | 141,454 | 139,822 |
| Associated companies | 615,673 | 962,875 |
| Other related parties | ‐ | 9,155 |
| Accounts receivable | 50,213,736 | 47,115,336 |
| Parent company | 2,551,820 | 1,439,583 |
| Subsidiaries | 20,687,545 | 19,805,085 |
| Jointly controlled companies | 2,332 | ‐ |
| Associated companies | 4 | ‐ |
| Other related parties | 43,403 | 46,827 |
| Accounts payable | 23,285,104 | 21,291,495 |
| Subsidiaries | 1,279,050,450 | 1,195,591,641 |
| Jointly controlled companies | 8,450,000 | 7,800,000 |
| Associated companies | 8,665,429 | 18,976,002 |
| Loans granted | 1,296,165,879 | 1,222,367,643 |
| Parent company | 347,400,000 | 347,400,000 |
| Subsidiaries | 290,898,588 | 402,548,615 |
| Other related parties | 52,600,000 | 52,600,000 |
| Loans obtained | 690,898,588 | 802,548,615 |
All Sonae, SGPS, SA and Efanor Investimentos SGPS, SA subsidiaries, associates and joint ventures are considered related parties and are identified in Consolidated Financial Statements.
During the period, the Company obtained loans from Sonae, SGPS, SA amounting to 859,966,172 euro (624,453,000 euro as at 31 December 2012) was repaid 859,966,172 euro during the year (624,453,000 euro as at 31 December 2012).
In 2013 and 2012 did not occur any transactions including granted loans with the Company's Directors.
During 2013 and 2012 no remuneration was attributed to Board of Directors by the company.
As at 31 December 2013 and 2012 there were no balances with Company's Directors.
Services rendered amounted to 870,539 euro and 2,018,202 euro, in 31 December 2013 and 2012, respectively. Services rendered include management fees over subsidiaries in accordance with Holding companies law.
As at 31 December 2013 and 2012 investment income is as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Dividends: | ||
| Azulino ‐ Imobiliária, SA | 43,448 | ‐ |
| Citorres ‐ Sociedade Imobiliária, SA | 52,353 | ‐ |
| Contimobe ‐ Imobiliária do Castelo de Paiva, SA | 7,449,929 | 5,252,433 |
| Fozimo ‐ Sociedade Imobiliária, SA | 25,321 | ‐ |
| Iginha ‐ Sociedade Imobiliária, SA | 520,619 | ‐ |
| Imoconti ‐ Sociedade Imobiliária, SA | 464,803 | ‐ |
| Imoestrutura ‐ Sociedade Imobiliária,SA | 63,255 | ‐ |
| Imosistema ‐ Sociedade Imobiliária, SA | 109,281 | ‐ |
| Modelo.Com ‐ Vendas por Correspondência, SA | 975,036 | 963,357 |
| Modelo Hiper Imobiliária, SA | 664,658 | 788,104 |
| Predicomercial ‐ Promoção Imobiliária, SA | 554,118 | ‐ |
| Sesagest ‐ Projectos e Gestão Imobiliária, SA | 2,247,787 | 14,735,408 |
| Socijofra ‐ Sociedade Imobiliária, SA | 313,017 | ‐ |
| Sondis Imobiliária, SA | 824,807 | ‐ |
| Soflorin, BV | 80,000,000 | ‐ |
| Sonae Center Serviços II, SA | 5,612,678 | ‐ |
| Sonaegest ‐ Soc. Gest. de Fundos de Investimentos, SA | 190,744 | 157,074 |
| Sonae MC ‐ Modelo Continente, SGPS, SA | 25,174,825 | ‐ |
| Sonvecap, BV | ‐ | 2,750,000 |
| 125,286,679 | 24,646,376 | |
| Income of financial investments: | ||
| Fundo de Investimento Imobiliário Fechado Imosede | 6,352,140 | 8,073,496 |
| Fundo de Investimento Imobiliário Imosonae Dois | 11,016,521 | 18,754,065 |
| 17,368,661 | 26,827,561 | |
| Impairment losses: | ||
| Chão Verde ‐ Sociedade de Gestão Imobiliária, SA | (1,300,000) | ‐ |
| Fozmassimo ‐ Sociedade Imobiliária, SA | (1,283,652) | ‐ |
| Igimo ‐ Sociedade Imobiliária, SA | (69,338) | ‐ |
| Imomuro ‐ Sociedade Imobiliária, SA | (66,115) | ‐ |
| Modelo ‐ Distribuição de Materiais de Construção, SA | (3,280,000) | ‐ |
| Modelo Hiper Imobiliária, SA | (642,516) | ‐ |
| Mundo Vip ‐ Operadores Turísticos, SA | ‐ | (1,101,337) |
| Raso, SGPS, SA | ‐ | (5,500,000) |
| Sempre à Mão ‐ Sociedade Imobiliária, SA | (6,898,157) | ‐ |
| Sociloures ‐ Sociedade Imobiliária, SA | (10,000,000) | ‐ |
| Soflorin, BV | (68,580,000) | ‐ |
| Sonae Capital Brasil, SA | (5,442,537) | (5,500,000) |
| (97,562,315) | (12,101,337) | |
| Investments disposal losses: | ||
| Tlantic Portugal ‐ Sistemas de Informação, SA | (1,168,315) | ‐ |
| 43,924,710 | 39,372,600 |
As at 31 December 2013 and 2012, net financial expenses are as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Interest receivable | ||
| related to bank deposits | 348,576 | 732,906 |
| related to loans granted | 45,206,023 | 49,305,432 |
| Others | 384,942 | 179,073 |
| Others finacial income | ‐ | 35,446 |
| Finacial income | 45,939,541 | 50,252,857 |
| Interest payable | ||
| related to bank deposits and overdrats | (5,750,245) | (8,146,413) |
| related to non convertible bonds | (16,535,181) | (21,134,856) |
| related to loans obtained | (50,130,949) | (47,303,046) |
| Other | (59) | ‐ |
| Others finacial expenses | ||
| Up front fees on the issuance of debt | (6,473,402) | (5,983,853) |
| Other | (22,984) | (27,495) |
| Financial expenses | (78,912,820) | (82,595,663) |
As at 31 December 2013 and 2012, other income is as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Recovery os charges (a) | 23,298 | 211,474 |
| Guarantees | 706,552 | 282,565 |
| Other income | 32,314 | 3,595 |
| 762,164 | 497,634 |
a) Income related to costs assumed by the Company, which were re‐charged to participated companies.
As at 31 December 2013 and 2012, external supplies and services are as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Specialized sercices | 182,726 | 262,872 |
| Advertising | 19,077 | 36,838 |
| Bank services | 929,355 | 613,165 |
| Insurance | 584,065 | 659,440 |
| Legal support | 173,951 | 23,212 |
| Guarantees | 2,289,646 | 1,162,677 |
| Others services | 8,263 | 1,204 |
| 4,187,083 | 2,759,408 |
As at 31 December 2013 and 2012, other expenses are as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Indirect tax | 327,706 | 440,797 |
| Others expenses | 12,333 | 613 |
| 340,039 | 441,410 |
Income tax charge for the year ended 31 December 2013 and 2012 is made up as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Current tax | (593,415) | (110,377) |
| Deferred tax | 4,565,712 | 1,533,481 |
| Total | 3,972,297 | 1,423,104 |
The reconciliation between the profit before taxation and the tax charge for the periods ended 31 December 2013 and 2012 is as follows:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Profit before income tax | 7,934,642 | 4,270,090 |
| Income tax rate | 25.00% | 25.00% |
| 1,983,661 | 1,067,523 | |
| Impairment losses not accepted for tax purposes | 24,662,676 | 3,498,865 |
| Reversal of impairment losses not accepted for tax purp | (250,000) | ‐ |
| Under/(over) taxation estimates | 593,415 | 110,378 |
| Difference between capital (losses)/gains for | 292,079 | ‐ |
| Effect of non‐tributable dividends | (31,321,670) | (6,161,594) |
| Effect of deferred tax | 21,347 | ‐ |
| Others | 46,196 | 61,724 |
| Income tax | (3,972,297) | (1,423,104) |
Earnings per share for the periods ended 31 December 2013 and 2012 were calculated taking into consideration the following amounts:
| 31.December.2013 | 31.December.2012 | |
|---|---|---|
| Net Profit | ||
| Net profit taken into consideration to calculate basic earnings pershare (Net profit foor the period) |
11,906,939 | 5,693,194 |
| Net profit taken into consideration to calculate diluted earnings pershare |
11,906,939 | 5,693,194 |
| Number of shares | ||
| Weighted average number of shares used to calculate basic earnings pershare |
900,000,000 | 900,000,000 |
| Weighted average number of shares used to calculate diluted earnings pershare |
900,000,000 | 900,000,000 |
| Earnings pershare (basic and diluted) | 0.0132 | 0.0063 |
During 2013 and 2012, the following receipts and payments occurred:
| 31.December.2013 | ||||
|---|---|---|---|---|
| Receipts | Payments | |||
| Companies | Total | Amount received | Total | Amount paid |
| Fozmassimo ‐ Sociedade Imobiliária, SA | 1,220,000 | 1,220,000 | ‐ | ‐ |
| Fundo de Investimento Imobiliário Imosonae Dois | ‐ | ‐ | 5,033 | 5,033 |
| Imomuro ‐ Sociedade Imobiliária, SA | ‐ | ‐ | 330,000 | 330,000 |
| Sempre à Mão ‐ Sociedade Imobiliária, SA | ‐ | ‐ | 8,500,000 | 8,500,000 |
| Sociloures ‐ Sociedade Imobiliária, SA | ‐ | ‐ | 2,350,000 | 2,350,000 |
| Sonae MC ‐ Modelo Continente, SGPS, SA | 189,650,350 | 189,650,350 | 13,348,625 | 13,348,625 |
| Tlantic Portugal ‐ Sistemas de Informação, SA | 575,000 | 575,000 | 675,000 | 675,000 |
| 191,445,350 | 191,445,350 | 25,208,658 | 25,208,658 |
| 31.December.2012 | |||||
|---|---|---|---|---|---|
| Receipts | Payments | ||||
| Companies | Total | Amount received | Total | Amount paid | |
| Bertimóvel ‐ Sociedade Imobiliária, SA | ‐ | ‐ | 150,000 | 150,000 | |
| Chão Verde ‐ Sociedade de Gestão Imobiliária, SA | ‐ | ‐ | 150,000 | 150,000 | |
| Cumulativa ‐ Sociedade Imobiliária, SA | ‐ | ‐ | 35,000 | 35,000 | |
| Imomuro ‐ Sociedade Imobiliária, SA | ‐ | ‐ | 100,000 | 100,000 | |
| Modelo ‐ Distribuição de Materiais de Construção, SA | ‐ | ‐ | 15,000,000 | 15,000,000 | |
| Tlantic Portugal ‐ Sistemas de Informação, SA | ‐ | ‐ | 175,000 | 175,000 | |
| ‐ | ‐ | 15,610,000 | 15,610,000 |
The accompanying financial statements were approved by the Board of Directors and authorized for issue on 17th March 2014. These financial statements will be presented to the Shareholders' General Meeting for final approval.
During the period ended as at 31 December 2013 shareholders' loan contracts were signed with the following companies:
Canasta ‐ Empreendimentos Imobiliários, SA
Citorres ‐ Sociedade Imobiliária, SA
Contimobe – Imobiliária do Castelo de Paiva, SA
Cumulativa ‐ Sociedade Imobiliária, SA
Iginha – Sociedade Imobiliária, SA
Imoconti – Sociedade Imobiliária, SA
Imoestrutura – Sociedade Imobiliária, SA
Imoresultado – Sociedade Imobiliária, SA
Imosistema – Sociedade Imobiliária, SA
MJLF – Empreendimentos Imobiliários, SA
Predicomercial – Promoção Imobiliária, SA Selifa ‐ Sociedade de Empreendimentos Imobiliários, SA Socijofra – Sociedade Imobiliária, SA Soflorin, BV Sonae Capital Brasil, SA Sonae MC – Modelo Continente, SGPS, SA Valor N, SA During the period ended as at 31 December 2013, treasury application agreements were signed with the following companies: Azulino Imobiliária, SA BB Food Service, SA Bertimóvel – Sociedade Imobiliária, SA Bom Momento ‐ Restauração, SA Chão Verde ‐ Sociedade de Gestão Imobiliária, SA Citorres – Sociedade Imobiliária, SA Contibomba ‐ Comércio e Distribuição de Combustíveis, SA Contimobe – Imobiliária do Castelo de Paiva, SA Continente Hipermercados, SA Cumulativa ‐ Sociedade Imobiliária, SA Discovery Sports, SA Efanor Investimentos, SGPS, SA Farmácia Selecção, SA Fashion Division, S.A. Fozimo – Sociedade Imobiliária, SA Fozmassimo ‐ Sociedade Imobliária, SA Igimo – Sociedade Imobiliária, SA Iginha – Sociedade Imobiliária, SA Imoconti – Sociedade Imobiliária, SA Imoestrutura – Sociedade Imobiliária, SA Imomuro ‐ Sociedade Imobiliária, SA Imoresultado – Sociedade Imobiliária, SA
Imosistema – Sociedade Imobiliária, SA Modalfa ‐ Comércio e Serviços, S.A. Modelo.Com ‐ Vendas por Correspondência, SA Modelo Continente Hipermercados, SA Modelo Hiper ‐ Imobiliária, SA Pharmaconcept Actividades em Saúde, SA Pharmacontinente – Saúde e Higiene, SA Predicomercial – Promoção Imobiliária, SA Raso Viagens e Turismo, SA Raso, SGPS, SA Sempre à Mão – Sociedade Imobiliária, SA Sesagest – Projectos e Gestão Imobiliária, SA Socijofra – Sociedade Imobiliária, SA Sociloures – Sociedade Imobiliária, SA Sonae, SGPS, SA Sonae MC – Modelo Continente, SGPS, SA Sonaerp ‐ Retail Properties, SA Sonae ‐ Specialized Retail, SGPS, SA Sonae Center Serviços II, SA Sondis Imobiliária, SA Sonvecap, BV Têxtil do Marco, SA Tlantic Portugal ‐ Sistemas de Informação, SA Valor N, SA Worten ‐ Equipamentos para o Lar, S A. Zyevolution Investigação e Desenvolvimento, SA The amounts due to group companies as at 31 December 2013 related to the mentioned contracts were the following:
| Company | 31.December.2013 |
|---|---|
| BB Food Service, SA | 1,641,257 |
| Contibomba ‐ Comércio e Distribuição de Combustíveis, SA | 771,257 |
| Chão Verde ‐ Sociedade de Gestão Imobiliária, SA | 244,257 |
| Fashion Division, SA | 3,791,257 |
| Modelo Continente Hipermercados, SA | 222,873,608 |
| Modelo Hiper Imobiliária, SA | 2,802,258 |
| Modelo.Com ‐ Vendas por Correspondência, SA | 7,837,258 |
| Pharmaconcept ‐ Actividades em Saúde, SA | 47,257 |
| Sesagest ‐ Projectos e Gestão Imobiliária, SA | 6,274,258 |
| Sonae ‐ Specialized Retail, SGPS, SA | 13,557,921 |
| Sonvecap, B.V. | 29,988,000 |
| Tlantic Portugal ‐ Sistemas de Informação, SA | 1,070,000 |
| 290,898,588 |
As at 31 December 2013 amounts owed by subsidiaries can be detailed as follows:
| Company | 31.December.2013 |
|---|---|
| Azulino ‐ Imobiliária, SA | 3,753,916 |
| Bom Momento ‐ Comércio Retalhista, SA | 158,743 |
| Bertimóvel ‐ Sociedade Imobiliária, SA | 21,718,724 |
| Canasta ‐ Empreendimentos Imobiliários, SA | 1,667,607 |
| Citorres ‐ Sociedade Imobiliária, SA | 2,574,448 |
| Contimobe ‐ Imobiliária do Castelo de Paiva, SA | 29,279,151 |
| Continente Hipermercados, SA | 9,074,743 |
| Cumulativa ‐ Sociedade Imobiliária, SA | 1,695,731 |
| Farmácia Selecção, SA | 900,743 |
| Fozimo – Sociedade Imobiliária, SA | 1,542,700 |
| Igimo – Sociedade Imobiliária, SA | 7,206,743 |
| Iginha – Sociedade Imobiliária, SA | 17,138,331 |
| Imoconti – Sociedade Imobiliária, SA | 11,113,123 |
| Imoestrutura ‐ Sociedade Imobiliária, SA | 183,448 |
| Imomuro ‐ Sociedade Imobiliária, SA | 15,574,346 |
| Imoresultado – Sociedade Imobiliária, SA | 475,398 |
| Imosistema ‐ Sociedade Imobiliária, SA | 3,713,385 |
| MJLF ‐ Empreendimentos Imobiliários, SA | 2,683,585 |
| Modelo ‐ Distribuição de Materiais de Construção, SA | 4,544,964 |
| MDS SGPS, SA | 8,665,429 |
| Pharmacontinente ‐ Saúde e Higiene, SA | 6,487,743 |
| Predicomercial ‐ Promoção Imobiliária, SA | 5,048,709 |
| Raso, SGPS, SA | 8,450,000 |
| Selifa ‐ Sociedade de Empreendimentos Imobiliários, SA | 2,634,374 |
| Sempre à Mão ‐ Sociedade Imobiliária, SA | 37,161,466 |
| Socijofra ‐ Sociedade Imobiliária, SA | 5,508,851 |
| Sociloures ‐ Sociedade Imobiliária, SA | 15,006,641 |
| Soflorin, BV | 201,883,415 |
| Sonae Capital Brasil, SA | 665,000 |
| Sonae Center Serviços II, SA | 2,242,163 |
| Sonae MC ‐ Modelo Continente, SGPS, SA | 671,738,743 |
| Sonaerp ‐ Retail Properties, SA | 173,239,925 |
| Sondis Imobiliária, SA | 19,382,676 |
| Valor N, SA | 3,050,915 |
| 1,296,165,879 |
The information regarding the Statutory Auditor Fees' is disclosed on the Management Report.
The Board of Directors,
Duarte Paulo Teixeira de Azevedo (President)
Ângelo Gabriel Ribeirinho dos Santos Paupério
(Translation of a report originally issued in Portuguese. In the event of discrepancies, the Portuguese language version prevails.)
Page 2 of 2
Porto, 17 March 2014
Deloitte & Associados, SROC S.A. Represented by António Manuel Martins Amaral
(Translation of a Report and Opinion originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
In compliance with the applicable legislation and in accordance with the terms of our mandate, the Statutory Audit Board issues the present report over the supervision performed and its Report and Opinion on the Report of the Board of Directors and the individual and consolidated financial statements for the year ended 31 December 2013, which are the responsibility of the Board of Directors.
During the year, the Statutory Audit Board accompanied, within the scope of its competencies, the management of the Company and its affiliated companies, the evolution of the operations, the adequacy of the accounting records, the quality and appropriateness regarding the process of preparation and disclosure of financial information, as well as the compliance with legal and regulatory requirements. For that purpose, the Board met quarterly during the year with the presence of the Board of Directors and the officers in charge of Administrative and Accounting department, Planning and Control department, Treasury department and Tax department. The Statutory Audit Board also met with the Statutory Auditor and External Auditor in order to obtain all the information and clarifications in relation with the scope and conclusions of the audit performed.
During the year the Statutory Audit Board accompanied, with special care, the accounting treatment of transactions that had material impact on the evolution of operations reflected in the financial statements under analysis, and in accordance with its duties verified the qualification and independence of the Statutory Auditor and External Auditor, having concluded favourably in relation with the rendering of non-audit services by the External Auditor.
In the fulfilment of its duties the Statutory Audit Board examined the individual and consolidated Balance sheets, the Individual and Consolidated Statements of profit and loss, cash flows, comprehensive income and changes in equity and the corresponding notes for the year under analysis.
Additionally, the Statutory Audit Board reviewed the Report of the Board of Directors and remaining individual and consolidated documents of account prepared by the Board of Directors, concluding that these information was prepared in accordance with the applicable legislation and that it is appropriate to the understanding of the financial position and results of the Company and the consolidation perimeter and has reviewed the Statutory Audit and Auditors' Report issued by the Statutory Auditor and agreed with its content.
Considering the above, is the opinion of the Statutory Audit Board, that all the necessary conditions are fulfilled in order for the Shareholders' General Meeting to approve:
In accordance with the terms defined in paragraph c) nº 1 of the article 245º of the Portuguese Securities Market Code, the members of the Statutory Audit Board declare that, to their knowledge, the information contained in the individual and consolidated financial statements were prepared in accordance with applicable accounting standards, giving a true and fair view of the assets and liabilities, financial position and the results of the Sonae Investimentos, S.G.P.S., S.A. and companies included in the consolidation. Also it is their understanding that the Board of Directors Report faithfully describes the business evolution, performance and financial position of Sonae Investimentos, S.G.P.S., S.A. and of the companies included in the consolidation perimeter and contains a description of the major risks and uncertainties that they face. It is also declared that the Corporate Governance Report complies with article 245º-A of the Portuguese Securities Market Code.
Matosinhos, 26 March 2014
The Statutory Audit Board
UHY & ASSOCIADOS, SROC, LDA represented by António Francisco Barbosa dos Santos
Arlindo Dias Duarte Silva
Óscar José Alçada da Quinta
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