Annual Report • Apr 2, 2014
Annual Report
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Shareholding Structure, Organisation, and Governance of the Company
PART II Company Governance Evaluation PART III
Analysis of Compliance with Corporate Governance Recommendations
Statement of the Board of Directors
Legal Certification of Accounts and Audit Report
07 08 09
Report and Opinion of the Statutory Audit Board
Ângelo Paupério, CEO of Sonaecom
Sonaecom achieved its primary strategic objective for 2013 with the completion of the merger between Optimus and Zon.
With this operation, the company was able to ensure a position of controlling influence on an operator, which is clearly sustainable. The company's shareholding structure is strong and committed to the sector. The company has privileged conditions to aspire to a leadership position in Portugal and at the same time grow internationally.
The stock market reacted very positively, with Sonaecom share prince increasing in 2013 by more than 73%.
As a result of this operation, the main asset of Sonaecom became a shareholding in a listed company, which, on 29 October 2013, led the Board of Directors to launch a Public Tender Offer for the Acquisition of Own Shares, in exchange for ZON OPTIMUS shares, thereby allowing shareholders to gain direct exposure to the stock closest to an investment in telecommunications.
Once more, the reaction of the market was very positive to the operation completed in 2014 with an acceptance level of over 62%, taking the free-float to close to 10%, which naturally resulted in Sonaecom's exclusion from the PSI 20. In this way, a cycle in the life of Sonaecom has been closed in just over 15 years, having started from scratch, having "revolutionized" the telecommunications market in Portugal and having affirmed itself as the most non-conformist, active and innovative player in the market.
This result is due to the permanent support of shareholders, bringing high ambition, resilience and confidence, but is mostly due to the extraordinary team working at Sonaecom. The Sonaecom team made use of its enormous energy and expertise, did not wilt in the face of numerous difficulties encountered on the way, and has always believed in the merit of its mission.
Ângelo Paupério, CEO of Sonaecom
Sonaecom is a sub-holding of the Sonae Group for the telecommunications and information technology areas, created in 1994 and first quoted on Euronext Lisbon in 2000.
Prior to the merger of Optimus and ZON, in August 2013, the portfolio of the company was composed by two business units: Optimus, an integrated telecommunications operator in Portugal and the Software and Information Systems area (SSI). The company also operated in the Online and Media segment, with a number of businesses such as "Público" , a general daily newspaper which has been published in Portugal for 23 years.
Through the Optimus brand, Sonaecom had a significant presence in various segments of the telecommunications market, focusing on the mobile communications services to residential and business customers, and traditional offers of voice and data, television and an extensive combination of mobile solutions and roaming services, as well as wholesale services to third parties
After the merger between Zon and Optimus, Sonaecom reached a relevant holding in an integrated telecommunications group – the ZON OPTIMUS Group – which constitutes the main asset in its holdings portfolio.
Sonaecom holds a participation of 50% in ZOPT, SGPS, S.A., which in turn holds 50.01% of the share capital of ZON OP-TIMUS. Additionally, Sonaecom also had, until 25 February 2014, a direct stake of 7.28% in the capital of ZON OPTIMUS, SGPS, S.A.. Since that date, following the tender offer for the general and voluntary acquisition of treasury shares launched by Sonaecom, Sonaecom's direct participation in ZON OPTI-MUS was reduced to 2.14%.
Sonaecom is an entrepreneurial growth company that chooses exceptional people to work and unlock their full potential. Sonaecom relentlessly pursues the creation of innovative products, services and solutions that fulfil the needs of its markets and generate superior economic value.
Our fundamental commitment is to create economic value founded on the principles of ethical business practice and sustainable development. We take a long-term strategic view based on stakeholder relationships built around confidence and trust.
We develop the competencies and capabilities of every Sonaecom employee through fresh challenges, an appetite for change and teamwork. Supported by an internal culture that promotes meritocracy, we believe these factors are crucial to attracting, retaining and developing people with outstanding talent and potential.
As our guiding force, the strength of our ambition is reflected in the way we continuously challenge ourselves to remain resilient and determined in our efforts to improve our capabilities and add value to our clients.
Innovation is the lifeblood of our business. By continuously challenging conventions, we consistently surprise the market. We believe that failure can also be a source of learning. At the same time, we are aware that it is important to balance mistakes within acceptable risk limits.
We have an active sense of social responsibility. With a strong concern for the environment and the development of human knowledge, fulfilling this responsibility involves helping to improve the lives of the communities around us.
We value efficiency and healthy competition, and continuously strive to optimise the use of our resources while maximising their returns.
We take a position of independence and autonomy in relation to central and local government. That said, we are always ready to co-operate with the authorities to improve the regulatory, legislative and social environment.
On 21 January 2013, Optimus - SGPS, S.A. and Zon Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. announced that the Boards of Directors of both companies unanimously approved the merger project involving the incorporation of Optimus into Zon, and pursuant to which all the assets and liabilities of Optimus will be globally transferred to Zon.
The merger project is based on an exchange ratio that grants Zon a value corresponding to 1.5 times the value of Optimus, aligned with the recommendation provided by Sonaecom and Eng. Isabel dos Santos, on 14 December 2012.
Pursuant to the merger, Zon will increase its share capital and, as a consequence, issue and grant to the shareholders of Optimus new shares representing 40% of the share capital of Zon resulting from the aforementioned increase.
Accordingly, Sonaecom, as the single shareholder of the merged company will receive 1.791866 shares of the merging company for each share representing the current registered capital of Optimus.
By virtue of the present merger transaction, Zon will adopt 'ZON OPTIMUS, SGPS, S.A.' as its corporate name, or any other to be approved by the National Register of Legal Entities.
The merger will result in a Group capable of investing in and promoting its own and the sector's competitiveness, and of creating greater shareholder value and new opportunities for employees, clients and suppliers. It will create a new Group with a sustainable strategy for growth, international expansion and optimised management in which the sharing of experience and expertise between the teams will play a decisive role.
Therefore, the Boards of Directors of the two companies consider this merger to be a logical and essential step towards the development of a common growth platform upon which to leverage and maximise the significant potential of both companies.
Agreement between Sonae SGPS, S.A. and France Telecom
On 15 February 2013, Sonae SGPS, S.A. and France Telecom have announced the execution of an agreement whereby, respectively, a call and put option was granted over the 20% stake in Sonaecom's share capital presently held by a subsidiary of FT-Orange.
Sonae's call option may be exercised during the 18 months after the closing of the agreement and FT-Orange's put option within the 3 months subsequent to the end of such 18 months' period. The price for the exercise of both options is of 98.9 million euros, which may be increased up to 113.5 million euros in case Sonaecom or Optimus participate in any material transaction of consolidation or restructuring of the telecommunications sector in Portugal which is announced within a 24 months' period.
This agreement is subject to the condition that the Portuguese Securities Commission (CMVM) confirms that no concerted exercise of influence results from this agreement and that the shares held by Sonae are not attributable to FT-Orange.
On 7 March 2013, Sonaecom informed, on behalf of its affiliated company Optimus, that it was approved at the extraordinary shareholder meeting the merger project by incorporation between Optimus SGPS, S.A. and Zon Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. and respective schedules, dated 21 January 2013.
The implementation of the merger is conditional upon the prior fulfillment of the non-opposition from the Competition Authority to the merger, in accordance with the terms of the Merger Project and the fulfillment of the remaining administrative and corporate formalities applicable or necessary to the completion of the merger, in accordance with the law and the terms laid down in the Merger Project.
On 8 March 2013, Sonaecom announced Board of Directors' intention to submit for shareholders' approval at the next shareholders general meeting the distribution of a gross dividend of 12 cents per share, continuing, for the third consecutive year, the practice of shareholder remuneration.
On 18 April 2013, CMVM, the Portuguese Securities and Exchange Commission, informed ZOPT, SGPS, S.A., on the resolution of waiving the obligation to launch a mandatory takeover bid on ZON Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A..
On 24 April 2013, Sonaecom shareholders decided at the Company's Annual General Meeting:
In accordance with legal requirements and pursuant to the decision taken at the Annual Shareholders' General Meeting held on 24 April 2013, dividends relating to the year ending 31 December 2012 were made available to shareholders on 22 May 2013 and corresponded to a gross dividend per share of 12 euro cents.
Following final deliberation of the Portuguese Competition Authority, stating non-opposition to the concentration process between ZON Multimédia - Serviços de Telecomunicações e Multimédia, SGPS, S.A. and Optimus SGPS, S.A., the commercial registry of the merger between the two companies was made on 27 August.
Following the share capital increase of its subsidiary ZOPT, SGPS, S.A., Kento Holding Limited and Unitel International Holdings, B.V., owning 50% of the share capital and voting rights of ZOPT, acquired 50% of Sonaecom's shareholder loans to ZOPT. As a result of this operation, on 30 August 2013, Sonaecom received a total amount 119.6 million euros.
Following the exercise, by Sonae, of the call option set out in the agreement settled on February 2013, ASB sold to Sonae, on 9 September 2013, 73,249,374 shares of Sonaecom, representing 20% of the share capital and voting rights of the company.
On 23 October 2013, Goldman Sachs Inc. informed Sonaecom about the completion, on 18 October, of a qualifying holding of 2.12% in Sonaecom, corresponding to 7,780,349 shares and voting rights.
On 29 October 2013, Sonaecom announced the decision taken by its Board of Directors to make a partial and voluntary tender offer for the acquisition of a maximum of 88,479,803 shares, representing 24.16% of its own share capital.
Sonaecom's shareholders were given the option to sell, in equal standing conditions, their Sonaecom shares for consideration of the directly held 37,489,324 ZON OPTIMUS shares, which are not necessary to the pursuit of Sonaecom's business purposes, thereby giving Sonaecom shareholders direct exposure to ZON OPTIMUS.
Sonaecom offered an overall price equivalent to 2.45 euros per Sonaecom share, to be composed of ZON Optimus shares and, where applicable, a remaining cash amount. To determine the Sonaecom/ZON OPTIMUS share trade ratio, a ZON OPTI-MUS price of 5.08 euros was considered.
On 18 November 2013, at Sonaecom Shareholders' Extraordinary General Meeting, the sole item of the agenda was approved with a majority of 99.31% of the voting rights represented. The sole item on the agenda consisted in the reduction of the share capital in the amount corresponding to the product of the number of company shares purchased through the tender offer for the acquisition of treasury shares, by the amount of 2.45 euros, by cancelling the treasury shares so acquired and reducing the nominal value of the remaining company shares, with the purpose of releasing the necessary funds to execute the offer, thereby accordingly amending paragraphs one and two of article five of the Articles of Association.
On 23 and 24 January 2014, under terms previously authorized by the Portuguese Securities Market Commission, CMVM, Sonae – SGPS, S.A. (Sonae) acquired over the counter 1,454,134 Sonaecom shares from Sonaecom directors and related parties.
The consideration of this acquisition was determined and settled on 20 February 2014, the date of calculation of the results of the tender offer, by the same amount paid to the shareholders who accepted the offer. Following this transaction, Sonae became the direct holder of 78,133,508 shares and the indirect holder of 194,063,119 shares, giving Sonae a total participation of 272,196,627 Sonaecom shares.
On 5 February 2014, Sonaecom made public the decision to launch a general and voluntary tender offer for the acquisition of shares representing the share capital of Sonaecom.
The offer was general and voluntary, with the offerer obliged to acquire all the shares that were the object of the offer and were, until the end of the respective period, subject to valid acceptance by the recipients.
The period of the offer, during which sales orders were received, ran for two weeks, beginning on 6 February and ending on 19 February 2014.
On 20 February 2014, the results of the offer were released. The level of acceptance reached 62%, corresponding to 54,906,831 Sonaecom shares. Euronext announced Sonaecom exclusion from the PSI-20 from 24 February 2014.
The physical and financial settlement of the offer occurred on 25 February 2014, being the consideration of the offer composed by 26,476,792 ZON OPTIMUS shares and 19,631 euros.
Following the offer, Sonaecom became the holder of 11,012,532 ZON OPTIMUS shares, corresponding to 2.14% of the company's share capital.
On 28 February 2014, Goldman Sachs Inc. informed Sonaecom about the reduction of its qualifying holding on 25 February 2014 from 2.12% to 0.79% of its share capital, corresponding to 2,881,353 shares and voting rights.
Sonae-SGPS, S.A. informed Sonaecom on the acquisition, from 24 february to 7 march 2014, of shares representing the share capital and voting rights of Sonaecom. After the completion of this transaction, Sonae is the direct holder of 79,097,818 shares of Sonaecom, and the 194.063.119 voting rights corresponding to the shares held by its subsidiary Sonae Investiments, B.V. will continue to be attributable to it.
The Board of Directors proposes that the negative Net Results registered in the Individual Accounts in the amount of 90,569,383.38 euros is fully transferred to Other Reserves.
Sonaecom would like to thank its statutory external auditor for the valuable advice and help it has given us during 2013 and its Statutory Audit Board for the close monitoring of our business.
We would also like to express our gratitude to our suppliers, commercial partners, financial institutions and the Group's other associates for their continuing involvement with our businesses and the confidence they again demonstrated in our organisation during 2013.
Sonaecom's Executive Committee would like to thank our Non-Executive Directors for another year of valuable guidance and advice.
Finally, we would like to express our gratitude to all employees, who constitute the company's most valuable resource. Once again, they have demonstrated remarkable resilience, flexibility and innovative spirit. Clearly, their efforts remain the basis of Sonaecom's continuing success.
The year of 2013 was marked by the consolidation operation between ZON and OPTIMUS, in August 2013. As a result, Sonaecom adjusted its 2012 and 2013 financial statements to reflect the new structure following the merger.
Sonaecom results in 2013 were particularly strong in turnover, growing 12.1% when compared with 2012, to 117.0 million euros. As for the operating profitability performance, the EBITDA reached 71.7 million euros, decreasing 30.8% y.o.y. mostly due to discontinued operations' evolution.
Consolidated turnover in 2013 stood at 117.0 million euros, up 12.1% compared to 2012. This rise was fuelled by an increase of 16.4% in service revenues, thanks to SSI's business, and a 2.5% increase in product sales.
Operating costs amounted to 113.8 million euros, 2.1% above 2012. Despite the decrease of 1.3% in commercial costs, personnel costs and other operating costs increased between 2012 and 2013, driven by increased activity in the SSI division.
Total EBITDA stood at 71.7 million euros, down 30.8% compared to 2012, primarily as a result of discontinued operations.
As for the EBITDA attributable to Sonaecom, resulting from the companies being consolidated through the equity method, the figure has decreased from 0.0 million euros to minus 0.5 million euros, driven by ZOPT contribution, that in turn is impacted by the evolution of ZON OPTIMUS's net income, which decreased 44.5% y.o.y.. It should be noted that this contribution to Sonaecom's EBITDA totalled negative 0.5 million euros in 2013.
The underlying EBITDA stood at 5.9 million euros, an improvement of more than 10 million euros compared with the negative 5.1 million euros registered in 2012.
The underlying EBITDA margin reached 5.1%, up 9.9pp y.o.y., benefiting from the increased volume of service revenues in the total turnover, which grew from 69.1% to 71.7%.
Despite the lower level of depreciation and amortization (D&A), Sonaecom's EBIT decreased 27.3% y.o.y. to 65.0 million euros.
Net financial results showed a very positive performance, totalling 42.6 million euros in 2013 thanks to higher income combined with lower expenses. The direct participation in ZON OPTIMUS registered a gain of 37.5 million euros between 30 September and 31 December 2013, driven by an increase in ZON OPTIMUS's share price from 4.40 euros to 5.40 euros.
Sonaecom's earnings before tax (EBT) improved significantly from 75.4 million euros to 107.6 million euros, up by 42.7% y.o.y..
Net results, group share, stood at 103.8 million euros, up 37.7% compared to 2012.
Sonaecom's operating CAPEX increased from 5.8 million euros to 7.9 million euros, reflecting the operating CAPEX trend at Sonaecom's SSI division.
Gross debt reached 29.5 million euros versus 376.5 million euros in 2012.
Net debt stood at a very comfortable negative 162.1 million euros – a positive cash position – versus 251.2 million euros in 2012. This was thanks to the acquisition of 50% of Sonaecom's shareholder loans to ZOPT from Kento Holding Limited and Unitel International Holdings, B.V..
| MILLION EUROS | ||||||||
|---|---|---|---|---|---|---|---|---|
| Consolidated income statement | 4Q12(R) | 4Q13 | ∆ 13/12 | 3Q13 | q.o.q | 2012(R) | 2013 | ∆ 13/12 |
| Turnover | 26.1 | 30.2 | 15.9% | 29.3 | 3.2% | 104.3 | 117.0 | 12.1% |
| Service Revenues | 19.7 | 22.1 | 12.6% | 20.7 | 6.9% | 72.1 | 83.9 | 16.4% |
| Product Sales | 6.4 | 8.1 | 25.9% | 8.5 | (5.7%) | 32.2 | 33.1 | 2.5% |
| Other Revenues | 1.0 | 1.0 | (2.1%) | 1.8 | (46.4%) | 2.0 | 3.5 | 72.5% |
| Operating Costs | 28.6 | 27.1 | (5.2%) | 29.5 | (8.2%) | 111.5 | 113.8 | 2.1% |
| Personnel Costs | 12.0 | 10.8 | (9.5%) | 10.9 | (0.9%) | 42.6 | 43.3 | 1.6% |
| Commercial Costs(1) | 5.5 | 6.3 | 14.5% | 8.7 | (28.4%) | 28.7 | 28.4 | (1.3%) |
| Other Operating Costs(2) | 11.1 | 10.7 | (3.7%) | 9.9 | 8.8% | 40.1 | 42.9 | 6.9% |
| EBITDA | 21.0 | 0.7 | (96.8%) | 19.7 | (96.6%) | 103.5 | 71.7 | (30.8%) |
| Underlying EBITDA(3) | (1.6) | 3.3 | - | 1.5 | 121.7% | (5.1) | 5.9 | - |
| Equity method(4) | (0.4) | (2.7) | - | 1.9 | - | 0.0 | (0.5) | - |
| Discontinued operations(5) | 22.9 | 0.0 | (100.0%) | 16.2 | (100.0%) | 108.6 | 66.2 | (39.0%) |
| Unerlying EBITDA Margin (%) | (6.0%) | 11.0% | 17.0pp | 5.1% | 5.9pp | (4.9%) | 5.1% | 9.9pp |
| Depreciation & Amortization | 5.6 | 1.4 | (75.2%) | 2.2 | (35.0%) | 14.1 | 6.6 | (53.0%) |
| EBIT | 15.4 | (0.7) | - | 17.5 | - | 89.4 | 65.0 | (27.3%) |
| Net Financial Results | (4.0) | 37.6 | - | 11.6 | - | (13.9) | 42.6 | - |
| Financial Income | 0.7 | 33.6 | - | 15.5 | 116.7% | 2.6 | 49.7 | - |
| Financial Expenses | 4.7 | (4.0 | - | 3.9 | - | 16.5 | 7.1 | (57.1%) |
| EBT | 11.3 | 36.8 | - | 29.1 | 26.7% | 75.4 | 107.6 | 42.7% |
| Tax results | 0.2 | (1.1) | - | (0.9) | (27.0%) | (0.0) | (3.9) | - |
| Net Results | 11.5 | 35.7 | - | 28.2 | 26.7% | 75.4 | 103.8 | 37.6% |
| Group Share | 11.5 | 35.8 | - | 28.2 | 26.9% | 75.4 | 103.8 | 37.7% |
| Attributable to Non-Controlling Interests | 0.0 | (0.1) | - | (0.0) | - | 0.0 | (0.1) | - |
(1) Commercial Costs = COGS + Mktg & Sales Costs;
(2) Other Operating Costs = Outsourcing Services + G&A + Provisions +others;
(3) Includes the businesses fully consolidated by Sonaecom;
(4) Includes the 50% holding in Unipress, the 50% holding in Infosystems, the 45% holding in SIRS and, from the end of August 2013, the 50% holding in ZOPT;
(5) Includes Optimus contribution before the closing of the merger between ZON and Optimus, i.e., until the end of August 2013;
(R) The values were adjusted in order to reflect Sonaecom structure following the merger between ZON and Optimus.
| MILLION EUROS | ||||||||
|---|---|---|---|---|---|---|---|---|
| Consolidated balance sheet | 4Q12 | 4Q13 | ∆ 13/12 | 3Q13 | q.o.q. | 2012 | 2013 | ∆ 13/12 |
| Total Net Assets | 1,898.9 | 1,227.1 | (35.4%) | 1,195.2 | 2.7% | 1,898.9 | 1,227.1 | (35.4%) |
| Non Current Assets | 1,583.2 | 767.3 | (51.5%) | 935.3 | (18.0%) | 1,583.2 | 767.3 | (51.5%) |
| Tangible and Intangible Assets |
960.5 | 22.2 | (97.7%) | 19.5 | 13.5% | 960.5 | 22.2 | (97.7%) |
| Goodwill | 518.0 | 28.4 | (94.5%) | 29.6 | (4.0%) | 518.0 | 28.4 | (94.5%) |
| Investments | 1.2 | 711.4 | 880.6 | (19.2%) | 1.2 | 711.4 | ||
| Deferred Tax Assets | 101.1 | 5.2 | (94.9%) | 5.5 | (6.0%) | 101.1 | 5.2 | (94.9%) |
| Others | 2.4 | 0.0 | (98.3%) | 0.0 | 0.0% | 2.4 | 0.0 | (98.3%) |
| Current Assets | 315.7 | 459.8 | 45.6% | 259.9 | 76.9% | 315.7 | 459.8 | 45.6%) |
| Trade Debtors | 144.9 | 36.4 | (74.9%) | 29.6 | 23.0% | 144.9 | 36.4 | (74.9%) |
| Liquidity | 61.7 | 188.0 | 197.8 | (4.9%) | 61.7 | 188.0 | ||
| Others | 109.0 | 235.3 | 115.8% | 32.5 | 109.0 | 235.3 | 115.8% | |
| Shareholders' Funds | 1,083.2 | 1,136.8 | 4.9% | 1,102.6 | 3.1% | 1,083.2 | 1.136.8 | 4.9% |
| Goup Share | 1,082.9 | 1,136.5 | 5.0% | 1,102.3 | 3.1% | 1,082.9 | 1,136.5 | 5.0% |
| NonControlling Interests | 0.4 | 0.3 | (30.4%) | 0.3 | (16.6%) | 0.4 | 0.3 | (30.4%) |
| Total Liabilities | 815.6 | 90.3 | (88.9%) | 92.6 | (2.5%) | 815.6 | 90.3 | (88.9%) |
| Non Current Liabilities | 296.0 | 29.3 | (90.1%) | 31.3 | (6.5%) | 296.0 | 29.3 | 90.1%) |
| Bank Loans | 196.2 | 24.8 | (87.4%) | 25.7 | (3.4%) | 196.2 | 24.8 | (87.4%) |
| Provisions for Other Liabilities and Charges |
43.7 | 3.1 | (93.0%) | 4.3 | (28.1%) | 43.7 | 3.1 | (93.0%) |
| Others | 56.1 | 1.4 | (97.4%) | 1.4 | 2.4% | 56.1 | 1.4 | (97.4%) |
| Current Liabilities | 519.6 | 61.0 | (88.3%) | 61.2 | (0.4%) | 519.6 | 61.0 | (88.3%) |
| Bank Loans | 187.2 | 1.0 | (99.5%) | 3.7 | (72.7%) | 187.2 | 1.0 | (99.5%) |
| Trade Creditors | 168.8 | 21.8 | (87.1%) | 18.1 | 20.6%) | 168.8 | 21.8 | (87.1%) |
| Others | 163.7 | 38.2 | (76.6%) | 39.5 | (3.3%) | 163.7 | 38.2 | (76.6%) |
| Operating CAPEX(1) | 3.6 | 3.4 | (4.7%) | 1.4 | 142.2% | 5.8 | 7.9 | 36.5% |
| Operating CAPEX as % of Turnover |
13.9% | 11.4% | (2.5pp) | 4.9% | 6.6pp | 5.5% | 6.7% | 1.2pp |
| Total CAPEX | 3.6 | 3.4 | (4.8%) | 1.4 | 142.2% | 15.8 | 8.3 | (47.5%) |
| EBITDA Operating CAPEX | (5.2) | (0.1) | 97.6% | 0.1 | (10.9) | (2.0) | 82.0% | |
| Gross Debt | 376.5 | 25.9 | (93.1%) | 29.5 | (12.0%) | 376.5 | 25.9 | (93.1%) |
| Net Debt | 251.2 | (162.1) | (168.3) | 3.7% | 251.2 | (162.1) |
(1) Operating CAPEX excludes Financial Investments.
Note: The 2012 and 2013 information was restated in order to consolidate the 50% holding in Unipress, the 50% holding in Infosystems and the 45% holding in SIRS through the equity method.
| MILLION EUROS | ||||||||
|---|---|---|---|---|---|---|---|---|
| Levered free cash flow | 4Q12(R) | 4Q13 | ∆ 13/12 | 3T13 | q.o.q. | 2012(R) | 2013 | ∆ 13/12 |
| Pro-forma EBITDA-Operating CAPEX(1) | (3.1) | (0.1) | 96.0% | 1.2 | - | (2.3) | 3.0 | - |
| Change in WC | (0.3) | (8.5) | - | (1.9) | - | (4.4) | (8.4) | (92.8%) |
| Non Cash Items & Other | 1.9 | (0.1) | - | (0.8 | 90.0% | 3.8 | (0.6) | - |
| Operating Cash Flow | (1.6) | (8.7) | - | (1.5) | - | (2.9) | (6.0) | (105.1%) |
| Investments | 0.0 | 0.0 | 100.0% | 115.0 | (100.0%) | (6.0) | 113.8 | - |
| Own shares | 0.0 | 0.0 | - | 0.0 | - | (3.4) | (2.5) | 26.1% |
| Financial results | 1.5 | 1.0 | (32.0%) | 10.3 | (90.2%) | (2.8) | 16.5 | - |
| Income taxes | (0.5) | (0.8) | (65.3%) | (1.2) | 34.3%) | (0.6) | (3.2) | - |
| FCF(2) | (0.6) | (8.5) | - | 122.5 | - | (15.7) | 118.6 | - |
(1) Pro-forma EBITDA-Operating CAPEX does not exclude the balances and transactions with Optimus;
(2) FCF Levered after Financial Expenses but before Capital Flows and Financing related upfront costs. FCF is calculated based on pro-forma EBITDA-Operating CAPEX and does not consider intercompany dividends;
(R) The values were adjusted in order to reflect Sonaecom, SGPS, S.A. structure following the merger between ZON and Optimus.
• New organizational structure in place since the end of the year and restructuring process initiated and well underway
| MILLION EUROS | ||||||||
|---|---|---|---|---|---|---|---|---|
| ZON OPTIMUS pro-forma highlights | 4Q12 | 4Q13 | ∆ 13/12 | 3Q13 | q.o.q. | 2012 | 2013 | ∆ 13/12 |
| Operating Revenues | 370.0 | 356.3 | (3.7%) | 361.6 | (1.5%) | 1,473.7 | 1,426.8 | (3.2%) |
| EBITDA | 127.9 | 118.3 | (7.5%) | 139.9 | (15.4%) | 541.4 | 536.6 | (0.9%) |
| EBITDA margin (%) | 34.6% | 33.2% | 0.2pp | 38.7% | - | 36.7% | 37.6% | 1.5pp |
| Net Income | 21.5 | (13.1) | - | 18.4 | - | 114.3 | 63.4 | (44.5%) |
| CAPEX | 80.7 | 80.7 | 0.0% | 61.6 | 31.0% | 297.2 | 269.5 | (9.3%) |
| EBITDA-CAPEX | 47.2 | 37.6 | (20.3%) | 78.3 | (52.0%) | 244.2 | 267.1 | 9.4% |
ZON OPTIMUS operating revenues reached 1.4 billion euros in 2013, decreasing 3.2% when compared to 2012.
EBITDA stood at 536.6 million euros, virtually decreasing 0.9% when compared to 2012. CAPEX decreased from 297.2 million euros to 269.5 million euros, less 9.3%.
As a consequence of EBITDA and CAPEX evolution, EBITDA-CAPEX grew 9.4% y.o.y., to 267.1 million euros.
With the integration process in place, Net income reached 63.4 million euros, less 44.5% when compared to 2012.
WeDo Technologies ended 2013 with a solid set of results, evidence that the business's strategy for 2011-15 is being successfully executed. WeDo Technologies' turnover grew 10% when compared to 2012, reaching 59 million euros (total revenues reached 62 million euros, approximately USD 83 million, growing 12% y.o.y.), while EBITDA grew 36% to 12 million euros (USD 16 million), corresponding to an EBITDA margin of 20%.
WeDo Technologies started 2013 with a disproportionate backlog of orders. Both the revenue and EBITDA evolution demonstrate why WeDo Technologies' delivery team is considered to be one of the best in the industry. The company continues to set the benchmark when it comes to delivering on time, on quality and on budget. By focusing on delivery, the company relieved the pressure on sales to some extent. On the other hand, competitive pressure decreased sharply. The number of requests for proposals decreased substantially due to a supply-side industry re-structuring. Several key competitors underwent internal changes and, at the same time, the continuation of the expected demand-side telecom industry consolidation is also taking its toll on order books.
Despite this, WeDo Technologies won 20 new customers and entered in five new countries, ending 2013 with over 200 customers across 90 countries in five continents. WeDo Technologies has also signed group global agreements with two major telecommunications operators, bringing its total number of group deals to 12.
Given these achievements, we are confident that WeDo Technologies will continue to reinforce its leading position in the international revenue assurance and fraud management software market, increasing its global market share and becoming a multiindustry software company through its enterprise business assurance software, RAID.
In July 2013, a report by analyst firm Gartner named WeDo Technologies as the market share leader in providing revenue assurance and fraud management solutions to telecoms operators worldwide. The report − entitled Market Share: Telecom Operations Management Systems (BSS, OSS and SDP), Worldwide, 2011-2012 − was updated in June following its original release in March 2013. It also places WeDo Technologies among the top 50 BSS, OSS and SDP vendors globally based on market share, in 41st place.
RAID 7.0 has been making strong progress and is fully aligned with our strategy. This major release, available from the beginning of 2013, has already generated remarkably positive feedback. The outlook for our RAID managed service offering looks promising: our managed services product line revenues grew by 69%.
The Southern Europe, Middle East and Africa region is showing excellent, well above-average growth in its telecom industry target market with a 34% increase in booked orders and a 15% increase in revenues.
In addition, WeDo Technologies' orders and revenues grew by 71% and 19% respectively in the retail, energy and finance industries. As at 31 December 2013, the number of customers outside the telecom sector was 31.
During 2013, the company also undertook a major strategic planning exercise, involving around 70 of its most senior employees worldwide. All those involved in the exercise underwent intensive strategy planning training. The objective was to prepare the company for the 2014-20 business cycle.
Looking ahead, WeDo Technologies will strengthen its global leadership in the revenue assurance telecoms market, complementing its portfolio with fraud management solutions and business assurance in telecoms and other sectors.
In 2013, Mainroad celebrated 10 years in business. During its first decade, the business passed several milestones en route to becoming one of the most well-known and highly awarded Portuguese and European providers of data center services (with three tier III data centers), IT outsourcing, IT service management (ITSM) and cloud services − among other IT solutions. With more than 120 customers worldwide, Mainroad currently provides services to customers in four continents from its offices in Lisbon, Porto and Madrid.
During 2013, Mainroad continued its international expansion drive by providing services and sales expertise in different territories. With this aim in mind, the business focused on reinforcing its sales team and efforts in different markets, such as Spain and Angola. These efforts were complemented by the implementation of local marketing activities, as Mainroad organised events and go-tomarket activities in Spain, Angola and Mozambique – among other locations.
In terms of its offer, Mainroad continued to develop its Trusted Cloud service. Building on its IaaS, DaaS and managed mobile solutions, Trusted Cloud expanded by introducing solutions such as Main Drive, Main IT Monitoring and Main IT Service Desk ondemand. These solutions are showcased on Mainroad's website (www.mainroad.pt/trustedcloud).
The business also developed new ITSM solutions, reinforcing its portfolio with IT Monitoring, Service Desk, Client Automation and Performance Management − among other solutions.
To provide our customers with better support and achieve even higher levels of satisfaction, Mainroad implemented a new monitoring and service desk platform. Based on CA Nimsoft, this platform provides a better reach and evaluation of our customers' infrastructure, date security, requests and reports. It also enables Mainroad to activate customer tools more quickly and effectively, ensuring that all tasks associated with new or existing customers and services are performed correctly.
With the focus still on improving customer service and satisfaction, Mainroad's Support Center, Monitoring and Operation 24x7 Team became the first team in the SSI group to use the Kaizen methodology to manage its day-to-day operations through its IoW – Improve our Work initiative. The results have been excellent and have encouraged the organisation to extend the initiative to other departments.
While Mainroad's focus has been on continuously improving its services, solutions and customer service, the business retained its Advanced SAP Hosting Partner certification, which allows it to launch new, complementary and unique offers to the market. Mainroad also retained its certification as a Microsoft Hosting Silver Partner and its ISO 9001 quality management certification.
In 2013, Bizdirect retained its leadership position for delivering multi-brand IT solutions and managing corporate software licensing contracts. The strategic areas developed in 2013 reinforced the business's market positioning as a specialised player in Microsoft solutions' integration and software asset management consulting.
In addition to the IT sector's delayed recovery caused by unstable macroeconomic conditions, Bizdirect faced enormous challenges when it came to developing two business areas in the early stage. In its more mature business areas, the company had to focus on maintaining its competitive strengths among the leading manufacturers while working more closely with customers in a consultative way. Bizdirect's market knowledge and its differentiation enabled it to achieve both objectives.
When it came to Microsoft solutions' integration, the challenge was to assess opportunities in the market, engage new customers, find the right partnerships and create awareness. Here, it was crucial to ensure high quality standards and deliver projects on time. The business achieved these objectives thanks to the efforts of its highly qualified and dedicated team.
New additions to Bizdirect's customer list included: Grupo Arena, Entreposto, Abreu Advogados, Critical Software, Adene, Codipor, SIVA, Deco, Instituto de Informática, Alvo and Grupo Arié.
It is important to mention that Bizdirect achieved Microsoft Silver Certification in Customer Relationship Management.
In Software Asset Management, the business won two major corporate customers. The challenge in this area was to offer a distinctive and recognised consulting service and to demonstrate the high value of best practices and prevention in software asset management. This process of alerting the market to these strengths got underway and continues to generate leads.
Bizdirect's four strategic pillars are:
Infrastructure – Designing and provisioning hardware, supported by multi-brand certified partnerships that deliver efficiency, return on investment and trust to its customers;
Licensing – Operational management of corporate licensing contracts, maximising benefits to the customer by centralising the entire management process and negotiating on a single contact. The main manufacturers covered are Microsoft, CA, IBM and Oracle;
Solutions – Integration and development of business solutions focused on the use of Microsoft technologies, based on technology platforms such as Dynamics CRM (customer relationship management); SharePoint (portals and collaborations); BizTalk (process management and integration);
SAM – A process to support compliance validation software that involves analysing and optimising software, consolidating the licenses and/or proposing new licensing models.
Bizdirect also promoted brand awareness in the media through press releases and case studies developed in collaboration with customers in the Microsoft Solutions area.
In 2013, Bizdirect also submitted an application to QREN, Portugal's National Strategic Reference Framework, for an innovation project involving sentiment analysis on social networks, which is being developed by our Solutions team.
Bizdirect is successfully implementing its strategy to offer the market greater value by broadening its portfolio and maximising synergies across interconnected business areas.
In 2014 Bizdirect will continue to pursue sustainable growth, with a significant focus on selling solutions and services in international markets while maintaining high levels of customer satisfaction and excellence among its employees.
Despite a difficult business environment and economic constraints throughout 2013, particularly in Portugal with its bailout programme, Saphety achieved its key objectives with its commitment to internationalisation and the consolidation of new businesses and products.
The business's customer portfolio grew 19% and currently comprises over 8,100 companies with more than 100,000 active users on its platforms.
During 2013, Saphety invested strongly in expanding into new countries, opening new offices in Brazil and Colombia. In parallel, it signed partnership agreements in the Baltic, Kazakhstan, Mexico and Kenya. Here, the strategy is to identify partners capable of delivering added value while representing Saphety's solutions and indirectly developing business in each market. This approach has paid off with, for example, the implementation of new projects in Finland and Denmark.
In the Portuguese market, Saphety launched SaphetyDrive and achieved certification from the national tax authorities for its SaphetyDoc software, SaphetyDoc+. In response to the market's needs, SaphetyDrive allows the dematerialisation of electronic transport documents, now mandatory in Portugal, making Saphety a leader in this sector.
Last year was also marked by the consolidation of Saphety's presence across mobile platforms that allow users to be even more closely connected to Saphety's different platforms.
In 2014, Saphety aims to stimulate the growth and profitability of its business, strengthening its position in the domestic market, broadening its service range, and – particularly in the international market − continuing its current direct operations while selecting new distributors. The ultimate objective is to fulfil its mission by helping customers to continuously improve their business processes with best-in-class technological solutions that ensure cost reduction, efficiency, innovation and sustainability.
IT service revenues per employee reached 136.5 thousand euros in 2013, 2.0% below 2012. The 6.9% growth in service revenues did not totally offset the 5.3% headcount increase. The EBITDA per employee reached 21.5 thousand euros, growing 8.3% y.o.y, driven by the very positive EBITDA evolution.
Equipment sales as percentage of turnover decreased y.o.y. from 21.7% to 20.7%, driven by Bizdirect's equipment sales.
| MAIN OPERATING KPI's | 4Q12 | 4Q13 | ∆ 13/12 | 3Q13 | q.o.q | 2012 | 2013 | ∆ 13/12 |
|---|---|---|---|---|---|---|---|---|
| IT Service Revenues/Employee(1) ('000 euros) | 35.8 | 31.4 | (12.3%) | 32.9 | (4.6%) | 139.3 | 136.5 | (2.0%) |
| Equipment Sales as % Turnover | 18.8% | 21.6% | 2.8pp | 24.0% | (2.5pp) | 21.7% | 20.7% | (1.0pp) |
| Equipment Sales/Employee(2) ('000 euros) | 162.7 | 179.3 | 10.2% | 218.7 | (18.0%) | 960.4 | 725.6 | (24.4%) |
| EBITDA/Employee ( '000 euros) | 7.5 | 5.9 | (22.0%) | 5.3 | 9.9% | 19.9 | 21.5 | 8.3% |
| Employees | 641 | 675 | 5.3% | 683 | (1.2%) | 641 | 675 | 5.3% |
(1) Excludingemployeesdedicated to Equipment Sales;
(2) Bizdirect.
| MILLION EUROS | ||||||||
|---|---|---|---|---|---|---|---|---|
| SSI consolidated income statement | 4Q12 | 4Q13 | ∆ 13/12 | 3TQ13 | q.o.q | 2012 | 2013 | ∆ 13/12 |
| Turnover | 26.9 | 25.8 | (4.1%) | 28.2 | (8.7%) | 103.8 | 109.6 | 5.5% |
| Service Revenues | 21.8 | 20.2 | (7.4%) | 21.4 | (5.8%) | 81.3 | 86.9 | 6.9% |
| Equipment Sales | 5.0 | 5.6 | 10.2% | 6.8 | (18.0%) | 22.6 | 22.7 | 0.5% |
| Other Revenues | 0.7 | 0.8 | 20.6% | 1.4 | (43.4%) | 1.5 | 2.7 | 82.1% |
| Operating Costs | 22.7 | 21.9 | (3.5%) | 26.0 | (15.7%) | 93.3 | 97.3 | 4.3% |
| Personnel Costs | 6.9 | 8.1 | 17.1% | 8.9 | (9.3%) | 30.7 | 34.5 | 12.3% |
| Commercial Costs(1) | 5.1 | 5.3 | 2.3% | 7.1 | (25.8%) | 23.7 | 23.1 | (2.7%) |
| Other Operating Costs(2) | 10.7 | 9.3 | (13.0%) | 10.0 | (7.3%) | 38.8 | 40.4 | 4.0% |
| EBITDA | 4.8 | 4.0 | (17.9%) | 3.6 | 8.6% | 12.0 | 14.4 | 19.2% |
| EBITDA Margin (%) | 18.0% | 15.4% | (2.6pp) | 12.9% | 2.5pp | 11.6% | 13.1% | 1.5pp |
| Operating CAPEX(3) | 3.2 | 2.8 | (12.7%) | 1.3 | 120.2% | 4.9 | 6.9 | - |
| Operating CAPEX as % of Turnover | 11.9% | 10.9% | (1.1pp) | 4.5% | 6.4pp | 4.7% | 6.3% | 1.5pp |
| EBITDA - Operating CAPEX | 1.6 | 1.2 | (28.3%) | 2.4 | (51.0%) | 7.2 | 7.5 | 4.9% |
| Total CAPEX | 3.2 | 2.8 | (12.8%) | 1.3 | 120.1% | 14.9 | 7.3 | (51.3%) |
(1) Commercial Costs = COGS + Mktg & Sales;
(2) Other Operating Costs = Outsourcing Services + G&A+ Provisions + others;
(3) Operating CAPEX excludes Financial Investments.
Turnover continued to benefit from the international expansion of SSI companies, growing 5.5% in 2013 to 109.6 million euros, driven by the very positive performance of service revenues, which increased from 81.3 million euros to 86.9 million euros, a growth of 6.9% y.o.y.. The evolution of equipment sales was relatively stable, increasing 0.5% compared to 2012, a clear recovery when compared with last quarters' performances.
Operating costs increased 4.3% versus 2012 to 97.3 million euros, impacted by higher personnel and other operating costs. Personnel costs increased 12.3% to 34.5 million euros, driven by headcount growth, especially at WeDo Technologies, designed to support increased activity levels across the subsidiaries. Other operating costs increased 4.0% y.o.y. to 40.4 million euros, impacted mostly by the higher outsourcing costs, aligned with the increased level of international activity.
Commercial costs stood at 23.1 million euros, 2.7% below 2012, impacted by the lower cost of goods.
EBITDA continued its positive trend fuelled by the growth of service revenues, which more than offset the higher operating costs. Between 2012 and 2013, SSI EBITDA increased 19.2%, reaching 14.4 million euros.
Benefiting from the increased volume of service revenues in the total turnover, the EBITDA margin was 13.1%, 1.5pp above 2012.
As a result of EBITDA and operating CAPEX performances, EBITDA-operating CAPEX stood at 7.5 million euros, improving 4.9% compared to 7.2 million euros in 2012.
Sonaecom SGPS's individual results for the years ended 31 December 2013 and 2012 are summarised as follows:
| MILLION EUROS | 2012 | 2013 | ∆ | % |
|---|---|---|---|---|
| Service Revenues | 3.5 | 2.6 | (0.9) | (24.7%) |
| Operating Costs (1) | (4.3) | (4.5) | (0.1) | 3.3% |
| EBITDA | (0.9) | (1.8) | (1.0) | 110.9% |
| EBIT | (0.9) | (1.9) | (1.0) | 102.4% |
| Dividend Received | 129.5 | 24.7 | (104.8) | - |
| Net Financial Activity | 1.2 | 13.6 | 12.4 | - |
| Other Financial Results | (26.6) | (120.7) | (94.1) | 354.4% |
| EBT | 103.1 | (89.1) | (192.2) | (186.4%) |
| Net Income | 103.2 | (90.6) | (193.8) | (187.7%) |
(1) Excluding depreciation, amortisation and provisions.
On 31 December 2013, Sonaecom SGPS's Executive Board of Directors was composed of four directors. The number of directors did not change compared to 2012. For additional information, please refer to Section 4 − Sonaecom management.
This line totalled 2.6 million euros, which compares to 3.5 million in 2012. It essentially comprises management services provided to its subsidiaries. The decrease was driven by the reduction of services rendered to Optimus, SGPS, S.A. after the merger with Zon (occurred on August 27th).
Total operating costs exclude depreciation, amortisation charges and provisions. This line amounted to 4.5 million euros, which compares with 4.3 million euros in 2012.
EBITDA was negative 1.8 million euros (negative 0.9 million euros in 2012) and the decrease versus last year was mainly driven by the lower level of service revenues.
In 2013, Sonaecom SGPS, SA only received dividends from Optimus, SGPS, S.A. in the amount of 24.7 million euros.
The net financial activity (interest income less interest expenses) was positive by 13.6 million euros, significantly above 2012 (1.2 million euros) due to the lower level of financing after the merger, the shareholder loans reimbursement from Optimus SGPS, S.A. and due to the interests related to loans granted to Zopt, SGPS, S.A..
Other financial results were a negative 120.7 million euros, almost entirely driven by impairment recognition on Optimus financial investments (167.2 million euros), partially compensated by the positive 46.6 million euros of market value adjustments related to the 7.28% stake on ZON OPTIMUS SGPS, S.A. (shares recorded at fair value through profit and loss).
Net results for the year were negative by 90.6 million euros, mainly driven by the impairment recorded at Optimus, SGPS, S.A..
The following table summarises the major cash movements during 2013:
| CHANGES IN SONAECOM SGPS LIQUIDITY | MILLION EUROS |
|---|---|
| Sonaecom SGPS stand-alone liquidity as at 31 December 2012 | 103.7 |
| Cash and Bank | 0.0 |
| Treasury Applications | 103.7 |
| Bank | 5.0 |
| Subsidiaries | 98.7 |
| Changes in Nominal Gross Debt | (335.5) |
| External Debt | (350.8) |
| Treasury applications from subsidiaries | 15.4 |
| Shareholder Loans granted (*) | (313.4) |
| Dividend paid | (43.3) |
| Free Cash Flow | 147.6 |
| Interest paid | (10.3) |
| Interest received | 23.0 |
| Own shares acquisition | (2.5) |
| Disposals of Investments (net of acquisitions) | 113.5 |
| Dividend received | 24.7 |
| Operational Free Cash Flow and others | (0.8) |
| Sonaecom SGPS stand-alone liquidity as at 31 December 2013 | 185.9 |
| Cash and Bank | 26.3 |
| Treasury Applications | 159.7 |
| Bank | 156.5 |
| Subsidiaries | 3.2 |
* Net of transfers to Supplementary Capital.
During 2013, Sonaecom's stand-alone liquidity increased 82.2 million euros to 185.9 million euros due to the following movements:
At the end of December 2013, Sonaecom SGPS's net debt was negative by 144.3 million euros, comprising:
Sonaecom shares have been listed on the Portuguese Stock Exchange – Euronext Lisbon – since June 2000, with the symbol SNC. The table below lists the key statistics relating to Sonaecom's 2013 stock performance.
| STOCK MARKET | EURONEXT LISBON |
|---|---|
| Ticker | SNC |
| ISIN | PTSNC0AM0006 |
| Bloomberg code | SNC PL Equity |
| Reuters code | SNC.LS |
| Number of shares outstanding | 366,246,868 |
| Share capital | 366,246,868 |
| Stock price as of last day December (euros) | 2.569 |
| Stock price – High (euros) | 2.600 |
| Stock price – Low (euros) | 1.450 |
| Average daily volume – 2013 (# shares) | 531,197 |
| Average daily volume – 2012 (# shares) | 247,056 |
| Market capitalisation as of last day December (euros) | 940,888,204 |
GRAPH 1 – Sonaecom's performance vs PSI 20 and DJ Euro Stoxx Telecoms in 2013
As far as the Portuguese market is concerned, PSI 20, the principal local stock index, ended 2013 at 6,558.85 points, an increase of 16,0% versus year-end 2012. This positive performance reflects the fact that the majority of PSI 20 companies recorded significant positive growth. To be more precise, 14 out of the index's 20 companies ended 2012 showing positive growth.
During 2013, the PSI 20's index equity turnover stood at approximately 27.9 billion euros compared to 19.8 billion euros in 2012, an increase of 40.9%. This increase was driven by a combination of the companies' positive growth coupled with improved liquidity. Sonaecom's equity turnover almost doubled in the same period.
DJ Euro Stoxx Telecoms, the European Stock Telecommunications index, ended 2013 with an annual increase of approximately 20.9%. This strong performance was driven by positive growth among more than half the companies that make up the index.
In 2013, Sonaecom's market share price increased 73.5% compared to 2012.
Sonaecom shares would have been influenced by various milestones during the year, as follows:
At the end of 2013, Sonaecom's shares had a market price of 2.569 euros per share, 73.5% above the closing price of 1.481 euros per share at 31 December 2012. The share price reached a maximum of 2.600 euros per share on 3 December 2013 and a minimum of 1.450 euros on 15 January 2013.
As for the wider Portuguese telecoms industry, Portugal Telecom registered the worst performance of the three players, ending 2013 with a 15.7% decline in the value of its shares. By contrast, ZON OPTIMUS's share price ended 2013 up 81.8%.
The year of 2013 was marked by the merger between Optimus and Zon, a process that had already started in 2012 with an agreement between Sonaecom, Kento Holding Limited and Jadeium BV, the two companies owned by Eng.ª Isabel dos Santos, recommending to the Boards of Zon and Optimus the merger of the two companies, based on the incorporation of Optimus into Zon.
The final decision on the merger was given by the Portuguese Competition Authority on 27 August 2013, stating . The creation of ZON OPTIMUS, SGPS, S.A. (ZON OPTIMUS), the merged company, has left an indelible mark on Sonaecom and on the telecommunications sector in Portugal.
Given the significant impact of the merger on Sonaecom's portfolio, the Board of Directors decided on 29 October 2013 to launch a tender offer to acquire own shares in exchange for ZON OPTIMUS shares held by Sonaecom outside the control structure. Sonaecom's shareholders were given the option to sell their shares on equal terms, a move that enabled Sonaecom shareholders to have direct exposure to ZON OPTIMUS. Sonaecom offered an overall price equivalent to 2.45 euros per Sonaecom share, to be composed of ZON OPTIMUS shares and, where applicable, a remaining cash amount. To determine the Sonaecom/ZON Optimus share trade ratio, the ZON OPTIMUS share price was set at 5.08 euros. Following this announcement, Sonaecom and ZON OPTI-MUS posted very similar trends, as indicated in Graph 2.
Sonaecom's market capitalisation stood at approximately 941 million euros at the end of 2013. The average daily trading volume reached approximately 531 thousand shares, an increase of 115.0% compared to 2012 (247 thousand shares).
GRAPH 2 – Portuguese telecoms market performance in 2013
In accordance with the Portuguese Securities Code, shareholdings amounting to or exceeding the thresholds of 2%, 5%, 10%, 15%, 20%, 25%, 33.33%, 50%, 66.67% and 90% of the total share capital must be reported to the Portuguese Securities Market Commission and disclosed to the capital market. Reporting is also required if the shareholdings fall below the same percentages.
| SHAREHOLDER | NUMBER OF SHARES HELD | % SHAREHOLDING AS AT 31 DEC. 2013 |
|---|---|---|
| Sonae - SGPS, S.A. | 270,742,493 | 73.92% |
| Goldman Sachs | 7,780,349 | 2.12% |
| Own shares | 5,571,014 | 1.52% |
| Free Float | 82,153,012 | 22.43% |
Sonae SGPS is Sonaecom's largest shareholder. This Portuguese multinational group, with interests in retail, shopping centres and insurance, holds a total shareholding of approximately 73.92%, following the acquisition of France Télécom's 20% stake in Sonaecom on 9 September 2013.
On 23 October 2013, Goldman Sachs Inc. informed Sonaecom about the completion, on 18 October, of a qualifying holding of 2.12% in Sonaecom's capital, corresponding to 7,780,349 shares and voting rights.
At 31 December 2013, the free float stood at approximately 22.43%, compared to 21.48% at the end of 2012. The free float is the percentage of shares not held or controlled by shareholders with qualified holdings and excluding own shares.
During 2013, there was no change in the number of shares issued by Sonaecom.
During 2013, Sonaecom acquired own shares in the stock market between 20 March and 8 April 2013. It purchased a total of 1,500,000 own shares through the Euronext Lisbon Stock Exchange, at a weighted average price of 1.661 euros per share. This represented approximately 0.41% of Sonaecom's share capital. The shareholders' Annual General Meeting granted the authorisations, which were designed to fulfil the obligations arising from the employees' Medium Term Incentive Plan (MTIP).
As a result of these purchases and the delivery of shares to employees under the terms of the MTIP, Sonaecom held 5,571,014 own shares at the end of 2013. This represented approximately 1.52% of its share capital.
The company's current governing bodies were elected for a four-year mandate (2012-2015) at the annual Shareholders' General Meeting held on 27 April 2012. Accordingly, at year-end 2013, Sonaecom had four Executive Directors and six Non-Executive Directors.
| NON-EXECUTIVE (2) | |||||
|---|---|---|---|---|---|
| EXECUTIVE (1) | INDEPENDENT (3) | NON- -INDEPENDENT |
AUDIT AND FINANCE COMMITTEE |
NOMINATIONS AND REMUNERATIONS COMMITTEE |
|
| Chairman Duarte Paulo Teixeira de Azevedo |
|||||
| Directors António Sampaio e Mello David Charles Denholm Hobley Franck Emmanuel Dangeard Gervais Gilles Pellissier Jean-François René Pontal Ângelo Gabriel Ribeirinho S. Paupério (CEO) Miguel Nuno Santos Almeida Maria Cláudia Teixeira de Azevedo António Bernardo Aranha da Gama Lobo Xavier |
(1) Executive Directors are members of the Board of Directors and Executive Committee with executive management responsibilities
(2) Non-Executive Directors are members of the Board of Directors without executive management responsibilities
(3) Independent Non-Executive Directors are Directors not associated with any specific interest groups in the company or groups that are capable of affecting their objectivity under any circumstance
The Board of Directors is responsible for managing the company's business, monitoring risks, managing conflicts of interest and developing the organisation's goals and strategy. Sonaecom's articles of association allow the Board to delegate the day-to-day company business, duties and responsibilities to an Executive Committee, as considered appropriate. The Board of Directors also has two specialised committees: the Board Audit and Finance Committee (BAFC) and the Board Nomination and Remuneration Committee (BNRC). It is worth noting that the BAFC comprises solely non-executive members. The BAFC met periodically during 2013 and exercised an important influence over the decision-making process and the development of strategy and policy. The BAFC did not encounter any restraints in the performance of its duties.
The main role of the Board of Directors is to supervise the management of Sonaecom's businesses, monitor risks and help develop the group's goals and strategy. It is also responsible for the remuneration and other compensation policies of the group's employees.
The qualifications and professional experience of members of the Board of Directors are detailed in 4.2 below.
Chairman
Paulo Teixeira de Azevedo
Executive Directors
Angelo Paupério (CEO)
Miguel Almeida Cláudia Teixeira
Gervais Gilles Pellissier
António Sampaio e Mello
David Hobley Jean-François
Pontal
Frank E. Dangeard
According to CMVM, the Portuguese Securities Commission, regulation no. 10/2005, there are no circumstances that may affect the Independent Non-Executive Directors' analysis or decision-making capabilities. These Directors, and the other Non-Executive Directors, exercise an important influence over the decision making-process and the development of company strategy and policy. Sonaecom's Board of Directors exhibits a healthy balance between the total number of Non-Executive Directors and the number of Independent Non-Executive Directors.
The Board of Directors formally delegates powers to Sonaecom's Executive Committee to manage and execute Sonaecom's dayto-day operations.
The roles and responsibilities of the Executive Management Team are detailed in the table below:
| ÂNGELO PAUPÉRIO | MIGUEL ALMEIDA | CLÁUDIA AZEVEDO | ANTÓNIO LOBO XAVIER |
|---|---|---|---|
| CEO | Deputy CEO | CEO SSI CEO Online & Media |
Executive Director |
Date of birth: 31 December 1965
Academic qualifications: Degree in Chemical Engineering from the École Politechnique Federal de Lausanne; MBA from Porto Business School.
Professional experience: CEO of Sonae - SGPS, S.A.; Member of the Board of Directors of Efanor Investimentos, SGPS, S.A.; Chairman of the Board of Directors of Sonae Investimentos, SGPS, S.A., Sonae Sierra, SGPS, S.A. and MDS, SGPS, S.A.; Board Director of Sonae Indústria, Member of the Board of Directores of ZOPT, SGPS, S.A. and Member of the Board of Directores of ZON OPTIMUS, SGPS, S.A..
Board member of Associação Portuguesa de Gestão e Engenharia Industrial (APGEI); Member of Board of Trustees of Associação Empresarial de Portugal (AEP); Director at COTEC – Associação Empresarial para a Inovação; Member of European Round Table of Industrialists (ERT) and Member of the Advisory Board of Allianz SE.
Previously: CEO of Sonaecom, SGPS, S.A.; CEO of Optimus - Telecomunicações, S.A.; Executive Board Director of Modelo Continente Hipermercados, S.A.; Planning and Strategic Control Director of Sonae – SGPS, S.A.; Organisational Development Director at Sonae – SGPS, S.A.; Project Manager at Sonae Industria, SGPS, S.A.; Analyst and Manager of New Investment Projects at Sonae Tecnologias de Informação.
Responsibilities at Sonaecom: Chairman of the Board of Directors of Sonaecom; Chairman of the Board Nominations and Remunerations Committee; Chairman of the Non-Executive Director Committee.
Date of birth: 14 September 1959
Academic qualifications: Degree in Civil Engineering at Porto University; MBA from Porto Business School.
Professional experience: Executive Vice-President of Sonae, SGPS, Board Director of Sonae Investimentos, SGPS, S.A., MDS, SGPS, S.A. and Sonae Sierra, SGPS; Vice President of Sonae MC – Modelo Continente, SGPS, S.A., Sonae – Specialised Retail, S.A. and Sonaerp – Retailed Properties , S.A..
Invited lecturer at Porto Business School.
Board Member of Universidade Católica Portuguesa; Member of the Supreme Council of Porto Business School and Chairman of APGEI Board
Previously: CEO of Sonae Capital, SGPS, S.A., CEO of Sonae Turismo, SGPS, S.A. and Board Director of Modelo Continente, SGPS, S.A..
Responsibilities at Sonaecom: CEO of Sonaecom, Chairman of Board of Directors of Público – Comunicação Social, S.A. and Sonaecom - Sistemas de Informação, SGPS, S.A.; Non-Executive Board Member of ZON OPTIMUS, SGPS, S.A..
Date of birth: 15 March 1967
Academic qualifications: Degree in Mechanical Engineering from the Faculty of Engineering of Porto University; MBA from the INSEAD.
Professional experience: Executive Director of Optimus - Comunicações, S.A..
Previously: Marketing Director of Modelo Continente, SGPS, S.A..
Responsibilities at Sonaecom: Member of the Board and Executive Director of Sonaecom, SGPS, S.A.; CEO of ZON OPTIMUS, SGPS, S.A.; Chairman of the Board of Directors of Be Artis – Concepção, Construção e Gestão de Redes de Comunicações, S.A.; Be Towering – Gestão de Torres de Telecomunicações, S.A. and Per-Mar, Sociedade de Construções, S.A.; Director of Sontária – Empreendimentos Imobiliários, S.A.; CEO of ZON OPTIMUS, SGPS, S.A..
Date of birth: 13 January 1970
Academic qualifications: Degree in Business Studies from the Universidade Católica do Porto; MBA from INSEAD (Fontainebleu).
Professional experience: Member of the Board of Directors of Efanor Investimentos, SGPS, S.A.; Chairman of the Board of Directors of Efanor – Serviços de Apoio à Gestão, S.A., Member of the Board of Directores of ZOPT, SGPS, S.A. and Member of the Board of Directores of ZON OPTIMUS, SGPS, S.A..
Previously: Executive Director of Sonae Matrix Multimedia residential unit and Marketing Director of Optimus.
Responsibilities at Sonaecom: Executive Director of Sonaecom, SGPS, S.A.; Executive Director of Sonaecom Sistemas de Informação; Non-Executive Director of ZON OPTIMUS, SGPS, S.A..
Date of birth: 16 October 1959
Academic qualifications: Degree in Law and Master in Economics Law, both from the University of Coimbra.
Professional experience: Partner and Member of the Board of MLGTS; Non Executive member of the Board of BPI, SGPS, Riopele S.A. and Mota-Engil SGPS, S.A..
Responsibilities at Sonaecom: Executive Director of Sonaecom, SGPS,S.A.; Member of the Board of Directors of Público – Comunicação Social, S.A. and Sonaecom – Sistemas de Informação, SGPS, S.A.; Non-Executive Director of ZON OPTIMUS, SGPS, S.A..
Date of birth: 29 January 1955
Academic qualifications: PhD in Economics, London Business School; MBA, Columbia University; Master In Economics, Columbia University; B.Sc in Engineering, Universidade Técnica de Lisboa.
Professional experience: Professor of Finance at the University of Wisconsin-Madison; Trustee Nakoma Funds, Managing Director of RiverRock Investors; Managing Director of Bank Robert Baird; Head of Corporate Finance of Banco Comercial Português; Head of Economic Research and Statistics Department of the Central Bank of Portugal; Managing Director of Finpro, SGPS.
Previously: President of the European Financial Management Association; Board member of the US Financial Management Association; Professor at MIT; President of the Social Sciences and Humanities Commission at the Junta Nacional de Investigação Científica e Tecnológica.
Responsibilities at Sonaecom: Independent Non-Executive Director of Sonaecom; Member of the Board Audit and Finance Committee.
Date of birth: 9 December 1946
Academic qualifications: Fellow of the Institute of Chartered Accountants of England and Wales.
Professional experience: Former Managing Director of Deutsche Bank AG, London.
Previously: Director of certain Orange Group companies.
Responsibilities at Sonaecom: Non-Executive Director of Sonaecom; Member of the Board Audit and Finance Committee.
Date of birth: 14 May 1959
Academic qualifications: Degree in Business Law (Université Paris XI); graduate of HEC (International Management – joint programme with Berkeley University and the University of Cologne).
Professional experience: France Télécom – Orange; Chief Executive Officer Delegate.
Previously: Supervisor of operational and geographic integration of France Télécom's businesses in Spain and Vice-Chairman of the Board of Bull (2004-2005).
Responsibilities at Sonaecom: Non-Executive Director of Sonaecom.
Date of birth: 25 February 1958
Academic qualifications: Graduate of École des Hautes Études Commerciales; Institut d'Études Politiques de Paris (Lauréat) and Harvard Law School (Fulbright Scholar, HLS Fellow).
Professional experience: Managing Partner of Harcourt; Chairman and CEO of Thomson; Deputy CEO of France Télécom; Managing Director of SBC Warburg; Chairman of SBC Warburg France. Responsibilities at Sonaecom: Independent Non-Executive Director of Sonaecom; Member of the Board Nominations and Remunerations Committee.
Date of birth: 17 April 1943
Academic qualifications: Degree in Engineering from Centre d'Études Supérieures des Techniques Industrielles, France.
Professional experience: CEO of the Spanish arm of Carrefour – PRYCA; Member of the Board of Directors of Carrefour; Group Executive Vice-President in charge of Mass Market Products & Services of France Télécom; CEO of Orange.
Responsibilities at Sonaecom: Independent Non-Executive Director of Sonaecom; Chairman of the Board Audit and Finance Committee; member of the Board Nominations and Remunerations Committee.
is a shareholder: Does not hold any office in any company in which Sonaecom is a shareholder.
Efanor Investimentos, SGPS, S.A. (Member of the Board of Directors) Imparfin, SGPS, S.A. (Member of the Board of Directors) MDS, SGPS, S.A. (Chairman of the Board of Directors) Migracom, SGPS, S.A. (Chairman of the Board of Directors) Sonaegest, Sociedade Gestora de Fundos de Investimentos, S.A. (Chairman of the Board of Directors) Sonae Indústria, SGPS, S.A. (Member of the Board of Directors) Sonae Investimentos, SGPS, S.A. (Chairman of the Board of Directors) Sonae MC – Modelo Continente, SGPS, S.A. (Chairman of the Board of Directors) Sonaerp – Retail Properties, S.A. (Chairman of the Board of Directors) Sonae - SGPS, S.A. (Member of the Board of Directors, CEO) Sonae Sierra, SGPS, S.A. (Chairman of the Board of Directors) Sonae – Specialized Retail, SGPS, S.A. (Chairman of the Board of Directors)
PCJ – Público, Comunicação e Jornalismo, S.A. (Chairman of the Board of Directors) Público – Comunicação Social, S.A. (Chairman of the Board of Directors) Sonaecom – Serviços Partilhados, S.A. (Chairman of the Board of Directors) Sonae com – Sistemas de Informação, SGPS, S.A. (Chairman of the Board of Directors) WeDo Consulting, Sistemas de Informação, S.A. (Chairman of the Board of Directors)
ZON OPTIMUS, SGPS, S.A. (Member of the Board of Directors) ZOPT, SGPS, S.A. (Member of the Board of Directors)
Enxomil, SGPS, S.A. (Managing Director) Enxomil – Sociedade Imobiliária, S.A. (Managing Director) Love Letters – Galeria de Arte, S.A. (Member of the Board of Directors) MDS, SGPS, S.A. (Member of the Board of Directors) MDS AUTO, Mediação de Seguros, S.A. (President of the Board of Directors) Sonae Center Serviços II, S.A. (Member of the Board of Directors) Sonaegest – Sociedade Gestora de Fundos de Investimento, S.A. (President of the Board of Directors) Sonae Investimentos, SGPS, S.A (Member of the Board of Directors) Sonae Investments, B.V. (Managing Director) Sonae MC – Modelo Continente, SGPS, S.A. (Vice-President of the Board of Directors) Sonae RE, S.A. (Member of the Board of Directors) Sonaerp – Retail Properties, S.A. (Member of the Board of Directors) Sonae - SGPS, S.A. (Member of the Board of Directors) Sonae Sierra, SGPS, S.A. (Member of the Board of Directors) Sonae – Specialized Retail, SGPS, S.A. (Member of the Board of Directors) Sontel B.V. (Managing Director)
Offices held in companies in which Sonaecom is a shareholder: Cape Technologies Limited (Ireland) (Member of the Board of Directors) Digitmarket – Sistemas de Informação, S.A. (Chairman of the Board of Directors) Lugares Virtuais, S.A. (Chairman of the Board of Directors) Mainroad – Serviços de Tecnologias de Informação, S.A. (Chairman of the Board of Directors)
Miauger – Organização e Gestão de Leilões Electrónicos, S.A. (Chairman of the Board of Directors) PCJ – Público, Comunicação, e Jornalismo, S.A. (Member of the Board of Directors) Praesidium Services Limited (Member of the Board of Directors) Público - Comunicação Social, S.A. (Member of the Board of Directors) Saphety Level – Trusted Services, S.A. (Chairman of the Board of Directors) Sonaecom Sistemas de Informação, SGPS, S.A. (Member of the Board of Directors) Sonaecom – Serviços Partilhados, S.A. (Member of the Board of Directors) Sonaecom – Sistemas de Información Espana, S.L. (Director) WeDo Consulting, Sistemas de Informação, S.A. (Member of the Board of Directors) WeDo Technologies Mexico, S. De R.L. De C.V. (Director) WeDo Technologies Egypt (Director) WeDo Poland Sp. Z.o.o. (Director) WeDo Technologies Americas Inc. (Chairman of the Board of Directors) WeDo Technologies Australia PTY Limited (Member of the Board of Directors) WeDo Technologies Panama, S.A. (Chairman of the Board of Directors) WeDo Technologies (UK) Limited (Member of the Board of Directors) ZON OPTIMUS, SGPS, S.A. (Member of the Board of Directors) ZOPT, SGPS, S.A. (Member of the Board of Directors)
Contacto Concessões, SGPS, S.A. (Member of the Board of Directors) Ecociclo II – Energias, S.A. (Member of the Board of Directors) Efanor – Serviços de Apoio à Gestão, S.A. (Chairman of the Board of Directors) Efanor Investimentos SGPS, S.A. (Membro do Conselho de Administração) Fundação Belmiro de Azevedo (Member of the Board of Directors) Imoareia – Investimentos Turísticos, SGPS, S.A. (Chairman of the Board of Directors) Integrum Colombo – Energia, S.A. (Member of the Board of Directors)
Integrum – Energia, S.A. (Member of the Board of Directors) Integrum Martim Longo – Energia, S.A. (Member of the Board of Directors) Integrum Vale do Caima – Energia, S.A. (Member of the Board of Directors) Integrum Vale do Tejo – Energia, S.A. (Member of the Board of Directors) Imparfin, SGPS, S.A. (Chairman of the Board of Directors) Linhacom, SGPS, S.A. (Chairman of the Board of Directors) SC – Engenharia e Promoção Imobiliária, SGPS, S.A. (Member of the Board of Directors) SC, SGPS, S.A. (Member of the Board of Directors) Sistavac, SGPS, S.A. (Member of the Board of Directors) Sistavac, S.A. (Member of the Board of Directors) Sonae Capital, SGPS, S.A. (Chairman of the Board of Directors) Sonae Turismo – SGPS, S.A. (Chairman of the Board of Directors) Spred, SGPS, S.A. (Member of the Board of Directors)
PCJ – Público, Comunicação e Jornalismo, S.A. (Member of the Board of Directors) Público - Comunicação Social, S.A. (Member of the Board of Directors) Sonae com – Sistemas de Informação, SGPS, S.A. (Member of the Board of Directors) Sonaecom – Serviços Partilhados, S.A. (Member of the Board of Directors) ZON OPTIMUS, SGPS, S.A. (Member of the Board of Directors)
BPI, SGPS, S.A. (Member of the Board of Directors) Douro Old Chaps, SGPS, S.A. (Chairman of the Board of Directors) Lemos & Van Zeller, Lda (Director) MLGTS & Associados, Sociedade de Advogados (Partner and Member of the Board of Directors)
Mota-Engil, SGPS, S.A. (Member of the Board of Directors) Riopele, S.A. (Member of the Board of Directors) Têxtil Manuel Gonçalves, S.A. (Chairman of the Board of the General Meeting) Vallis Capital Partners (Member of the Board of Directors)
Offices held in companies in which Sonaecom is a shareholder: Be Artis, Concepção, Construção e Gestão de Redes de Comunicações, S.A. (Chairman of the Board of Directors) Be Towering – Gestão de Torres de Telecomunicações, S.A. (Chairman of the Board of Directors) Optimus Comunicações, S.A. (Member of the Board of Directors, CEO) Per-Mar, Sociedade de Construções, S.A. (Chairman of the Board of Directors) Sontária – Empreendimentos Imobiliários, S.A. (Chairman of the Board of Directors) ZON OPTIMUS, SGPS, S.A. (Member of the Board of Directors, CEO) ZON TV CABO PORTUGAL, S.A. (Chairman of the Board of Directors)
Other offices held: Does not hold any office in any other company.
Offices held in companies in which Sonaecom is a shareholder: Does not hold any office in any company in which Sonaecom is a shareholder.
Other offices held: Does not hold other offices
Does not hold any office in any company of which Sonaecom is a shareholder.
Other offices held: Incadea PLC (Member of the Board of Directors) Velti plc (Member of the Board of Directors) Westgate Nominees Hall Limited (Member of the Board of Directors)
is a shareholder: Does not hold any office in any company in which Sonaecom is a shareholder.
Atari (Chairman) Crédit Agricole - Commercial and Investment Bank (Director) Goldbridge Capital Partners (Chairman) Hindustan Power Projects Ltd (Director) Moser Baer India Ltd (Director) Symantec (US) (Director) Telenor (Norway) (Deputy Chairman)
Offices held in companies in which Sonaecom is a shareholder: Does not hold any office in any company in which Sonaecom is a shareholder.
Dailymotion (France) (Director) Everything Everywhere Ltd. (UK) (Director) Iris Capital Management (France) (Deputy Chairman of the Supervisory Board) Medi Telecom (Morocco) (Director) Orange (ex-France Telecom) (Deputy CEO)
Orange Spain (Member of the Board of Directors)
Orange Polksa (Poland) (Member of the Supervisory Board)
Offices held in companies in which Sonaecom is a shareholder: Does not hold any office in any company in which Sonaecom is a shareholder.
Other offices held: Oger Télécom, Dubai (Member of the Board of Directors)
In accordance with article 447 of the Portuguese Company Law and CMVM Regulation no. 05/2008, this table lists the shares held by the Board of Directors and Management and respective transactions during 2013:
| ADDITIONS | REDUCTIONS | BALANCE AT 31 DECEMBER 2013 |
||||
|---|---|---|---|---|---|---|
| Date | Quantity | Market price € | Quantity | Market Price € | Quantity | |
| Duarte Paulo Teixeira de Azevedo | ||||||
| Efanor Investimentos, SGPS, S.A.(1) | 1 | |||||
| Migracom, SGPS, S.A.(3) | 1,969,996 | |||||
| Sonae - SGPS, S.A.(6) | a) 488,530 |
|||||
| Shares attributed under the company's remuneration policy |
25.06.2013 | 28,479 | 0.00 | |||
| Sale | 26.06.2013 | 28,479 | 0.70 | |||
| Shares attributed under the Medium Term Incentive Plan | 04.12.2013 | 485,707 | 0.00 | |||
| Ângelo Gabriel Ribeirinho dos Santos Paupério | ||||||
| Sonae- SGPS, S.A.(6) | 763,150 | |||||
| Shares attributed under the Medium Term Incentive Plan | 08.03.2013 | 178,588 | 0.00 | |||
| Sonaecom, SGPS, S.A.(9) | 552,837 | |||||
| Shares attributed under the Medium Term Incentive Plan | 04.03.2013 | 112,767 | 0.00 | |||
| Miguel Nuno Santos Almeida | ||||||
| Sonae- SGPS, S.A.(6) | 201,543 | |||||
| Shares attributed under the Medium Term Incentive Plan | 08.03.2013 | 74,375 | 0,00 | |||
| Sonaecom, SGPS, S.A.(9) | 185,652 | |||||
| Shares attributed under the Medium Term Incentive Plan | 04.03.2013 | 46,963 | 0.00 | |||
| Maria Cláudia Teixeira de Azevedo | ||||||
| Efanor Investimentos, SGPS, S.A.(1) | 1 | |||||
| Linhacom, SGPS, S.A.(4) | 99,996 | |||||
| Sonae- SGPS, S.A.(6) | 41,127 | |||||
| Shares attributed under the Medium Term Incentive Plan | 08.03.2013 | 41,127 | 0.00 | |||
| Sonaecom, SGPS, S.A.(9) | 40,566 b) |
|||||
| Shares attributed under the Medium Term Incentive Plan | 04.03.2013 | 40,396 | 0.00 | |||
| António Bernardo Aranha da Gama Lobo Xavier | ||||||
| Sonae- SGPS, S.A.(6) | 178,229 | |||||
| Shares attributed under the Medium Term Incentive Plan | 08.03.2013 | 48,152 | 0.00 | |||
| Sonaecom, SGPS, S.A.(9) | 85,900 | |||||
| Shares attributed under the Medium Term Incentive Plan | 04.03.2013 | 47,297 | 0.00 | |||
| Sale | 14.06.2013 | 24,000 | 1.55 |
a) This balance includes 530 shares held by descendants in his charge;
b) This balance includes 170 shares held by spouse.
| ADDITIONS | REDUCTIONS | BALANCE AT 31 DECEMBER 2013 |
||||
|---|---|---|---|---|---|---|
| Date | Quantity | Market price € | Quantity | Market price € | Quantity | |
| David Graham Shenton Bain | ||||||
| Sonae- SGPS, S.A.(6) | 20,000 | |||||
| Sonaecom, SGPS, S.A.(9) | 15,000 | |||||
| Rui José Gonçalves Paiva | ||||||
| Sonaecom, SGPS, S.A.(9) | c) 105,754 |
|||||
| Shares attributed under the company's remuneration policy |
10.05.2013 | 519 | 0.00 | |||
| Pedro Rafael de Sousa Nunes Pedro | ||||||
| Sonae- SGPS, S.A.(6) | 6,625 | |||||
| Ana Cristina Dinis da Silva Fanha Vicente Soares | ||||||
| Sonaecom, SGPS, S.A.(9) | ||||||
| Sale | 09.08.2013 | 30,092 | 1.78 | - | ||
| c) This balance includes 460 shares held by spouse. |
| Date Quantity Market price € Quantity Market price € (1) Efanor Investimentos, SGPS, S.A. Sonae- SGPS, S.A.(6) |
Pareuro, BV (2) | Quantity | ||
|---|---|---|---|---|
| 200,100,000 | ||||
| 5,583,100 | ||||
| Sonaecom, SGPS, S.A.(9) | 1,000 | |||
| (2) Pareuro, BV | ||||
| Sonae- SGPS, S.A.(6) | 849,533,095 | |||
| (3) Migracom, SGPS, S.A. | ||||
| Imparfin, SGPS, S.A.(5) | 150,000 | |||
| Sonae- SGPS, S.A.(6) | 2,936,683 | |||
| Acquisition 26.06.2013 28,479 0.70 |
||||
| Sonaecom, SGPS, S.A.(9) | 387,342 | |||
| (4) Linhacom,SGPS, S.A. | ||||
| Imparfin, SGPS, S.A.(5) | 150,000 | |||
| Sonae- SGPS, S.A.(6) | 439,314 | |||
| Sonaecom, SGPS, S.A.(9) | 120,300 | |||
| (5) Imparfin, SGPS, S.A. | ||||
| Sonae- SGPS, S.A.(6) | 4,105,280 | |||
| (6) Sonae- SGPS, S.A. | ||||
| Sonaecom, SGPS, S.A.(9) | 76,679,374 | |||
| Acquisition 09.09.2013 73,249,374 1.55 |
||||
| Sonae Investments BV (7) | 2,894,000 | |||
| Sontel BV (8) | 32,745 | |||
| (7) Sonae Investments BV | ||||
| Sontel BV (8) | ||||
| Acquisition 18.12.2013 14.900 5.369.13 |
58,555 | |||
| (8) Sontel BV | ||||
| Sonaecom, SGPS, S.A.(9) | 194,063,119 | |||
| (9) Sonaecom, SGPS, S.A. | 5,571,014 | |||
| 04.03.2013 247,423 0.00 |
||||
| Shares attributed under the company's remunera 10.05.2013 1,192 0.18 tion policy |
||||
| 10.05.2013 1,409 0.00 |
||||
| Acquisition mar-12 809,000 1.658 |
||||
| apr-12 691,000 1.677 |
In accordance with article 448 of the Portuguese Company Law:
| NUMBER OF SHARES AS OF 31 DECEMBER 2013 | |
|---|---|
| Efanor Investimentos, SGPS, S.A. (1) | |
| Sonae- SGPS, S.A. | 200,100,000 |
| Pareuro, BV | 5,583,100 |
| Sonaecom, SGPS, S.A. | 1,000 |
| Pareuro, BV | |
| Sonae- SGPS, S.A. | 849,533,095 |
| Sonae- SGPS, S.A. | |
| Sonaecom, SGPS, S.A. | 76,679,374 |
| Sonae Investments BV | 2,894,000 |
| Sontel BV | 32,745 |
| Sonae Investments BV | |
| Sontel BV | 58,555 |
| Sontel BV | |
| Sonaecom, SGPS, S.A. | 194,063,119 |
| The Goldman Sachs Group, Inc. | |
| Sonaecom, SGPS, S.A. | 7,780,349 |
(1) The representative shares of about 99,99% of the share capital and the voting rights of Efanor Investimentos, SGPS, S.A. belong to Belmiro Mendes de Azevedo.
In compliance with sub-paragraph b), no. 1, of article 8 of the CMVM Regulation no. 05/2008, we declare the qualifying holdings as at 31 December 2013:
| % OF VOTING RIGHTS | ||||
|---|---|---|---|---|
| Shareholder | Number of shares |
% of Share capital |
With own shares |
Without own shares |
| Sontel BV | 194,063,119 | 52.99% | 52.99% | 53.81% |
| Sonae- SGPS, S.A. | 76,679,374 | 20.94% | 20.94% | 21.26% |
| Migracom, SGPS, S.A. | 387,342 | 0.11% | 0.11% | 0.11% |
| Ângelo Gabriel Ribeirinho dos Santos Paupério (1),(2) | 552,837 | 0.15% | 0.15% | 0.15% |
| Belmiro Mendes de Azevedo (1),(3) | 75,537 | 0.02% | 0.02% | 0.02% |
| Linhacom, SGPS, S.A. | 120,300 | 0.03% | 0.03% | 0.03% |
| Álvaro Carmona e Costa Portela (1) | 5,000 | 0.00% | 0.00% | 0.00% |
| Efanor Investimentos, SGPS, S.A. | 1,000 | 0.00% | 0.00% | 0.00% |
| Maria Cláudia Teixeira de Azevedo (3) | 40,566 | 0.01% | 0.01% | 0.01% |
| Total attributable (4) | 271,925,075 | 74.25% | 74.25% | 75.39% |
| Goldman Sachs Group, Inc. | 7,780,349 | 2.12% | 2.12% | 2.16% |
| Total attributable | 7,780,349 | 2.12% | 2.12% | 2.16% |
(1) Member of the Board of Directors of Sonae- SGPS, S.A.;
(2) Member of the Board of Directors of Sonae Investments, BV and Sontel BV;
(3) Member of the Board of Directors of Efanor Investimentos, SGPS, S.A.;
(4) The corresponding qualified holding is attributable to Efanor which representative shares of about 99,99% of the share capital and the voting rights of Efanor Investimentos, SGPS, S.A. belong to Belmiro Mendes de Azevedo.
05_SONAECOM GOVERNANCE 49
The company's share capital is 366,246,868 euros, paid up and subscribed in its entirety, divided into 366,246,868 registered ordinary shares with a nominal value of 1 euro each.
All shares representing the capital stock are traded in the Euronext Lisbon regulated market.
There are no restrictions on the transferability or ownership of Sonaecom shares.
As of 31 December 2013, Sonaecom held 5,571,014 own shares, representing 1.52% of its share capital.
There are no agreements signed by Sonaecom that include clauses intended to constitute defensive measures against change in its shareholding control or which would cease in case of change in control of the company after a takeover bid.
Most of Sonaecom's share capital is owned by one single shareholder.
5. System to which the renewal or removal of defensive measures are subject, in particular those which establish the limitation of the number of votes that can be cast or exercised by a single shareholder individually or in agreement with other shareholders No defensive measures were taken.
No shareholders' agreements that have Sonaecom as their subject are known.
See point 4.4 in chapter 4.
8.Number of shares and bonds held by the members of management and supervisory Board, presented in the terms of no. 5 of Art. 447 of the Commercial Companies Code
See point 4.4 in chapter 4.
.
9. Competence of the Board of Directors in capital increases This is a competence that corresponds exclusively to the General Shareholders' Meeting.
Business and transactions with holders of qualified shareholdings are part of the usual activity of Sonaecom subsidiaries and are executed in normal market conditions. The amounts involved correspond mostly to interest and are not significant.
The current term of office of the members of the Board of the General Shareholders' Meeting is 2012 to 2015.
| João Augusto Esmeriz Vieira de Castro | President |
|---|---|
| António Agostinho Cardoso da Conceição Guedes | Secretary |
The company's bylaws do not envisage any limitation on the tallying of the votes or the existence of shares with no voting rights.
This regulation is not included in Sonaecom's bylaws, given that they do not establish any limitation on the number of votes that can be cast by a shareholder or group of shareholders.
As established in the company bylaws, any decisions made by the General Shareholders' Meeting shall be by simple majority, unless otherwise required by law.
This company has a monist governance model, whose administration structure is centralised in the Board of Directors, and the supervisory structure includes a Statutory Audit Board and a Statutory External Auditor.
The Board of Directors is the body in charge of managing the company's business, performing all the administration functions pertaining to the corporate purpose, determining the strategic orientation, and appointing and generally supervising the actions of the Executive Committee and the specialised committees established.
The other two organs are in charge of supervisory tasks.
The members of the Board of Directors are elected, as established by law and the bylaws, in the terms specified in the proposal approved in the General Shareholders' Meeting.
The bylaws establish that, should shareholders representing at least 10% of the share capital vote against the winning proposal for the election of the directors, a director will be elected by the shareholders in said minority, in the same meeting, and the director elected shall automatically replace the person with the lowest number of votes in the winning list, or, in case of an equal number of votes, the person in the last position in the list. One shareholder may not nominate more than one candidate.
Should candidates be nominated by a group of shareholders, the vote shall concern those candidacies as a whole. These regulations shall not apply to the election of a substitute director.
Without prejudice to the foregoing, should shareholders representing at least 19% of the share capital vote against the winning proposal for the election of the directors, a second director will be elected by the shareholders in said minority, in the same meeting, and the director elected shall automatically replace the person with the second lowest number of votes in the winning list, or, in case of an equal number of votes, the person in the penultimate position in the list. To this end, only shareholders or groups of shareholders holding shares representing more than 19% and less than 30% of the company's share capital may nominate candidates.
The Board of Directors of the company or the Appointments and Remuneration Committee designated by the Board shall previously verify objectively whether the candidates nominated in the terms of the previous section are independent and suitable for the position. Only verified persons may be elected pursuant to said statutory regulation. Should the Board of Directors or the Appointments and Remuneration Committee find that the candidates are not independent and/or not suitable for the position and reject their appointment, it shall justify its refusal in a satisfactory manner, in good faith and in writing, within 15 days. In this case, the nominating shareholder or group of shareholders shall be entitled to propose a new candidate to the Board of Directors or the Appointments and Remuneration Committee, and so on.
It is also statutorily established that in case of death, resignation, or hindrance, temporary or definitive, of any director other than a director elected under the minority rule, the Board of Directors shall replace said director through co-optation. This appointment shall be subject to ratification by shareholders in the following General Meeting.
As part of the exercise of the power of co-optation by the Board of Directors, the Appointments and Remuneration Committee, composed exclusively of non-executive directors, shall be in charge of identifying potential candidates for the position of directors who have a suitable profile for performance of those duties.
The definitive lack, for any reason, of a director elected under the aforementioned special rules shall lead to a new election by the General Meeting.
The Board of Directors shall appoint its Chairman.
Pursuant to the Sonaecom bylaws, the Board of Directors may be constituted by three to twelve members, elected in the General Shareholders' Meeting. The Board of Directors' term of office is four years. Its members may be re-elected. The current Board of Directors' term of office is 2012 to 2015. The Board of Directors elects its own Chairman.
| Members | |
|---|---|
| Duarte Paulo Teixeira de Azevedo | Chairman |
| António Sampaio e Mello | Independent non-executive director |
| David Charles Denholm Hobley | Non-executive director * |
| Gervais Gilles Pellisser | Non-executive director |
| Jean-François René Pontal | Independent non-executive director |
| Franck Dangeard | Independent non-executive director |
| Nuno Manuel Moniz Trigoso Jordão (*) | Non-executive director |
| Ângelo Gabriel Ribeirinho dos Santos Paupério | Executive director and CEO |
| António Bernardo Aranha da Gama Lobo Xavier | Executive director |
| Maria Cláudia Teixeira de Azevedo | Executive director and CEO of the SSI and Online & Media divisions |
| Miguel Nuno Santos Almeida | Executive director and Deputy CEO |
The members of the Board of Directors were first elected in the following terms:
| Members | Date first appointed |
End of term of office |
|---|---|---|
| Duarte Paulo Teixeira de Azevedo | 30-04-2004 | 31-12-2015 |
| António Sampaio e Mello | 05-07-2006 | 31-12-2015 |
| David Charles Denholm Hobley | 30-04-2004 | 31-12-2015 |
| Gervais Gilles Pellisser | 05-07-2004 | 31-12-2015 |
| Jean-François René Pontal | 30-04-2004 | 31-12-2015 |
| Franck Dangeard | 02-07-2008 | 31-12-2015 |
| Nuno Manuel Moniz Trigoso Jordão (*) | 16-04-2008 | 31-12-2015 |
| Ângelo Gabriel Ribeirinho dos Santos Paupério | 24-04-2007 | 31-12-2015 |
| António Bernardo Aranha da Gama Lobo Xavier | 23-04-2010 | 31-12-2015 |
| Maria Cláudia Teixeira de Azevedo | 05-04-2006 | 31-12-2015 |
| Miguel Nuno Santos Almeida | 30-04-2004 | 31-12-2015 |
*Left this position on 9 May 2013
| MEMBERS | |
|---|---|
| Duarte Paulo Teixeira de Azevedo | Chairman |
| António Sampaio e Mello | Independent non-executive director |
| David Charles Denholm Hobley | Non-executive director |
| Gervais Gilles Pellisser | Non-executive director |
| Jean-François René Pontal | Independent non-executive director |
| Franck Dangeard | Independent non-executive director |
| Nuno Manuel Moniz Trigoso Jordão | Non-executive director |
| Ângelo Gabriel Ribeirinho dos Santos Paupério | Executive director and CEO |
| António Bernardo Aranha da Gama Lobo Xavier | Executive director |
| Maria Cláudia Teixeira de Azevedo | Executive director and CEO of the SSI and Online & Media divisions |
| Miguel Nuno Santos Almeida | Executive director and Deputy CEO |
*Left this position on 9 May 2013
The non-executive members were appointed on the basis of their reputation in the fields of business, finance, academia and consultancy, in order to reinforce the Board of Directors' competences, particularly regarding the strategy for configuring the business portfolio and the annual financial plan, as well as their review.
The non-executive members of the Board of Directors are regarded as independent following the independence criterion established in point 18.1 of Appendix I to regulation 3/213 of the Securities and Exchange Commission and recommendation II.1.7 of the Securities and Exchange Commission (2013).
The independent non-executive directors have a duty to immediately notify the company of any event during their term of office that gives rise to incompatibilities or loss of independence as required by law.
The Board of Directors reflects a healthy balance between the total number of non-executive directors and the number of independent non-executive directors.
The academic qualifications, experience, and duties of the directors are given in Chapter 4 of this report.
The Chairman of the Board of Directors of the company, Duarte Paulo Teixeira de Azevedo, is the Chairman of the Executive Committee of Sonae – SGPS, S.A., which holds, as of 31 December 2013, a 74% share in Sonaecom, corresponding to 74% of voting rights. The latter has a first-degree collateral family relationship with Maria Cláudia Teixeira de Azevedo, executive member of the Board of Directors of Sonaecom.
The Chairman of the Executive Committee of Sonaecom, Ângelo Ribeirinho dos Santos Paupério, is also a member of the Board of Directors of Sonae – SGPS, S.A., which owns a share in Sonaecom in the terms described above.
21. Distribution of competences among the various corporate bodies, committees, and/or company departments, including information about delegation of competence, in particular regarding delegation of the company's daily management
| SONAECOM, SGPS, S.A. | ||
|---|---|---|
| Shareholders' Remuneration Committee | Board of the Shareholders' General Meeting | Statutory Audit Board |
| Statutory External Auditor | ||
| Board and Corporate Governance Officer | Board of Directors | Company Secretary |
| Board Nomination | Executive Committee | Board Audit |
| and Remuneration Committee | and Finance Committee |
Following below are the main functions and responsibilities of the Sonaecom corporate bodies:
The Board of Directors is responsible for managing the company's business, monitoring risks, handling conflicts of interest, and executing the organisation's objectives and strategy.
Sonaecom's bylaws allow the Board of Directors to delegate powers in an Executive Committee when it comes to everyday business, duties and management responsibilities in the terms deemed suitable (as described in the Executive Committee section). However, they do not allow the Board of Directors to approve capital increases, which shall be decided in the General Shareholders' Meeting.
All the terms of reference for the Board of Directors may be viewed on the company's website (www.sonae.com).
ii) Distribution of competences among the various company departments
The corporate structure is based on the following functional structures:
Main duties:
Main duties:
Main duties:
. Assessing risk exposure and checking the effectiveness of risk management and internal controls through the execution of audits of business processes and information systems;
. Proposing measures to improve controls and monitor the evolution of risk exposure associated with the main audit findings.
Main duties:
Main duties:
. Developing human resources management models and processes in areas such as remuneration and benefit policy; career management; social climate monitoring and development; administrative management and salary processing; staff budgeting and reporting on human resources issues; occupational health, hygiene; and safety management;
. Monitoring legal occupational issues;
Main duties:
The terms of reference of the Board of Directors are available on the company website (www.sonae.com).
The Sonaecom Board of Directors meets at least four times every year, as specified in the bylaws, and whenever the Chair or two members of the Board of Directors call a meeting. Four meetings were held in 2013 with an 83% attendance rate. The non-executive directors also meet separately to discuss and evaluate their independence in performance of their duties, as well as to suggest measures to improve the Board of Directors' procedures in terms of corporate governance. The non-executive directors confirmed in these meetings that there were no restrictions on their activities during 2013.
The Supervisory Board meets at least once every quarter. Five meetings were held in 2013 with a 93% attendance rate.
The Sonaecom Executive Committee usually meets once every two weeks and whenever its Chair or the majority of its members call a meeting. Fifteen meetings of the Executive Committee were held in 2013, with a 98% attendance rate.
The BAFC meets at least five times every year and whenever its Chair or the Board of Directors, Executive Committee, or, exceptionally, the Statutory External Auditor call a meeting. Between meetings, the BAFC analyses projects and monitors activity by means of conference calls among its members. Four meetings were held in 2013, with an 88% attendance rate. In addition, four conference calls were held.
The BNRC meets at least twice every year and whenever its Chair or the Board of Directors see fit. Two meetings of the BNRC were held in 2013, with a 100% attendance rate.
The Shareholders' Remuneration Committee meets at least once a year. Two meetings were held in 2013 with a 100% attendance rate.
The Ethics Committee usually meets once every six months and whenever its Chair or two of its members see fit. One meeting was held in 2013, with a 100% attendance rate.
To establish the variable component of remuneration, an individual evaluation of the Executive Directors' performance is carried out by the Shareholder Remuneration Committee, in co-operation with the BNRC of the Boards of Directors. This evaluation is performed once the company's performance is known.
The short-term variable remuneration is meant to reward the achievement of various targets defined on an annual basis, which are linked to business KPIs and personal KPIs. The target short-term variable remuneration is based on a percentage of the fixed component of the Remuneration Plan, which will range between a minimum and a maximum percentage, depending on the Executive Director's functional group. The business KPIs, which are a significant component of economic/financial indicators, amount to 70% of the short-term variable remuneration and constitute objective indicators. The remaining 30% derives from the individual KPIs, which may combine objective and subjective components. The amounts paid result from real performance and may range between 0% and 148% of the established target short-term variable remuneration.
26. Availability of each of the members of the Board of Directors, specifying the roles held simultaneously in other companies, inside and outside the Group, and other relevant activities performed by the members of these bodies during the business year. The list of roles held by the company directors is given in chapter 4 of this report.
Members of the Board of Directors consistently displayed their availability to perform their duties, attending meetings and taking part in the respective works on a regular basis.
27. Identification of the committees created within the Board of Directors and location of their operating regulations The Board of Directors of the company includes the following committees:
The terms of reference for the Board of Directors committees are available on the company website (www.sonae.com).
| Ângelo Gabriel Ribeirinho dos Santos Paupério | Executive director - CEO |
|---|---|
| Miguel Nuno Santos Almeida | Executive director – Deputy CEO |
| Maria Cláudia Teixeira de Azevedo | CEO SSI and CEO Online & Media |
| António Bernardo Aranha da Gama Lobo Xavier | Executive director |
The Executive Committee may deliberate on matters that relate to general management and not on matters that are exclusively within the powers of the Board of Directors. Powers and the responsibility to manage and carry out Sonaecom's day-to-day operations are delegated to the Executive Committee, except as follows:
(xiii) To purchase or subscribe for new shares in the share capital of any subsidiary companies where the accumulated amount exceeds 5,000,000 euros in any financial year, unless covered by the Group's Annual Budget or Business Plan duly approved by the Board;
(xiv) To invest in any other companies or in other financial assets when the accumulated value is in excess of 1,000,000 euros in any financial year, unless covered by the Group's Annual Budget or Business Plan duly approved by the Board;
The full Terms of Reference of the Executive Committee are available on the company's website (www.sonae.com).
To ensure that the Board of Directors is kept well informed by the Executive Committee, all significant decisions taken by the Executive Committee are systematically extracted from the minutes of their meetings and are reported, in writing, to the Board of Directors.
The BAFC operates under Terms of Reference approved by the Board and is responsible for monitoring and supervising Sonaecom's financial reporting processes, reviewing accounting policies and for evaluating risk associated with its activities on behalf of the Board, and additionally for overseeing Corporate Governance within the company. The BAFC also meets directly with the Group's Statutory External Auditors and the Internal Audit Team. The duties of the BAFC are:
The full Terms of Reference of the BAFC are available on the company's website (www.sonae.com).
Sonaecom's BAFC reports in writing, on a regular basis, to the Board of Directors concerning the work accomplished, results obtained and concerns identified, thus ensuring the effectiveness of the Committee's work.
The BNRC operates under Terms of Reference approved by Sonaecom's Board and is responsible for identifying candidates for appointment to the Board of Directors or Senior Management positions within the Group, for supervising the preparation of proposals on remuneration and other compensation on behalf of the Board of Directors, for the succession planning and for monitoring Sonaecom's talent management and contingency planning processes. The BNRC reports in writing to the Board, whenever necessary, and liaises with Sonaecom's Shareholders' Remuneration Committee ('Comissão de Vencimentos') to obtain their approval, on behalf of shareholders, for the remuneration and other compensation of the Board of Directors and other Statutory Governing Bodies. The BNRC may receive assistance from external entities, which are required to ensure absolute confidentiality in relation to all the information obtained.
The full Terms of Reference of the BNRC:
Note: Under Article 27 of the company Statutes, Sonaecom has a Shareholders Remuneration Committee ("Comissão de Vencimentos") with 2 members, being: Paulo Azevedo (representing Sonae SGPS) and Francisco de La Fuente Sánchez (representing Sontel BV). All remuneration and other compensation proposals involving the Officers of the company ("Orgãos Sociais"), including the Board of Directors, must have the agreement of and be formally approved by this Body on behalf of Sonaecom SGPS shareholders.
The full Terms of Reference of the BNRC are available on the company's website (www.sonae.com).
During 2013, Sonaecom BNRC hired external advisory services in remuneration policy benchmarking and best practices.
The Committee is responsible for approving the remuneration and other compensation of members of Sonaecom's Board of Directors and of its other Statutory Governing Bodies, on behalf of the Shareholders, in accordance with the remuneration and other compensation policies approved by Shareholders at a Shareholders' General Meeting.
The Ethics Committee is responsible for supervising and maintaining the company's Code of Conduct and for monitoring its application and ensuring compliance by all Officers and employees of Sonaecom companies.
The Committee is also responsible for reporting to the company's Board of Directors on compliance with the Code of Conduct, at least once a year, and additionally, whenever requested.
By delegation of the Statutory Audit Board, it is the responsibility of the Ethics Committee to receive, discuss, investigate and assess any alleged irregularities that are reported, in accordance with Sonaecom's 'whistle-blowing' policy. The Committee decides the appropriate measures that should be taken in each case reported.
The full Terms of Reference of the Ethics Committee are available on the company's website (www.sonae.com).
The BCGO reports to the Board of Sonaecom as a whole, through the Chairman, and also, when appropriate, through the senior Independent Non-Executive Director.
In particular, the main duties of the BCGO are:
(vi) Ensuring that the Board is conscious of the concept of stakeholders and the need to protect minority interests, when important business decisions are being taken;
(vii) Helping to ensure that the procedure to nominate and appoint Directors is properly carried out and assist in the induction of new Board Members;
Under the adopted governance model, the Board of Auditors and the Statutory Auditor are the company's supervisory bodies.
In accordance with the Articles of Association, the Board of Auditors may be made up of an odd or even number of members, with a minimum of three and a maximum of five members, elected for four-year terms. The Board of Auditors also includes one or two alternate members, depending on whether the number of members is three or more.
Sonaecom's Board of Auditors was appointed at the Annual General Meeting held on 24 April 2012 for a term relating to the period 2012-2015. The council is made up of the following members:
| Arlindo Dias Duarte Silva | Chairman |
|---|---|
| Armando Luís Vieira de Magalhães | Member |
| Óscar José Alçada da Quinta | Member |
| Jorge Manuel Felizes Morgado | Alternate member |
| MEMBROS | DATE FIRST APPOINTED | END OF TERM OFFICE |
|---|---|---|
| Arlindo Dias Duarte Silva | 02-05-2007 | 31-12-2015 |
| Armando Luís Vieira de Magalhães | 02-05-2007 | 31-12-2015 |
| Óscar José Alçada da Quinta | 02-05-2007 | 31-12-2015 |
| Jorge Manuel Felizes Morgado (Alternate member) | 02-05-2007 | 31-12-2015 |
The Statutory External Auditor for Sonaecom is Deloitte & Associados, SROC, S.A. represented since 2012 by António Manuel Martins Amaral, who may be replaced by João Luís Falua Costa da Silva.
All members of the Statutory Audit Board are independent under the terms of article 414.5, and they are not covered by any incompatibility under the terms of article 414-A (1), both from the Code on Commercial Companies. The Board of Auditors carried out an assessment of the independence of its members by the renewal of written declarations issued individually.
Members of the Board of Auditors must notify the company immediately of any occurrence during the course of their mandates that gives rise to incompatibilities or a loss of independence, as required by law.
Educational qualifications: Degree in Economics, University of Oporto Professional experience: Statutory Auditor, Sole Auditor, and member of the Board of Auditors of various companies Number of Sonaecom shares held: none
Educational qualifications: Degree in Economics, University of Oporto. Executive MBA, European Management, IESF / IFG. Professional experience: Statutory Auditor in various companies Number of Sonaecom shares held: none
Educational qualifications: Degree in Economics, University of Oporto Professional experience: Member of the Institute of Statutory Auditors, Partner in Óscar Quinta, Canedo da Mota & Pires Fernandes, SROC, and member of the Board of Auditors of various companies Number of Sonaecom share held: none
Educational qualifications: Degree in Economics, University of Oporto Professional experience: Statutory Auditor and Member of the Board of Auditors of various Portuguese companies Number of Sonaecom shares held: none
The operating regulations of the Board of Auditors may be viewed on the company website (www.sonae.com).
The annual report and opinions of the Board of Auditors are published during each financial year, together with documents relating to accountability of the Board of Auditors, available at www.sonae.com.
Resolutions of the Statutory Audit Board are passed by majority vote, with dissenting members being required to give their reasons for dissent in the minutes.
The Statutory Audit Board meets at least once a quarter. In 2013, six formal meetings of that body were held, the attendance rate being 100%.
Members of the Statutory Audit Board consistently demonstrated their availability when carrying out their functions, having regularly attended meetings of the body and taken part in the respective work.
Information relating to other posts held by members of the Statutory Audit Board, as well as those members' qualifications and professional experience are available in the curricula vitae given in appendix to this report.
Roles held in companies of the Sonaecom Group: None
Other roles: Sonae SGPS, S.A. (member of the Board of Auditors) Sonae Investimentos, SGPS, S.A. (member of the Board of Auditors) Rochinvest – Investimentos Imobiliários e Turísticos, S.A. (member of the Board of Auditors)
ALADI – Associação Lavrense de Apoio ao Diminuído Intelectual (member of the Board of Auditors) Associação Cultural do Senhor do Padrão (member of the Supervisory Board)
Roles held in companies of the Sonaecom Group: None.
Sonae Capital, SGPS, S.A. (member of the Board of Auditors) Sonae Indústria, SGPS, S.A. (member of the Board of Auditors)
Eça de Queirós Foundation (member of the Board of Auditors) Futebol Clube do Porto – Futebol, S.A.D.; Porto Comercial – Sociedade de Comercialização e Sponsorização, S.A. (member of the Board of Auditors)
Roles held in companies of the Sonaecom Group: None.
BA GLASS I – Serviços de Gestão e Investimentos, S.A. (member of the Board of Auditors) Óscar Quinta, Canedo da Mota & Pires Fernandes, SROC (member of the Board of Auditors) Sonae Investimentos, SGPS, S.A. (member of the Board of Auditors) Caetano-Baviera-Comérico de Automóveis, S.A. (member of the Board of Auditors)
Roles held in companies of the Sonaecom Group: None.
Sonae Capital, SGPS, S.A. (member of the Board of Auditors) Sonae Indústria, SGPS; S.A. (member of the Board of Auditors) Sonae SGPS, S.A. (member of the Board of Auditors) Sonae Sierra, S.A. (member of the Board of Auditors)
The Board of Auditors shall have the authority to approve the provision of services that are additional to the audit services provided by the External Auditor.
To that end, at the first meeting held in each financial year, the Board of Auditors schedules a work plan that includes supervisions of the External Auditor's activity in matters concerning:
In assessing the criteria that underpin the contracting of work additional to that of the External Auditor, the Board of Auditors checks that the following safeguards are in place:
The Statutory Audit Board, while performing its functions, statutory and legally assigned, including the ones set out in Art. 420 of the Commercial Companies Code has the following main duties, among others:
The SAB obtains from the Board of Directors, namely through the Board of Audit and Finance Committee, all the necessary information to carry out its duties, namely relating to the operational and financial progress of the company, changes to its business portfolio, the terms of any transactions that have occurred and the details of the decisions taken.
The SAB is the global supervision body of the company for matters of internal control and risk management, acts in an independent manner and has primacy over other bodies regarding the supervision of those matters.
The full Terms of Reference of the Statutory Audit Board are available on the company's website (www.sonae.com).
The Statutory Auditor for Sonaecom is Deloitte & Associados, SROC, S.A., in 2013 represented by António Manuel Martins Amaral, who may be replaced by João Luís Falua Costa da Silva.
The present structure of the oversight body, which oversees the function of a Supervisory Board and a Statutory Auditor, was adopted by the company at the shareholders' annual general meeting, in accordance with applicable legislation, on 2 May 2007, and Deloitte & Associados, SROC, S.A, was chosen as the Statutory Auditor, serving until the end of the current term.
In 2008, a new term corresponding to the 2008/2011 four-year period began and the Statutory Auditor was re-appointed to the post. In 2012, the proposal for election of Deloitte & Associados, SROC, S.A. to a new term was submitted by the Supervisory Board to the Shareholders' Annual General Meeting, having been supported by the following opinion in which the conditions of independence of the auditor and the advantages and costs of its replacement are weighed:
"To prepare this proposal, the Supervisory Board oversaw an extended selection process that began in 2010, in which various audit companies of recognised national and international competence were invited to take part.
"For this purpose the conditions of eligibility were identified beforehand, which comprised the background of experience and competence of the candidates in the activity sectors in which Sonaecom operates, the competence, sufficiency, and availability of the work team proposed, the methods used, as well as the size of the charges to be defrayed by the company.
"In fiscal year 2011, all the factors in the selection equation were weighed and the Supervisory Board decided to propose to the General Meeting re-appointment to a new term of the current Statutory Auditor, in the company's conviction that its remaining in service neither eliminates nor limits the fitness and independence with which it is serving."
(transcription of the proposal submitted by the Supervisory Board under point 5 on the Agenda for the Annual General Meeting on 27 April 2012).
42. Identification of Statutory External Auditor designated for the purposes of Article 8 and of the partner who represents it in the performance of these duties, as well as the respective registry number at the Portuguese Securities Commission [CMVM – Comissão do Mercado de Valores Mobiliários]
The Sonaecom External Auditor, designated for the purposes of Article 8 of the Marketable Securities Code, is Deloitte & Associados, SROC S.A, recorded under No 231 at the Marketable Securities Commission, represented by António Manuel Martins Amaral.
The External Auditor under the current governance model completed its second term of one and four years respectively in 2011, having been re-appointed to a new term in 2012, based on a proposal from the Supervisory Board. The partner who represents it in the performance of its duties was replaced in 2012.
The Supervisory Board has adopted the recommended principle of not proceeding with the rotation of the External Auditor at the end of two four-year terms in continuous service, if, after a thorough evaluation, it were to have concluded, first, that remaining in service beyond the specified period does not conflict with the necessary independence of the External Auditor and, once this prior requirement has been met, that the cost benefit weighting of its/their replacement makes renewal of the term advisable.
Notwithstanding the analysis leading to the decision that the External Auditor should remain in service beyond the end of two terms, a new Partner was appointed by the External Auditor to represent it in 2012.
Based on the company's governance model, appointment or removal of the Statutory Auditor/External Auditor is decided at the General Shareholders Meeting, based on a proposal from the Supervisory Board.
Furthermore, the Supervisory Board supervises the action of the External Auditor and the performance of its work over each fiscal year; weighs and approves the additional work to be performed by the External Auditor; and undertakes yearly an overall evaluation of the External Auditor, which includes an evaluation of its independence.
46 and 47. Work other than auditing performed by the External Auditor for the company and/or for companies with which it is in a control relationship, as well as reporting on the internal procedures for purposes of approval of the contracting of such services and the reasons for such hiring and the annual remuneration paid by the company and/or by legal entities in a control or group relationship to the Auditor and to other individuals or legal entities belonging to the same network, and break out of the percentages for each service.
| 2013 | 2012 | |||
|---|---|---|---|---|
| Values in € | % | Values in € | % | |
| For the Company* | ||||
| Statutory audit review | 8,001 | 6% | 9,786 | 4% |
| Other services of assurance | 10,000 | 7% | 22,000 | 9% |
| Tax Consultancy | 2,877 | 2% | 30,030 | 12% |
| Other Consultancy | - | - | - | - |
| By entities included in the group | ||||
| Statutory audit review | 102,972 | 75% | 161,913 | 64% |
| Other services of assurance | - | - | 12,000 | 5% |
| Tax Consultancy | 11,870 | 9% | 17,755 | 7% |
| Other Consultancy | 1,250 | 1% | - | - |
| Total | ||||
| Statutory audit review | 110,973 | 81% | 171,699 | 68% |
| Other services of assurance | 10,000 | 7% | 34,000 | 13% |
| Audit services | 120,973 | 88% | 205,699 | 81% |
| Tax Consultancy | 14,747 | 11% | 47,785 | 19% |
| Other Consultancy | 1,250 | 1% | - | - |
| Total | 136,970 | 100% | 253,484 | 100% |
*Includes individual and consolidated accounts.
Note: Sonaecom's risk management policy, overseen by the Supervisory Board in co-ordination with the Audit and Finance Committee, tracks and controls services requested from External Auditors and their network of companies, so their independence is not compromised. The Supervisory Board [Conselho Fiscal – CF] receives and analyses information about fees and services rendered by the Statutory Auditor.
The fees paid by the Sonaecom Group to the Deloitte group represent less than 1% of the total annual billing of Deloitte in Portugal. Furthermore, every year a Letter of Independence [Carta de independência] is prepared, in which Deloitte guarantees compliance with international guidelines in matters of auditor independence.
Amendments to the bylaws follow the terms of the Commercial Companies Code [Código das Sociedades Comerciais], requiring a two-thirds majority of the votes cast for approval..
For the General Meeting to function on first summons, the bylaws require a minimum of 50% of the capital issued to be present or represented at the General Meeting.
Sonaecom has a policy and follows a process for reporting alleged irregularities made by administrators, staff and partners, under which means are defined for responding to all irregularities reported.
The process for reporting irregularities can be summarised as follows:
The Supervisory Board has statutory accountability in this process, specifically to:
The Supervisory Board is supported by the Ethics Committee in the performance of these duties, specifically to:
In this context Sonaecom would like to indicate that:
VIII.The support of the Ethics Committee supplements the Supervisory Board's oversight mechanisms in these matters.
IX. The Ethics Committee comprises trained members with an adequate degree of independence and immunity for the duties assigned to them, so that the performance of their duties takes place without risks of compromising the normal oversight process.
X. The chair of this committee is held by an independent, non-executive member.
50. Individuals, bodies, or committees in charge of internal auditing and/or implementing internal control systems Those in charge and the goals of the key stakeholders in the internal control and risk management systems are indicated below.
Business areas – Each functional department in Sonaecom's business units is, as part of its responsibility for functional processes, accountable for implementing internal controls and for managing the respective specific risks. Moreover, specific risk management teams can be set up for developing given risk management programmes, such as a Risk Committee or a work team. These typically include an individual in charge at executive level, a committee of directors, and a team of prime movers representing the business units.
Planning and control functions – These are functions in Sonaecom's various companies that are accountable for drawing up and monitoring the execution of action plans and annual resources and budgets and forecasts, as well as the processes that lead to their implementation, in the finance and operating areas. They promote and support integration of risk management in the planning and control process of Sonaecom companies.
Risk Management functions – These contribute tools, methodologies, support and know-how to the business areas. They also promote and monitor implementation of programmes and actions intended to align risk levels with the acceptable limits set by management. They promote awareness, measurement, and management of business risks that interfere with the achievement of objectives and with the creation of value for the organisation.
Internal Audit functions – These evaluate exposure to risk and verify the effectiveness of risk management in the internal controls of business processes and information systems. They propose measures to improve controls and monitor evolution of exposure to the risk associated with the principal findings of the audits.
External Auditor – Within the scope of the annual audit process, the Statutory External Auditor analyses the functioning of internal control mechanisms and reports shortcomings identified. It is responsible for auditing the accounts and for issuing a statutory audit certificate and an audit report.
At the corporate level, the company has two specialised functions in risk matters: Risk Management and Internal Audit. Their mission is to contribute to the effective management of Sonaecom's business risks. They support Sonaecom in achieving its objectives, adding value and improving company operations through a systematic and disciplined approach to evaluate and to help improve the effectiveness of risk management, internal controls and the organisation's governance processes.
Risk management activities promote awareness in the organisation of critical business risks, propose risk management policies to the company, and they co-ordinate cross-sectional programmes or projects to implement risk management processes. There can also be risk management functions in the business areas, specifically when the existence of pivots is relevant to some risk management specialties, as is the case, for example, with the management of information security.
Defining the activities of Internal Audit is done in the context of the Internal Audit Letter, approved by the oversight bodies. It comprises assurance activity and independent and objective consulting, governed by the guidelines of the Institute of Internal Auditors (IIA), including the definition of internal auditing, the Code of Ethics, and the International Standards for the Professional Practice of Internal Auditing (IAA Standards).
The annual Internal Audit Plan is developed [according to] and based on Sonaecom's annual plan of actions and resources and on prioritising audit work using a risk-based methodology that integrates the results of Enterprise Risk Management (ERM) and considers the roadmap for coverage of business processes. The plan also considers the contributions of the Executive Commission, of other members of top management, of the Audit and Finance Board, and, separately, of the Supervisory Board.
The hierarchical and functional reporting lines are those indicated below:
. Internal Auditing hierarchically reports to the Sonaecom CEO;
. Internal Auditing functionally reports to the Supervisory Board, as an independent oversight body, and to the Sonaecom Audit and Finance Committee, as a specialised committee that advises the Board of Directors on given matters, including those relating to the Internal Audit and Risk Management functions;
. Risk Management has similar reporting lines in the context of Sonaecom.
Sonaecom considers it important to clarify the competencies of the Supervisory Board and of the Audit and Finance Committee as regards control and risk matters in line with the following definitions:
. The Supervisory Board is the statutory body for oversight of the company. It takes precedence in this matter and acts independently;
. Internal Auditing answers to the Supervisory Board, which ensures existence of a channel for reporting to a body independent of the Board of Directors;
. Evaluation of the internal control and risk-management system is effectively done, the Supervisory Board being the oversight body, with precedence over the Audit and Finance Committee, since agreement of the Supervisory Board is always necessary;
. The Supervisory Board has the last word on the role and the evaluation of Internal Auditing;
. Internal Auditing can request private meetings to report to the Supervisory Board, without any member of the Board of Directors or member of management present;
. The existence of evaluation competencies at the Audit and Finance Committee is necessary and beneficial, both for shareholders and for the company, in the sense that the Audit and Finance Committee has more specialised and executive know-how about the business, which is complex, enabling the committee to more closely control various areas of the company and challenge them to efficiently manage their risks;
. Therefore, the existence of a specialised committee, under the Board of Directors, responsible for evaluation in control and risk matters, does not nullify the duties of the Supervisory Board. Separate oversight by these two bodies allows us, beyond independent, sovereign, and dominant oversight (the role of the Supervisory Board), to strengthen levels of self-checking (the role of the Audit and Finance Committee);
. The central function of Risk Management is to submit for evaluation by the Audit and Finance Board, and share with the Supervisory Board, a periodic report on the Business Risk Management Cycle (method and results) and it can seek contributions to adjust it.
Responsibilities for creating, functioning and periodic evaluation of internal control and risk management systems are published under the terms of reference for the Board of Directors, for the Audit and Finance Board, and for the Supervisory Board, which are available on the company's website.
Besides the areas mentioned above, Sonaecom has other functional areas and business processes with competency in controlling and monitoring risks, in particular the following:
From the ERM viewpoint, a risk management cycle at WeDo Technologies was completed in 2013. The status of the main risks was updated through review of the most relevant causes of risk, assignment of risk responsibilities and identifying the main controls in place or actions to manage these risks. A risk matrix was produced as a result of this cycle, including analysis of each potential risk's impact and probability of occurring.
In the categories of economic, financial, and legal risks, risks are presented and ranked, in the present section, based on the ranking and structure of Sonaecom's BRM. BRM is a systematic way of identifying risks that affect the organisation (everyday language) and makes it possible to define and group risks along with their main causes (dictionary of risks).
Based on Sonaecom's BRM, economic risks are associated with the following risk categories: business environment, strategy, operations, information processing and technology, and empowerment and integrity.
Sonaecom is exposed to the current adverse economic environment in Portugal, and, consequently, the widespread reduction in consumption. In this context, there is a risk that revenue from clients will continue to be affected due to the high rate of unemployment and reduction in private and public consumption. This risk is intensified in businesses that operate only in the Portuguese market.
For SSI companies, it is relevant to note that, due to the pace of expansion and globalisation at WeDo Technologies, the impact of the adverse economic environment on the business is less severe. The company continued to manage these adverse effects by expanding its product portfolio and identifying other target business sectors (see business portfolio risk). In addition, WeDo Technologies, has been optimising its domestic and international structure in recent years, which allows it to sustain its rate of growth.
For Mainroad, although the recession has affected all IT outsourcing activities, managed/outsourcing services continued to assure a greater share of revenues. In the case of Bizdirect, the company has been affected by shrinkage of the market for microcomputer technology, offset by the sale of multi-brand solutions of IT equipment to the business market, and by the management of corporate software licensing agreements. Despite the current economic crisis, Saphety has continued to position itself in the domestic market as a leader in solutions for simplifying and automating processes.
Like several other companies in the publications sector, Público went through a financial crisis in a recession that offers limited prospects for recovery in the advertising market. With the need to ensure sustainability without compromising its role as an independent information source in Portugal, Público has continued to execute its restructuring programme, which involves a greater focus on meeting growing demands in the digital world and a sizeable reduction in its operating costs structure.
For Sonaecom, having an optimised technology infrastructure is a critical success factor that helps to reduce potential failures in leveraging technological developments. Accordingly, its various businesses continue to take greater advantage of technological innovation.
WeDo Technologies is certified in Research, Development, and Innovation Management (NP 4457:2007). This certification, along with its existing quality certification (ISO 9001:2008), helps the company to continue innovating sustainably and helps to mitigate potential risk factors. This means that the offerings from WeDo Technologies are continually adapted to new technology trends, such as cloud computing services. WeDo Technologies was one of the first software producers to invest in the revenue assurance market, having also been the first to do so for business assurance.
Mainroad faces the challenges of technology innovation from cloud computing. This technology trend is characterised by a growing adoption by clients of server virtualisation and architectures focused on services. On the service provider side, an effort must be made in tracking, adapting infrastructure and changing the operating model to a service-based model. One of the most significant risks generally associated with cloud computing is the change from traditional data centres, that are adapted to clients' proprietary solutions, to more standardised cloud computing data centres. In this context, Mainroad continued its approach towards handling cloud computing issues, developing its main business areas by developing cloud computing services through partnerships.
Cloud computing is also a risk factor to Bizdirect, since it can cannibalise the market for the sale of infrastructure and reduce procurement of systems by clients. Although part of Bizdirect's revenue arises precisely from sales of hardware and software, cloud computing is considered a positive trend when it comes to addressing client needs. At present, companies are confronting cloud computing's different development stages and Bizdirect is following them in this process The risk is also managed by strategic relationships with partners, which allow us to offer a full portfolio of products rather than limiting offerings. We emphasise, for example, the partnership that allows Bizdirect to offer integration of Microsoft solutions, such as Dynamics CRM, SharePoint, BizTalk, and Office 365.
Público has continued with restructuring of its publications, both in the layout and content of its paper edition and in adopting technological innovations in its online edition. These innovations are designed to ensure a greater alignment with the new reading habits of the Portuguese, offering new access channels to information using smartphones and tablets, as well as sustaining Público's position as the leading non-specialist online newspaper.
Sonaecom has been an active agent in the transformation of the Portuguese market for information and communication technologies. In this context, Sonaecom's various companies are exposed to risks of competition from other operators in the domestic market in its respective businesses sectors.
Of all Sonaecom's businesses, WeDo Technologies may be most exposed to international competition. However, this risk is not significant since WeDo Technologies is the worldwide leader in revenue assurance software and is a top three global competitor in the aggregate market for revenue assurance and fraud management.
At WeDo Technologies, one of the main goals has been the expansion and globalisation of the business. This goal could have adversely affected if the company had continued with just one product line, focused on one business sector. This risk will decrease because the company continues to consolidate its global presence outside Portugal and has identified new target business sectors since 2009. To offset the concentration of clients in the telecommunications sector, it expanded into new markets, including the retail, energy, and financial sectors. It also enlarged its product portfolio, expanding from revenue assurance and fraud management to business assurance. Also, since 2012, following the acquisition of Connectiv Solutions in the USA, WeDo Technologies has made a commitment to managed services and Software as a Service (SaaS), areas where Connectiv Solutions has deep know-how and a large footprint in the US market.
Bizdirect pursued a strategy of expanding and diversifying its portfolio, concentrating on three areas: globalisation, client relationships and differentiation. The first area centres on Africa as part of a combined effort with other SSI companies that also have projects in this region, and is in line with the Sonae Group's strategic priority of globalisation. In the area of differentiation, we would highlight our service involving technical maintenance of computer hardware focused on companies; software compliance consulting; and the integration of solutions focused on Microsoft technologies.
Saphety continued to consolidate its portfolio of services, restructured in previous years, giving current and potential clients a clearer view of its service portfolio, and at the same time responding to the need to cover the market's value chain. The portfolio is now divided into three types of solutions that can operate in integrated fashion and in an SaaS environment: SaphetyGov, SaphetyBuy, and SaphetyDoc. To reduce the risk of dependency on the domestic market, Saphety also continued to globalise. At present more than 10% of its orders come from the international market.
Mainroad has also continued to expand its portfolio of international clients beyond its existing client base in Spain through the growth of services and projects, focusing on markets in Angola and Brazil. The business also strengthened its portfolio with an offering called Main IT Service Desk and through new competencies in the area of information security consulting.
Since Sonaecom businesses are particularly focused on the use of technology, potential faults with technical/operational resources (network infrastructure, information system applications, servers etc.) can present a significant risk of business interruption if they are not well managed. This, in turn, can pose other risks to the company, such as adverse impacts on our reputation and our brand, on the integrity of our revenues and client satisfaction, and on quality of service. These can lead to loss of clients.
In the IT sector, business clients typically have a lower tolerance for interruptions. In this context, SSI companies face risks associated with the resilience of data centre infrastructure and with their management and operating procedures; the availability of software platforms that support key client processes – among others.
To identify this specific set of risks and to implement actions for prevention and mitigation that guarantee continuity of critical services and operations, Sonaecom has adopted a Business Continuity Management (BCM) programme over several years.
SSI companies have continued to implement measures to prevent and mitigate the risk of interruption impacting facilities, infrastructure to support the most critical systems and activities that support services to clients. For these, they develop resilience strategies, recovery actions and incident-management procedures. The most critical business processes from the interruption viewpoint can also undergo periodic impact and risk analyses, as well as audits, tests and simulations. As examples, we would highlight the introduction of improvements to the Disaster Recovery Procedures Manual for Mainroad clients and audits of physical security risks for critical facilities, including Mainroad data centres.
Also related to Mainroad data centres, we would also emphasise ongoing improvements in critical physical infrastructure, including power systems, cooling systems, and other safety equipment. It should be stressed that Mainroad has been honoured several times with Data Centres in Europe Awards, specifically as Best Managed Services Data Centre in Europe 2011. This achievement followed two second places in the categories Data Centres Risk Mitigator (2009) and Disaster Recovery Provider (2008). These awards confirm the company's ability to maintain resilient operations at data centres servicing Sonaecom companies and outside clients.
Since Sonaecom is primarily a technology, media and telecommunications (TMT) group, all its subsidiary companies extensively use technology and information that are typically subject to availability, integrity, confidentiality and privacy risks. Therefore, since 2010 Sonaecom has taken steps to reinforce its commitment to managing these risks by creating a Governance, Risk and Compliance (GRC) Committee. This group functions as an additional risk management and supervisory mechanism in addition to the existing control mechanisms in each Sonaecom business unit.
The GRC Committee is a working group appointed by the Executive Committee, and it is co-ordinated by the Risk Management function, including representatives of SSI companies and the respective business areas that are closer to information and assets management and security issues. The committee's main responsibilities are: the maintenance and development of an information security policy and respective security charter, rules and related procedures; the recommendation of actions and controls for the business areas to manage information security issues; the supervision of the security policy through risk assessments, compliance assessments and KPIs; and promoting security awareness through training and communication.
The GRC Committee develops, proposes and co-ordinates an annual risk management action plan. Some activities that continue to be developed by SSI companies with the purpose of consolidating the security management processes include:
Awareness is a key success factor when it comes to promoting a strong culture of information security among employees, partners and key stakeholders. In addition to being a technological issue, security should also be considered as a cultural and behavioural issue. Sonaecom has developed several initiatives to raise awareness and accountability over the past few years, of which the following stand out:
. Clauses on personal data protection in contracts with employees and business partners. All employees are bound to obligations of confidentiality, secrecy and protection of personal data. As such they are forbidden from disclosing to third parties information to which they have access as a result of their roles in the company. These obligations and these duties shall remain in force even after the end of the employment relationship between the company and the employee. Our business partners have the same confidentiality obligations and, in turn, these obligations are also applicable to their employees.
For specific issues related to the confidentiality and privacy of personal data, a few Sonaecom companies has appointed a Chief of Personal Data Protection Officer (CPDPO), who:
. Has responsibility for implementing and complying with the laws and regulations applicable to data processing.
. Acts on behalf of the company during interactions with the national regulatory authority for data protection (CNPD − National Data Protection Commission).
. Promotes the adoption of data protection principles that are consistent with international standards and best practices.
Is also a member of the GRC Committee on information security.
As Sonaecom companies are customer-oriented, we give special attention to the impact that the potential failure of our products or services may have on our customers, particularly with regard to civil liability issues. These issues are intrinsic to the business and, usually, they are related to accidents, unintentional acts, errors or omissions by employees or subcontractors. Risk events can be physical (for example: damage to equipment or facilities) or non-physical (for example: error in a software installation). Both events are relevant to companies such Sonaecom subsidiaries, which mainly provide technology- and information-based services. Since our responsibility derives from our contractual relationship with customers, professional liability issues may arise in the event of service failure.
The risk management strategy selected by Sonaecom for this type of risk involves the transfer of risk through insurers in addition to the implementation of internal controls. In this context, we continue to carry out the actions designed and implemented in previous years relating to professional liability insurance:
According to the Sonaecom Business Risk Model (BRM), financial risks are primarily related to the financial risk category and, in part, with the business environment risk category.
The Group operates internationally, having subsidiaries that operate in Brazil, United Kingdom, Poland, Ireland, Spain, United States, Mexico, Panama, Colombia, Australia, Egypt, Singapore and Malaysia (branch). A few subsidiaries have local partners and operate in their domestic currency. The Group's exposure to foreign exchange rate risk results essentially from the fact that some of its subsidiaries report in a currency different from the euro. Here, operational risk activity is immaterial.
Exchange risk management seeks to minimise the volatility of investments and transactions in foreign currency. Whenever possible, the company uses natural hedges to manage exposure or derivative financial hedging instruments. Additional information on how the risk is managed and controlled is presented in the notes to the financial statements, including a summary of the Group's exposure to the exchange rate risk and its sensitivity to changes in foreign exchange rates.
Sonaecom's total debt is indexed at variable rates, exposing the total cost of debt to a high risk of volatility. The impact of this volatility on the Group results or on its shareholders' funds is mitigated by the the following factors: (i) relatively low level of financial leverage; (ii) the possibility of using derivative instruments that hedge the interest rate risk, as mentioned below; (iii) during non-recession periods, the possible correlation between the level of market interest rates and economic growth, with the latter having a positive effect in other lines of the company results; this partially offsets the increase of financial costs (natural hedge); and (iv) the existence of standalone or consolidated liquidity which is also bearing interest at a variable rate. The company uses only derivatives or similar transactions to hedge interest rate risks considered significant. These include interest rate swaps and other derivatives. The counter-parties of the derivative hedging instruments are limited to highly rated financial institutions. Sonaecom's Board of Directors approves the terms and conditions of the financing with significant impact on the Group, based on analysis of the debt structure, the risks and the different options in the market, particularly as to the type of interest rate (fixed/ variable). Under the policy defined above, the Executive Committee is responsible for the decision on the occasional interest rate hedging contracts by monitoring the conditions and alternatives in the market. Additional information on how the risk is managed and controlled is presented in the notes to the financial statements, including the interest rate risk sensitivity analysis.
The existence of liquidity in the company requires the definition of policies for an efficient and secure management of the liquidity, allowing us to maximise profitability and minimise the opportunity costs related to that liquidity. The main underlying policies correspond to the variety of instruments allowed, the maximum acceptable level of risk, the maximum amount of exposure by the counter-party and the maximum periods for investments.
Additional information on how the risk is managed and controlled is presented in the notes to the financial statements.
The company's exposure to credit risk is mainly associated with the accounts receivable related to current operational activities. The credit risk associated with financial operations is mitigated by the fact that the Group, in respect to telecommunications operators, only deals with highly rated entities.
This risk management seeks to guarantee that the amounts owing are effectively collected within the periods negotiated without affecting the financial health of the Group. The Group uses credit rating agencies and has specific departments responsible for risk control, collections and management of litigation processes, as well as credit insurances, which all contribute to the mitigation of credit risk.
According to the Sonaecom Business Risk Model (BRM), the legal risks are related to the business environment risk category. To monitor the drivers of actual and potential risks, as well as to assure the fulfilment of the legal and regulatory framework in force, Sonaecom has a dedicated team that includes the Legal Department and follows legal and regulatory issues very closely. Nevertheless, we cannot totally exclude the risk of possible infringement processes against Sonaecom companies due to different views on the practical meaning of the legal and regulatory framework. Sonaecom also collaborates with the authorities with the aim of defining a legal and regulatory framework that in our opinion promotes the development of the communications sector in Portugal. Such collaboration may be proactive or involve sending comments in response to public consultations.
Within Sonaecom's business portfolio, regulatory issues are more relevant in the telecommunications unit, which is subject to specific rules that are mainly defined by the national sector regulator ICP − National Communications Authority (ICP – ANACOM), following the regulatory framework defined at European level.
Sonaecom's SSI companies face an additional risk relating to the globalisation process. This has been managed for many years in WeDo Technologies and is becoming increasingly relevant for Mainroad, Saphety and Bizdirect. The issue arises because these companies have a presence in several countries around the world. This involves specific risks relating to very different legal frameworks, where additional effort is needed to fully understand and to cope with those frameworks.
The SSI companies operating in the market of information society services are exposed to industry-specific regulations, and in particular to the European regulations on network and information security.
Additionally, Sonaecom companies are also subject to the horizontal legislation, which is not specific to the sectors in which they operate, including competition law.
The risk management process is supported by a consistent and systematic methodology, based on the international standard Enterprise Risk Management − Integrated Framework issued by COSO (Committee of Sponsoring Organisations of the Treadway Commission).
The diagram below illustrates the main phases in Sonaecom's risk management cycle, which can be applied to all business units.
Methodology based on Risk Management Methodologies Standard of the Sonae's Risk Management Advisory Group (2008).
Derived from this general framework, the management and control of the main risks facing Sonaecom, are achieved through the following key approaches and methods:
Approach: the Enterprise-Wide Risk Management aligns the risk management cycle with the strategic planning cycle. This approach allows Sonaecom's businesses to prioritise and identify critical risks that might compromise their performance and goals and to take actions to manage those risks, within the pre-defined levels of acceptance. This is achieved through constant monitoring of risks and the implementation of certain corrective measures.
Method: 1. Identify business risks >> 2. Investigate sources >> 3. Measure triggers >> 4. Manage risks >> 5. Monitor risks
Approach: the implementation of Information Security Management processes is intended to manage the risks associated with the availability, integrity, confidentiality, and privacy of information. The scope of this process also includes the development and maintenance of the Information Security Policy, verification of compliance with policy procedures, development of training programmes and awareness, setting and supervision of KPIs for information security.
Method: 1. Identify critical information >> 2. Detail platforms/critical information supporting resources >> 3. Assess the security risk level >> 4. Define and implement indicators >> 5. Manage and monitor risk mitigation actions
RMCP – RISK MANAGEMENT CYCLES OR PROCESSES
Approach: the development of specific risk management cycles/processes enables the mitigation of critical risks that can impact certain processes, areas or entities, positioning these risks within the levels defined by the management team. It identifies and monitors other operational risks that management considers relevant.
Method: 1. Identify specific risks >> 2. Investigate causes >> 3. Manage risks >> 4. Monitor risks
Sonaecom acknowledges that, as with other listed companies with similar activities, it is potentially exposed to risks related to the financial and accounting reporting processes, in addition to other financial risks, as detailed above. Sonaecom's attitude in relation to financial risk management is conservative and prudent, and these principles have been followed in 2013.
Therefore, Sonaecom is committed to ensuring an effective internal control environment, particularly in the financial reporting process. It seeks to identify and improve the most relevant processes in terms of the preparation and disclosure of financial information, with the objectives of transparency, consistency, simplicity and materiality. The objective of the internal control system is to ensure reasonable assurance regarding the preparation of financial statements, in accordance with adopted accounting principles, and the quality of financial reporting.
The internal control system for accounting and preparation of financial statements include the following key controls:
Among the various risk drivers that can materially impact accounting and financial reporting, we highlight the following:
XVII. Accounting estimates and provisions – The most significant accounting estimates are described in the notes to the financial statements. The estimates were based on the best information available during the preparation of financial statements and based on the best knowledge and experience of past and/or present events;
XVIII. Balances and transactions with related parties – The most significant balances and transactions with related parties are disclosed in the notes the financial statements. Attached to the report, we present a list of all parties related to the Sonaecom Group. These are mainly associated with the operational activities of the Group, as well as the granting and obtaining of loans, being made at market prices.
More specific information on how these and other risks drivers were mitigated can be seen throughout the notes to the financial statements.
Additionally, Sonaecom undertakes several actions regarding the continuous improvement of its financial risks control system, including:
56. Service responsible for investor relations, composition, functions, information provided by these services and contacts The Investor Relations Department is responsible for managing Sonaecom's relationship with the financial community – current and potential investors, analysts and market authorities – with the goal of enhancing their knowledge and understanding of Sonaecom's businesses and activities, by providing relevant, timely and reliable information.
The department regularly prepares presentations and communications covering quarterly, half-year and annual results, as well as issuing announcements to the market, whenever necessary, to disclose or clarify any relevant event that could influence Sonaecom's share price.
To further enhance effective communication with the capital market and guarantee the quality of information provided, the Investor Relations Department organises roadshows covering the most important financial centres of Europe and participates in various conferences. In addition, a large number of investors and analysts have the opportunity to talk to management in one-on-one meetings or conference calls.
Any interested party may contact the Investor Relations Department using the following contact details:
Investor Relations Officer Tel: (+351) 93 100 2349 Fax: (+351) 93 100 2229 Email: [email protected] / [email protected] Address: Rua Henrique Pousão, 432 – 2nd Floor, 4460-191 Senhora da Hora, Portugal Website: www.sonae.com
Investor Relations Tel: (+351) 93 100 2165 Fax: (+351) 93 100 2229 Email: [email protected] / [email protected] Address: Rua Henrique Pousão, 432 – 2nd Floor, 4460-191 Senhora da Hora, Portugal Website: www.sonae.com
The representative for relations with capital markets and Euronext is António Bernardo Aranha da Gama Lobo Xavier, who may be contacted by phone or e-mail:
Tel: (+351) 93 100 2232 Fax: (+351) 93 100 2229 Email: [email protected] / [email protected] Address: Rua Henrique Pousão, 432 – 7th Floor, 4460-191 Senhora da Hora, Portugal
58. Information on the number of requests for information received in the year or pending from previous years, and response times During 2013, the Investor Relations Department received a normal number of requests taking into consideration the size of the company in the capital markets. These requests for information were received either by email or post, or by phone. The response to these requests was provided with the maximum possible speed.
59. Address www.sonae.com
60. Location of the information mentioned in Article 171 of the Commercial Companies Code http://www.sonae.com/investidores/governo-da-sociedade/
61. Location of the statutes and regulations governing the operation of bodies and/or committees http://www.sonae.com/investidores/governo-da-sociedade/
62. Location of the information concerning the identity of the governing bodies, the representative for the market relations, the Investor Relation Office, functions and means of access http://www.sonae.com/investidores/governo-da-sociedade/ and www.sonae.com/contactos/
63. Location of the documents for the preparation of financial reports and the calendar of corporate events Annual report documents: http://www.sonae.com/investidores/assembleias-gerais Calendar of corporate events: http://www.sonae.com/investidores/calendario-financeiro/
64. Location of the notice for the General Meeting and all the preparatory and subsequent information related to it. http://www.sonae.com/investidores/assembleias-gerais/
65. Location of the historical records with the resolutions taken at general meetings of the company, the represented share capital and the voting results, with reference to the past three years
http://www.sonae.com/investidores/assembleias-gerais/
66. Indication as to competence for determining the remuneration of the executive directors, members of the Executive Committee or managing director and the directors of the company.
Sonaecom's Remuneration Committee is responsible for the approval of the remuneration of the members of the Board of Directors and other corporate officers and agencies on behalf of the shareholders, following the remuneration and other compensation policies approved by shareholders at a Shareholders' General Meeting.
Sonaecom has a Remuneration Committee consisting of two members, namely: Paulo Azevedo, on behalf of Sonae SGPS, and Francisco de la Fuente Sánchez, on behalf of Sontel BV.
The company has not hired any entities to provide regular support in this regard. When establishing the remuneration policy and setting remuneration levels, a comparison is made with market benchmarks based on surveys carried out in Portugal and other main European markets, in particular those prepared by Mercer and the Hay Group. Comparisons are also made with companies included in the main Portuguese Stock Market Index (PSI 20).
The company would like to add that the members of its Remuneration Committee are independent in relation to the Board of Directors. The company's opinion is based on the following considerations: (i) Duarte Paulo Teixeira de Azevedo represents our major reference shareholder at the Shareholder's Remuneration Committee in his capacity of CEO of Sonae - SGPS, S.A., which is fully consistent with the purpose of this committee; (ii) he is a Non-Executive Chairman of our Board; (iii) he does not take part in any discussion where a conflict of interest might arise with his role as Chairman of our Board (for example, he does not discuss his own remuneration at Sonaecom, which is decided by the other independent member of our Shareholders' Remuneration Committee); and (iv) additionally, his remuneration at Sonaecom is not of significant value, being 60,710 euros in 2013.
The experience and professional qualifications of the members of Sonaecom's Remuneration Committee are listed in the curricula vitae in the annex to this document and allow them to exercise their responsibilities competently and accurately, each having the appropriate skills to perform their duties.
The remuneration and compensation policy for executive directors incorporates control mechanisms in its structure, considering the connection to the individual and collective performance, preventing excessive risk-taking behaviours. This objective is further ensured by the fact that each KPI is limited to a maximum value.
Executive directors' remuneration is made up of two components:
The fixed remuneration of an executive director is based on the responsibility of the function exercised and is reviewed annually. Each executive director is assigned a rating designated internally by management level (ML). Executive directors are classified in MLs as Group Leader (GF.0), Senior Executive Group (GF.1) and Senior Executive (GF.2). Sonaecom MLs are applied in a similar way across all Sonae Group companies and are related to Hay's international model for the classification of corporate functions, thereby facilitating market comparisons while helping to promote internal equity.
The variable remuneration is intended to guide and reward the executive director for compliance with predetermined objectives, based on the company's performance indicators, work teams under their responsibility and their own individual performance. It is awarded after the annual accounts are cleared and the performance evaluation has been made. As the amount of the award is subject to the accomplishment of objectives, there is no guarantee that any payment will be made.
These shares, or the equivalent value in cash, are delivered after a deferral period of three years. This delivery depends on the overall continuing success of the company during this period, measured in accordance with the objectives set by the Shareholders' Remuneration Committee for each period of three years. Additionally, in the case of the distribution of dividends, change in the nominal value of shares or share capital during the deferral period, the number of shares on the plan will be adjusted to the number of shares that, considering the above modifications, are equivalent to the number of initial shares. This maintains an alignment with the total return obtained, or total shareholder return. This link is based on Sonaecom shares but a component, representing up to 40% of the overall value, is linked to Sonae SGPS, S.A. shares. At the vesting date, shares are only delivered if the criterion for continuing positive performance of the company, mentioned above, is met. Payment is made by delivering shares at a discount that can vary between 90% and 100%, although Sonaecom retains an option to pay an equivalent value in cash. Annex I includes the Share Allocation Plan.
Remuneration for the non-executive directors is determined based on market data, in line with the following principles: (1) attribution of fixed remuneration (around 15% is dependent on presence in meetings of the Board of Directors, the Audit and Finance Committee and the Appointments and Remuneration Committee); and (2) attribution of an annual responsibility allowance. The fixed remuneration can be increased by up to 6% for those non-executive directors who chair a Board of Directors' Committee. There is no variable remuneration.
The remuneration for members of the company's Supervisory Board consists exclusively of a fixed component which includes an annual responsibility allowance, determined in line with comparable market rates.
The company's Statutory Accountant is remunerated in line with the standard fees table for similar services, at market rates, under a proposal from the Supervisory Board that establishes a link with the Audit and Finance Committee and with the Board of Directors.
The remuneration for General Shareholders' Meeting Board members shall be a fixed amount, which will take into account the company's characteristics and market rates.
Under the terms of Article 248-B.3 of the Securities Code, Directors are the members of the company bodies referred to above, and also those who have regular access to privileged information and take part in decisions about the issuer's business management and strategy.
The Remuneration Committee proposes that the remuneration policy applicable to these Directors shall be equivalent to that adopted for remuneration for other senior executives at the same level of functions and responsibilities, without assigning any additional benefit due the respective operating group.
Therefore, Directors' remuneration includes two components: (i) a fixed component, which includes the basic remuneration base, paid over a one-year period (salaries are paid on a 14-month basis) and a range of benefits associated with the role; and (ii) a variable component, which in turn includes (a) short-term remuneration paid in the first quarter of the following year (paid in money, via a retirement savings plan or by granting a discount on share purchases); and (b) a discretionary and variable component (medium-term variable remuneration), paid in the following year, in the form of deferred benefits under the Medium Term Incentive Plan (MTIP). This vests on the third anniversary of the date of the assignment. In some cases, the Board of Directors, after approval by the Appointments and Remuneration Committee, may propose distribution of company profits to shareholders. After calculating the total amount to be distributed, the amount receivable under the profit-sharing scheme will depend on the annual objectives being met.
70, 71, 72 and 73. Information about how remuneration is structured to align the interests of management body members with the company's long-term interests, as well as how it is based on performance evaluation and lack of incentives to take on excessive risk. Reference, if applicable, to the remuneration policy for company bodies, members of the executive committee or managing director and company managers. Deferred payment of the variable remuneration component, specifying the deferral period. Criteria underpinning the attribution of variable remuneration in shares, as well as the executive directors' retention of these shares in the event of any contracts related to them, specifically hedging or risk transfer contracts, the respective limit, and their relationship with the total annual remuneration total and the company's managers.
The Remuneration and Compensation Policy applicable to members of the company bodies and its managers complies with community guidelines, national legislation and the recommendations of the Securities Market Commission. It is based on the presumption that initiative, competence and commitment are the essential foundations of good performance and must be aligned with the company's medium- and long-term interests, with the aim of sustainability.
The content of the performance indicators, on which the variable remuneration component depends, and its specific weight in determining actual remuneration, ensures that the executive directors are aligned with the defined strategic and compliance with the legal standards that govern the company's activities.
Therefore, for each company financial year, individual performances and contributions to collective success will necessarily influence allocation of the fixed and variable component of each member's remuneration plan.
In addition, actual allocation of at least 50% of the variable remuneration awarded to the chief executive based on evaluation of individual and company performance in each financial year is deferred for a period of three years. This deferred component of the variable remuneration consists of shares, under the company's Share Allocation Plan.
The company's Remuneration and Compensation Policy maintains the principle of not awarding compensation to directors, or members of the other company bodies, if their appointment is terminated, whether such termination occurs at the end of the respective period or earlier for any reason or grounds, notwithstanding the company's obligations to comply with the legal provisions in force in this area.
The Remuneration and Compensation Policy does not include any system of retirement benefits for members of company bodies and other managers.
Sonaecom is committed to the implementation of generally recommended remuneration risk management guidelines, as follows:
A risk assessment of Sonaecom's remuneration policy can be obtained from the information set out below:
74. Criteria underpinning the assignment of variable remuneration in options, and indications of the deferral period and the exercise price
Not applicable.
The main parameters and foundations of the variable remuneration system are described in the remuneration policy approved in the Shareholders General Meeting held on 24 April 2013, available at http://www.sonae.com/investidores/assembleias-gerais/.
76. Main features of Directors' complementary pensions or early retirement schemes for and date of approval by the General Shareholders' Meeting individually and for company managers Not applicable.
77. 78 and 79. Indication of annual amount of remuneration earned, in total and individually, by members of the company's management bodies, from the company, including fixed and variable remuneration and, in relation to this, mentions of the different components that led to them, amounts of any kind paid by other controlled or Group companies, or those under shared control, and remuneration paid as profit sharing and/or bonus payments and the reasons why such bonuses and/or profit sharing payments were made
The remuneration for each Sonaecom director, assigned by the company and by controlled and Group companies for 2013 and 2012 is set out in the following tables.
| 2013 | 2012 | |||||||
|---|---|---|---|---|---|---|---|---|
| AMOUNTS IN EUROS | FIXED REMUNERATION |
ANNUAL PERFORMANCE BONUS |
MEDIUM TERM INCENTIVE PLAN |
TOTAL | FIXED REMUNERATION |
ANNUAL PERFORMANCE BONUS |
MEDIUM TERM INCENTIVE PLAN |
TOTAL |
| Individual breakdown | ||||||||
| Executive Directors | ||||||||
| Ângelo Gabriel Ribeirinho dos Santos Paupério (CEO) |
287,190 | 302,800 | 302,800 | 892,790 | 323,553 | 225,000 | 225,000 | 773,553 |
| Maria Cláudia Teixeira de Azevedo |
147,442 | 67,300 | 67,300 | 282,042 | 175,836 | 67,500 | 67,500 | 310,836 |
| Miguel Nuno Santos Almeida(1) | – | – | – | – | 313,113 | 163,200 | 163,200 | 639,513 |
| António Bernardo Aranha Gama Lobo Xavier |
198,430 | – | – | 198,430 | 198,220 | – | – | 198,220 |
| 633,062 | 370,100 | 370,100 | 1,373,262 | 1,010,722 | 455,700 | 455,700 | 1,922,122 | |
| Non-Executive Directors | ||||||||
| Duarte Paulo Teixeira de Azevedo (Presidente)(2) |
60,710 | – | – | 60,710 | 60,500 | – | – | 60,500 |
| Jean François René Pontal | 39,730 | – | – | 39,730 | 39,780 | – | – | 39,780 |
| David Charles Denholm Hobley | 37,300 | – | – | 37,300 | 37,350 | – | – | 37,350 |
| António Maria Theotonio Pereira Sampaio Melo |
35,970 | – | – | 35,970 | 37,350 | – | – | 37,350 |
| Nuno Manuel Moniz Trigoso Jordão(3) |
11,748 | – | – | 11,748 | 34,100 | – | – | 34,100 |
| Frank Emmanuel Dangeard | 34,830 | – | – | 34,830 | 34,880 | – | – | 34,880 |
| Gervais Pellissier | – | – | – | – | – | – | – | – |
| 220,288 | – | – | 220,288 | 243,960 | – | – | 243,960 | |
| Total | 853,350 | 370,100 | 370,100 | 1.593,550 | 1,254,682 | 455,700 | 455,700 | 2,166,082 |
(1) Remuneration for Miguel Almeida for 2013 has been excluded from the table above as his cost were supported by ZON OPTIMUS as from 1 January 2013;
(2) The value for Duarte Paulo Teixeira de Azevedo for 2013 and 2012, disclosed in the table above, is related to management services recharged by Sonae to Sonaecom. The values recharged by Sonae to Sonaecom represents the equivalent cost of his services centralised at Sonae SGPS during 2013 and 2012;
(3) The value for Nuno Manuel Moniz Trigoso Santos Jordão for 2013 (until he left the company on 2013.05.09) and 2012, disclosed in the table above, is related to management services recharged by Sonae to Sonaecom. The values recharged by Sonae to Sonaecom represents the equivalent cost of his services centralised at Sonae SGPS during 2013 and 2012.
| Plan 2009 | Plan 2010 | Plan 2011 | Plan 2012 | Total | |
|---|---|---|---|---|---|
| Award date | 10 Mar 2010 | 10 Mar 2011 | 09 Mar 2012 | 08 Mar 2013 | |
| Sonaecom shares | |||||
| Share price at award date(1) | 1,685 | 1,399 | 1,256 | 1,505 | |
| Share price at vesting date | 1,55 | – | – | – | |
| Share price at 31 December 2013 (2) | 2,569 | 2,569 | 2,569 | 2,569 | |
| Ângelo Gabriel Ribeirinho dos Santos Paupério (CEO) | |||||
| Number of shares at 01 January 2013 | 112,767 | 140,444 | 157,086 | – | 410,297 |
| Number of shares at 31 December 2013 | – | 150,417 | 168,240 | 96,070 | 414,727 |
| Miguel Nuno Santos Almeida | |||||
| Number of shares at 01 January 2013 | 46,963 | 65,056 | 74,524 | – | 186,543 |
| Number of shares at 31 December 2013 | – | – | – | – | – |
| Maria Claúdia Teixeira de Azevedo | |||||
| Number of shares at 01 January 2013 | 40,396 | 51,957 | 49,717 | – | 142,070 |
| Number of shares at 31 December 2013 | – | 55,647 | 53,265 | 33,624 | 142,536 |
| António Bernardo Aranha Gama Lobo Xavier | |||||
| Number of shares at 01 January 2013 | 47,297 | – | – | – | 47,297 |
| Number of shares at 31 December 2013 | – | – | – | – | – |
| Total | |||||
| Number of shares at 01 January 2013 | 247,423 | 257,457 | 281,327 | – | 786,207 |
| Number of shares at 31 December 2013 | – | 206,064 | 221,505 | 129,694 | 557,263 |
| Sonae SGPS shares | |||||
| Share price at award date | 0,761 | 0,811 | 0,401 | 0,701 | |
| Share price at vesting date | 0,696 | – | – | – | |
| Share price at 31 December 2013(3) | 1,049 | 1,049 | 1,049 | 1,049 | |
| Ângelo Gabriel Ribeirinho dos Santos Paupério (CEO) | |||||
| Number of shares at 01 January 2013 | 178,588 | 166,325 | 334,720 | – | 679,633 |
| Number of shares at 31 December 2013 | – | 173,401 | 348,961 | 133,850 | 656,212 |
| Miguel Nuno Santos Almeida | |||||
| Number of shares at 01 January 2013 | 74,375 | 77,045 | 158,797 | – | 310,217 |
| Number of shares at 31 December 2013 | – | – | – | – | – |
| Maria Claúdia Teixeira de Azevedo | |||||
| Number of shares at 01 January 2013 | 41,127 | 39,556 | 68,102 | – | 148,785 |
| Number of shares at 31 December 2013 | – | 41,239 | 71,024 | 30,116 | 142,379 |
| António Bernardo Aranha Gama Lobo Xavier | |||||
| Number of shares at 01 January 2013 | 48,152 | – | – | – | 48,152 |
| Number of shares at 31 December 2013 | – | – | – | – | – |
| Total | |||||
| Number of shares at 01 January 2013 | 342,242 | 282,926 | 561,619 | – | 1,186,787 |
| Number of shares at 31 December 2013 | – | 214,640 | 419,985 | 163,966 | 798,591 |
| Values | |||||
| CEO | |||||
| Value at award date | 325,918 | 331,371 | 331,523 | – | 988,811 |
| Value at vesting date | 299,086 | – | – | – | 299,086 |
| Values at 31.12.2013 | – | 568,319 | 798,269 | 387,212 | 1,753,800 |
| Miguel Nuno Santos Almeida (4) | |||||
| Value at award date | 135,732 | 153,497 | 157,280 | – | 446,509 |
| Value at vesting date | 124,558 | – | – | – | 124,558 |
| Values at 31.12.2013 | – | – | – | – | – |
| Maria Claúdia Teixeira de Azevedo | |||||
| Value at award date | 99,365 | 104,768 | 89,753 | – | 293,886 |
| Value at vesting date | 91,238 | – | – | – | 91,238 |
| Values at 31.12.2013 | – | 186,217 | 211,342 | 117,972 | 515,531 |
| António Bernardo Aranha Gama Lobo Xavier | |||||
| Value at award date | 116,339 | – | – | – | 116,339 |
| Value at vesting date | 106,824 | – | – | – | 106,824 |
| Values at 31.12.2013 | – | – | – | – | – |
| Total | |||||
| Value at award date | 677,354 | 589,635 | 578,556 | – | 1,845,545 |
| Value at vesting date | 621,706 | – | – | – | 621,706 |
| Values at 31.12.2013 | – | 754,536 | 1,009,611 | 505,184 | 2,269,331 |
(1) Average share price in the month prior to the award date;
(2) On 3 December 2013, the share price hit a high of 2.60 euros and a low of 1.45 euros on January 2013;
(3) On 18 November 2013, the share price hit a high of 1,11 euros and a low of 0.664 on July 2013;
(4) On 27 August 2013, part of the outstanding Sonaecom and Sonae share plans were converted into ZON OPTIMUS share plans. This conversion was based on the merger exchange ratio for Sonaecom and based on the share fair value for Sonae, as duly approved by the Shareholders Remuneration Committee.
| SONAECOM | SONAE SGPS | TOTAL | |||
|---|---|---|---|---|---|
| Amounts in euros | Role | Total Remuneration |
Role | Total Remuneration |
Total |
| Name | |||||
| Ângelo Gabriel Ribeirinho dos Santos Paupério | CEO | 892,790 | Executive | 336,840 | 1,229,630 |
| Duarte Paulo Teixeira Azevedo | Chairman | 60,710 | CEO | 1,287,640 | 1,348,350 |
| Nuno Manuel Moniz Trigoso Jordão | Non-executive | 11,748 | Executive | 156,743 | 168,491 |
(1) Nuno Manuel Moniz Trigoso Santos Jordão left both Sonaecom and Sonae SGPS on 9 May 2013.
There is no compensation due to or from members of the board related to termination of functions during the 2013 and 2012 financial years.
Supervisory Board members' remuneration consists of a fixed annual amount, based on the company's position and market rates, with no variable remuneration.
The amount of the fixed annual remuneration for the members of this body in the 2013 and 2012 financial years was as follows:
| 2013 | 2012 | |
|---|---|---|
| Amounts in euros | ||
| Individual breakdown | ||
| Statutory Audit Board | ||
| Arlindo Dias Duarte Silva | 10,010 | 9,800 |
| Armando Luís Vieira Magalhães | 8,010 | 7,800 |
| Óscar José Alçada Quinta | 8,010 | 7,800 |
| Jorge Manuel Felizes Morgado | – | – |
| Total | 26,030 | 25,400 |
In the event of dismissal of Board members, the Group's policy is to pay the compensation set out in law: in each situation, a different value may be negotiated, considered more suitable by both parties. Members of the Board of Directors do not receive any additional compensation and are subject to the same criteria as other staff. There are also no individual contracts with directors to define the methodology for calculating any compensation. In addition, Sonaecom has never paid, and does not plan to pay, any compensation for dismissal or termination due to inadequate performance.
84. Reference to the existence and description, with an indication of the amounts involved, of agreements between the company and the Board Directors and managers that provide for compensation in the event of dismissal, termination without due cause, or termination of employment following a change in control of the company
In the event of early termination of the mandate of members of the Board of Directors, Group policy is to pay the compensation set out in law or to negotiate, on a case-by-case basis, a value considered fair and appropriate by both parties. There are no additional compensation provisions for members of the Board of Directors, who are treated in the same way as the other staff.
85 and 86. Identification of the plan and respective recipients. Features of the plan (assignment conditions, share transfer clauses, share price and option exercise price criteria, period during which options can be exercised, features of the shares or options to be assigned, incentives to acquire shares and/or exercise options).
The MTIP is designed to align the interests of employees and Executive Directors with the success of Sonaecom, reinforcing their engagement and the perception of the impact of their performance on the success of Sonaecom, which is reflected by the price of the share.
The MTIP is applicable to all Sonaecom Group companies, with the exception of WeDo Consulting – Sistemas de Informação, S.A. which has adopted its own specific incentive plan. For Público – Comunicação Social, S.A. and the companies it owns, the attribution rules are more restricted than those described below and this is not expected to change
The MTIP is subject to the eligibility rules described in this document.
The general terms of the MTIP and any significant amendments thereto are reviewed by the Shareholders' Remuneration Committee and then approved by shareholders at a Shareholders' General Meeting, based on a proposal submitted by the Board of Directors, after the Board has taken advice from the Board Nomination and Remuneration Committee ("BNRC"). The participation in the MTIP of the members of Sonaecom's Executive Committee (ExCom) is approved by the Shareholders' Remuneration Committee ("Comissão de Vencimentos"), in line with the Group's Remuneration Policy, which is approved by shareholders at a Shareholders' General Meeting. The participation of other Senior Executives is approved, annually, by the Sonaecom ExCom.
All Sonaecom employees at Sonaecom Management Levels ("Grupo Funcional" or "GF") GF1 to GF6 are eligible to be awarded a Medium Term Performance Bonus under the MTIP, provided that they held Management Level GF6 or higher, on 31 December of the respective performance year.
Classification as Management Level GF6, on recruitment or by promotion, does not automatically give entitlement to the award of a MTPB. Any decisions to make an award, including the value awarded (which is calculated as a percentage of the individual annual fixed remuneration), should take into account the total variation in the compensation package of each employee that results. It is recommended that, for the first MTPB awarded, the value should be equal or lower than 50% of the maximum value recommended for the same Management Level (see table 2).
The MTPB reference values for officers and employees with Management Levels GF1,and GF2 (see Table 1 below) is based on a percentage of their total Target Performance Bonuses (Short Term + Medium Term), which is defined on an individual basis, taking into account their level of qualification and the structure of their compensation package. This is also linked to the achievement of individual Key Performance Indicators (KPIs) and is approved: For ExCom members (Management Levels GF1 and GF2): by the Shareholders' Remuneration Committee of Sonaecom, based on proposals submitted by the BNRC; and For Management Level GF3 by the Chairman of the Board of Directors, based on proposals submitted by Sonaecom ExCom;
The decision making bodies above may decide to alter the value of individual MTPBs to be awarded should the value be considered to be no longer appropriate.
| SONAECOM MANAGEMENT LEVEL |
REFERENCE VALUE FOR MTIP (% of Total Target Performance Bonus) |
COMPOSITION OF SHARE PACKAGE |
COMPOSITION OF SHARE PACKAGE |
|---|---|---|---|
| SONAE SGPS SHARES | SONAECOM SHARES | ||
| Sonaecom Executive Directors | |||
| GF1 | 50% | 40% | 60% |
| GF2 | 50% | 30% | 70% |
| Other Employees | |||
| GF2 | 100% |
Table 1 (defines the percentage of shares for each company in the portfolio)
The value of the MTIP may alter over the period between the award date and the vesting date, as it is linked to a standard share package and to the Total Shareholder Return ("TSR") of the respective Sonae SGPS and Sonaecom SGPS shares. The percentage of shares of each company which make up the standard share package is set out in Table 1 above. Vesting is dependent on the overall continuing success of the company during the 3 year vesting period, measured in accordance with the objectives set by the Shareholders' Remuneration Committee for each period of three years.
For employees with Management Levels GF3, GF4, GF5 and GF6, the MTIP reference values are based on a percentage of the Annual fixed remuneration, which is defined on an individual basis, taking into account their level of qualification and the structure of their compensation package. This is also linked to the performance of individual Key Performance Indicators (KPIs) to be approved by Sonaecom ExCom.
The MTIP reference values, for employees who have a monthly performance bonus ("commission" - "comissão"), should take into account the following: a) total commissions received on an annual basis; b) compatibility of this value, in light of the minimum and maximum STPB values awarded for other employees with the same Management Level. When the annual commissions awarded are outside the above range, the company may decide to adjust them.
| MANAGEMENT LEVEL | REFERENCE VALUES FOR MTIP ( % OF ANNUAL FIXED REMUNERATION) |
|---|---|
| GF3 | Up to 65% |
| GF4 | Up to 60% |
| GF5 | Up to 50% |
| GF6 | Up to 45% |
Table 2
The MTIP plans are established annually and each plan has a three year term. As from the award date of the third consecutive plan, 3 plans with be open at the same time.
The MTIP is valued at the award date, based on the listed share prices in Portugal of the shares that make up the respective share package. In the case of Sonae SGPS shares, the most favourable of the following prices is used: (i) the closing price on the first working day after the company's Shareholders' Annual General Meeting; or (ii) the average of the closing prices of the last 30 trading sessions, before the Annual General Meeting. For Sonaecom shares, the value is calculated by dividing the average of the closing prices of the last 30 trading sessions, before the award date.
The number of shares to be delivered is determined by dividing the MTIP value by the share price calculated at the award date (see previous paragraph). The resulting number of shares may be acquired by the beneficiaries at a discount to be defined by the company on the third anniversary of the award date.
Should dividends be distributed, or the nominal value of the shares altered, or the share capital of the respective company be changed, the number of shares under the Plan will be altered so that the number of shares, after taking account of the effects of the above changes, will remain equivalent, as a result of these changes, to the initial number of shares.
At the vesting date of the MTIP, the company that awarded the MTIP retains the right to pay the cash equivalent to the value of the shares at that date, rather than deliver actual shares, provided that the Shareholding and Retention Policy described below is complied with, when applicable.
The following Shareholding and Retention Policy ("SH&R Policy") is applicable to the members of Sonaecom's Board of Directors and to other members of the ExCom (covering Management Levels: GF1 and GF2), but only in relation to the Sonaecom shares included in their MTIP share packages:
Each GF1 or GF2 is required to retain 50% of the shares delivered on the vesting of each Plan until they hold, on an accumulated basis, a total number of shares that is equivalent to the value of 2 annual fixed salaries. The requirement to retain shares ends as soon as the respective manager holds, on an accumulated basis, a total number of shares that meets the agreed shareholding requirement, either by retaining MTIP shares awarded by Sonaecom or by acquiring shares in their individual name. The inclusion of the latter shares is optional and is of the exclusive decision of each manager, who, in this case, should inform the company of this intent and provide the respective share information. For this purpose, the annual fixed salary is the monthly base remuneration paid 14 times a year;
The SH&R Policy was applied on a transitional basis to the 2004 Plan (2005-2008) and 2005 Plan (2006-2009) with a share retention level of 20% of the shares attributed under each Plan. The 2006 Plan (2007-2010), although already awarded at the date of implementation of this regulation, will be subject to a share retention level of 50%.
The SH&R Policy, which is only applicable to Management Levels GF1 and GF2, is to be managed by the individuals involved and will be monitored by Human Resources ("DRH") and Accounting & Administrative ("DAF") departments.
The right to a MTIP ceases when an employee is no longer an officer or employee of Sonae SGPS, or any company that represents the sub-holding where they work, or any other company directly or indirectly affiliated with either of the above. Exceptionally, the relevant decision making bodies, may decide to continue the MTIP until its vesting date or to pay out the MTIP, based on the market value of the shares at that time.
In the event of death or permanent disability, the MTIP is valued at current market prices of the shares and the equivalent value in cash will be paid to the employee or to his or her legal heirs.
On retirement, rights to a MTIP are retained and vest on the normal vesting date.
Not applicable.
There are no planned control mechanisms.
Sonaecom undertakes its transactions with related parties based on principles of rigour, transparency and strict observance of market competition rules. Such transactions are subject to specific administrative procedures that arise from regulatory requirements, specifically those related to rules for transfer prices, or voluntary adoption of internal checks and balances systems, specifically formal reporting or validation processes, based on the value of the transaction in question.
Transactions with any of the entities indicated in the previous paragraph respected normal market conditions and were evaluated by the Supervisory Board. There were no transactions with any member of the Board or supervisory body during the 2013 financial year.
Transactions with qualifying shareholders or entities in a relationship with them under Article 20 of the Securities Code are formally submitted for prior opinion by the Audit and Finance Committee of the Board of Directors and the Supervisory Board if their value is greater than 10 million euros. In addition, all transactions with related parties in excess of 1 million euros are also submitted for quarterly reports by these two bodies, via the secretary of the Executive Committee.
Business with related parties, in line with IAS 24, is described in note 34 of the attachment to the consolidated financial statements for 2013.
The Company Governance Report provides a description of the company's governance structure, policies and practices, and complies with Article 245-A of the Securities Code and the information requirements contained in the Securities Market Commission Regulations no. 4/2013 of 1 August, as well as the company's observance, on a comply or explain basis, with the CMVM (Portuguese Securities Market) recommendations integrated into the CMVM Company Governance Code, 2013.
This document must be read as an integral part of the Annual Report and individual and consolidated financial statements for the 2013 financial year.
The information requirements of Article 3 of Law no. 28/2009 of 19 June, Articles 447 and 448 of the Companies Code, Article 245-A of the Securities Code and Regulation no. 5/2008 of the CMVM have been complied with.
All legal and regulatory standards cited in this report are available at www.cmvm.pt.
The governance model adopted by Sonaecom allowed the Board of Directors and its special committees to operate normally, and no other company bodies reported any restrictions on free exercise of their functions.
The Supervisory Board exercised its supervisory function, having received appropriate support from the Board of Directors to this end, via regular provision of information supplied by the Audit and Finance Committee and by the Executive Committee.
The Statutory External Auditor monitored the company's activities and made the examinations and verifications he considered necessary to review and legally certify the accounts, interacting with the Supervisory Board, within the framework of their respective competences and responsibilities and with full collaboration from the Board of Directors.
The Board of Directors, and specifically its Audit and Finance Committee and the Executive Committee, act in harmony with the Supervisory Board and the Statutory Accountant, collaborating transparently and rigorously as requested, observing the respective company governance operating regulations and best practices.
To record the experience accumulated throughout the mandate concerning linked operation of the management body and the supervisory body under the model adopted, the bodies formalised the procedure by which the Supervisory Board interacts with the Board of Directors, the Executive Committee and the Audit and Finance Committee in an internal document.
Such procedures, developed over the term of the mandate, facilitate:
. the exercise of the Supervisory Board's powers, formalising the bi-lateral flow of information between this body and the Board of Directors, with active intervention by the Audit and Finance Committee and the Executive Committee in reporting information about risk management mechanisms and the company's internal audits, as well as preparing and releasing financial information;
. intervention by the Supervisory Board, via recommendations from the Board of Directors and the Executive Committee, specifically pertaining to the operation of internal control and risk management systems and, where applicable, transactions with related parties.
The Board of Directors did not identify any fact or event that would have caused a loss of independence for any of its independent non-executive members during the period covered by this report. This conclusion was based on written declarations issued by each of the independent members, at the request of this Board.
In accordance with the corporate governance recommendations published in July 2013 by the CMVM, this section gives a detailed description of the functions, responsibilities and composition of our governance bodies. Among other subjects, this section also includes a detailed description and explanation of our remuneration policy and the shareholding positions of our directors.
The full text containing Sonaecom's current governance rules – whether regulatory, recommended or voluntary, including the code of conduct and, in particular, the internal regulations for share transactions and conflicts of interest – are available to the general public on our website: www.sonae.com and the CMVM website: www.cmvm.pt
The following table summarises CMVM recommendations about corporate governance published in July 2013 and the respective level of compliance by Sonaecom at 31 December 2013.
I 1. Companies must encourage their shareholders to participate and vote in general assemblies, and specifically must not fix an excessively high number of shares needed to grant voting rights, and must implement the means needed to exercise voting rights by correspondence and electronically.
Recommendation fully adopted.
The company encourages its shareholders to take part in General Shareholders' Meetings, namely by assigning a vote to each share, and does not limit the number of votes that may be held or exercised by each shareholder, and provides shareholders with the necessary means to exercise their votes by post or electronically.
In addition, the company provides on its website, from the date each general shareholders' meeting is convoked, template documents intended to facilitate access to the information needed to issue shareholder notifications to ensure their presence at the meeting and also provides an electronic address to clarify any doubts and to receive all notifications of participation in the Shareholders' Meeting.
I 2. Companies should not adopt mechanisms that hamper decision-making by their shareholders, in particular by establishing a quorum greater than that set forth in law. Recommendation fully adopted.
The quorum detailed in the company bylaws corresponds to the minimum required by law.
I 3. Companies must not establish mechanisms that aim to provoke a discrepancy between the right to receive dividends or to subscribe to new securities and the voting rights of each ordinary share, unless duly justified on the basis of the long-term interests of the shareholders.
Recommendation fully adopted.
The company has no mechanism that aims to provoke the aforementioned discrepancy.
I 4. Company bylaws that establish a limitation on the number of votes that can be held or exercised by a single shareholder, individually or together with other shareholders, must also establish that at least every five years the amendment or maintenance of such bylaw provision be deliberated at a general meeting of shareholders - with no requirement for an increased quorum compared to that set forth in law - and establish that, during such deliberation, all of the votes submitted will be counted without such limitation having effect.
Recommendation fully adopted.
The company bylaws do not establish any limitation on the number of votes that can be held or exercised by a single shareholder.
I.5. Measures that require payments or the assumption of orders by the company in the event of a transfer of control or a change in the composition of the Board of Directors, which appear likely to hinder the free transferability of shares and free assessment by the shareholders of the performance of members of the Board of Directors should not be adopted. Recommendation fully adopted.
The company has not adopted any measures that fall under those mentioned in the recommendation above.
II 1.1. Within the limits established by law, and excluding companies of a small size, the Board of Directors must delegate the daily management of the company, and the delegated powers must be detailed in the annual report on corporate governance. Recommendation fully adopted.
The daily management of the company is delegated to an Executive Committee. See II. Administration and Supervision; c) Committees within the Board of Directors.
II 1.2. The Board of Directors must ensure that the company acts in line with its objectives, and does not delegate its powers, namely regarding: i) defining the company's general policies and strategy; ii) defining the Group's corporate structure; iii) decisions that must be considered strategic due to their amount, risk or to their special characteristics. Recommendation fully adopted.
Such responsibilities are not included in the delegation of powers of the Board of Directors in the Executive Committee.
II 1.3. Apart from exercising the inspection powers that are entrusted to them, the Supervisory and General Board must assume full responsibility in terms of the governance of the company. Consequently, by statutory provision or equivalent means, the mandatory requirement for this body to make decisions about the company's strategy and main policies, the definition of the Group's corporate structure and the decisions that must be considered strategic due to their amount or risk, must be established. This body must also assess the fulfilment of the company's strategic plan and the execution of its main policies. Recommendation not applicable.
Sonaecom did not adopt this governance model.
II 1.4. Except when the company in question is small, the Board of Directors and the Supervisory and General Board, according to the model adopted, must establish the committees required to:
a) Ensure a competent and independent assessment of the performance of executive directors and of their own overall performance, as well as of the different existing committees;
b) Reflect on the structural system and the governance practices adopted, check their efficacy and propose measures to be implemented, to the competent bodies, with a view to their improvement.
The Audit and Finance Committee and, particularly, the Appointments and Remunerations Committee were established to this end. See II. Administration and Supervision; c) Committees within the Board of Directors.
II 1.5. The Board of Directors or the Supervisory and General Board, according to the applicable model, must set objectives relating to the assumption of risks and create systems to monitor these risks, with a view to guaranteeing that the risks effectively incurred are consistent with those objectives.
Recommendation fully adopted.
These systems are implemented and monitored by the company's Supervisory Board, and the Inspection Board is responsible for inspection, complemented by the additional monitoring carried out by the Audit and Finance Committee.
II 1.6. The Board of Directors must include a number of non-executive members to guarantees an effective ability to monitor, supervise and assess the activity of the other members of the Board of Directors. Recommendation fully adopted.
Six of the 10 members of the Board of Directors are not executive members.
II 1.7. There should be an adequate proportion of independent directors among the non-executive directors, taking into account the governance model adopted, the size of the company, its shareholder structure and the respective free float. The independence of the members of the Supervisory and General Board and of the members of the Audit Committee is based on the terms of the applicable legislation. As regards the other members of the Board of Directors, a party not associated with any specific group of interests in the company or who is not in any situation that may exclude them from analysis or decision, namely by virtue of the following, is considered independent:
a) Having been an employee of the company or of a company owning it or belonging to the same group in the last three years;
Recommendation fully adopted.
At present, the company's Board of Directors includes three non-executive independent directors, which correspond to over a quarter of the total number of directors.
II 1.8. When asked by other members of the corporate bodies, the directors who exercise executive duties must provide the information requested by such in good time and in a manner appropriate to the request. Recommendation fully adopted.
The company directors fulfil this recommendation.
II 1.9. The president of the executive governing body or of the executive committee must, where applicable, send the Chairman of the Board of Directors, the Chairman of the Superviory Board, the Chairman of the Audit Committee, the Chairman of the Supervisory and General Board and the Chairman of the Committee for Financial Affairs, the announcements and minutes of the respective meetings.
Recommendation fully adopted.
The Chairman of the company's Executive Committee fulfils this recommendation.
II 1.10. Should the chairman of the Board of Directors exercise executive duties, this body should appoint one of its members as an independent director who ensures the co-ordination of the work of the other non-executive members and the conditions required for such to make independent and informed decisions or to find another equivalent mechanism that ensures such co-ordination.
Recommendation not applicable.
The Chairman of the company's Board of Directors does not exercise executive duties.
II 2.1. Depending on the applicable model, the Chairman of the Inspection Board, of the Audit Committee or of the Financial Affairs Committee must be independent, in accordance with the applicable legal standard, and have the skills appropriate for exercising their respective duties.
Recommendation fully adopted.
The Chairman of the Inspection Board, as well as all of the members of this body, are independent, in accordance with the criteria established under item 5 of article 414 of the Commercial Companies Code, and have the skills and experience required to exercise their duties.
II 2.2. The inspection body must be the main interlocutor of the External Auditor and the first addressee of the respective reports, and be entrusted namely with proposing the respective remuneration and guaranteeing that the conditions appropriate for rendering services are ensured within the company.
Recommendation fully adopted.
The company fully complies with the Commercial Companies Code stipulations in terms of the duties and function of the Inspection Board. The Inspection Board is linked to the Audit and Finance Committee as detailed in this report.
II 2.3. The inspection body must annually assess the External Auditor and propose their dismissal or the termination of the service agreement to the competent body provided that there is a justifiable reason to do so. Recommendation fully adopted.
The company Inspection Board undertakes this assessment annually.
II 2.4. The inspection board must assess the function of the internal monitoring systems and of the management of risks and propose the adjustments required.
These systems are implemented and monitored by the company's Supervisory Board, and the Supervisory Board is responsible for inspection complemented by the additional monitoring carried out by the Audit and Finance Committee.
II 2.5. The Audit Committee, the Supervisory and General Board and the Inspection Board must make decisions on the work plans and the resources subject to the internal audit services and to the services that ensure the compliance of the regulations applicable to the company (compliance services), and should be the addressees of the reports prepared by these services at least when matters related to accountability, the identification or the resolution of conflicts of interest and the detection of potentially illegal acts are in question.
Recommendation fully adopted.
The internal audit services report functionally and separately to the Supervisory Board and to the Audit and Finance Committee. The company highlights that the Internal Audit reports functionally and effectively to the Supervisory Board. The report for the Audit and Finance Committee, as a specialised committee of the Board of Directors, is yet another way of reinforcing the monitoring levels and does not replace the duties of the Supervisory Board.
II 3.1. All members of the Remunerations Committee or equivalent must be independent from the executive members of the Board of Directors and include at least one member with knowledge and experience of remuneration policy matters. Recommendation fully adopted.
Duarte Paulo Teixeira de Azevedo, Chairman of the Board of Directors and non-executive member of this body,assembles the Remuneration Committee, having been appointed to this duty by the General Meeting, as proposed by majority shareholder Sontel, B.V.. He represents the shareholders' interests in the Remuneration Committee and does not act here in the capacity of Chairman of the Board of Directors.
In order to guarantee independence in the exercising of these duties, Duarte Paulo Teixeira de Azevedo does not take part in any discussions or deliberations that involve, or could involve, a conflict of interests Adopting this procedure ensures the conditions of independence required for members' activities and the body's decision-making.
For further information, please see point 67 of this report.
II 3.2. Any individual or entity who, in the last three years, has rendered services to any structure under the direction of the Board of Directors to the company management body itself or who currently has a relationship with the company or with a consultant of the company, should not be hired to support the Remunerations Committee in the performance of its duties. This recommendation is equally applicable to any individual or legal entity that has a relationship with such by means of an employment or service agreement.
Recommendation fully adopted.
The Appointments and Remunerations Committee, composed of independent members, supports the Remuneration Committee in the performance of its duties. It is also supported by respected international consultants whose independence is guaranteed either by the fact that they have no connection to the Board of Directors or due to their broad experience and recognised status in the market.
II 3.3. The declaration on the remuneration policy of the management and inspection bodies, to which article 2 of Law 28/2009 of 19 June refers, must additionally contain:
a) An identification and explanation of the criteria for determining the remuneration to members of the corporate bodies;
Recommendation fully adopted.
The declaration on the remuneration policy was submitted to the Annual General Meeting on 27 April 2013 and contains the information referred to in this recommendation. Payments relating to the removal or cessation of directors' duties are not enforceable, without prejudice to the applicable legal provisions.
The declaration on the remuneration policy is available at www.sonae.com/investidores/assembleias-gerais/.
II 3.4. Proposals to approve plans for the allocation of shares and/or acquisition of shares or options based on variations in the price of shares must be submitted to members of the corporate bodies at the General Meeting. The proposal must contain all the elements required to properly assess the plan.
Recommendation fully adopted.
In its proposal, the company includes the approval of the share allocation plan, and always accompanies it with the respective regulation.
II 3.5. Any proposals for the approval of any retirement benefits system established for members of the corporate bodies must be submitted to the General Meeting. The proposal must contain all the elements required to properly assess the system. Recommendation not applicable.
At present, the company has no retirement pension plans in force.
III 1. The remuneration of the executive members of the management body must be based on effective performance and on discouraging the excessive assumption of risks. Recommendation fully adopted.
The remuneration of the executive members of the company management body is based on their effective performance and discourages the excessive assumption of risks.
III 2. The remuneration of non-executive members of the Board of Directors and the remuneration of members of the Supervisory Board must not include any component whose value depends on the performance of the company or its value. Recommendation fully adopted.
The remuneration of non-executive members of the Board of Directors and the remuneration of members of the Supervisory Board includes only one fixed component. As a result, these members do not receive variable remuneration nor do they participate in the MTIP. III 3. The variable remuneration component must be generally reasonable in relation to the fixed remuneration component, and maximum limits must be established for all components.
Recommendation fully adopted.
The company remuneration policy includes a fixed component and a variable component, as set forth in the main European reference indicators. In comparative terms, the fixed remuneration is close to the average and the total remuneration is close to the third quartile of the indicators. The variable component represents over 40% of the total received. The minimum and maximum variable components are pre-established as a percentage of a fixed component and as such are objectively established.
III 4. A substantial part of the variable remuneration must be deferred for a period of no less than three years, and the right to receive this variable remuneration must be dependent on the continuation of the company's positive performance throughout this period.
Recommendation fully adopted.
The MTIP, an integral part of the remuneration of executive members of the management body, is based precisely on this deferral.
III 5. Members of the management body should not enter into contracts with the company or with third parties that aim to mitigate the risk inherent in the variability of the remuneration established for them by the company. Recommendation fully adopted.
The company did not identify any contracts of this nature.
III 6. Until the end of their term, the executive directors must maintain the company shares they have been allocated by virtue of variable remuneration schemes, up to twice the value of total annual remuneration, with the exception of those shares that must be sold in order to pay taxes on the gains from such shares. Recommendation fully adopted.
Since 2008, the company has implemented a share retention policy that fully complies with this recommendation.
III 7. If the variable remuneration includes the allocation of options, the start of the period of exercise must be deferred by a period of no less than three years.
Recommendation fully adopted.
The variable component of the company remuneration does not include the allocation of options.
III 8. When the dismissal of a director is not due to serious breach of their duties or their incompetence in the normal exercising of their respective duties but, nevertheless, can be traced back to inadequate performance, the company must be equipped with the appropriate and required legal instruments so that any indemnification or compensation, aside from that legally payable, is not enforceable.
Recommendation fully adopted.
The company uses the appropriate legal instruments available in law for this situation. There are no individual contracts with the directors to define how possible compensation would be calculated. In addition, the company has never attributed or contemplated attributing compensation to the directors in the event of dismissal or cessation due to inadequate performance.
IV 1. The External Auditor must, within their competence, verify the application of the remuneration systems and policies of the corporate bodies, the efficacy and the operation of the internal monitoring mechanisms, and report any deficiencies to the company's inspection body.
Recommendation fully adopted.
The official accounts reviewer for the company confirms the activity they performed in the 2013 period, in terms of their annual report, which is available on the company website.
IV 2. The company or any entities that hold ownership of it must not contract services other than auditing services from the External Auditor or from any entities that are in the same group as it or form part of the same network. In the event there are reasons for contracting such services − which must be approved by the inspection body and detailed in its annual report on corporate governance − they must not assume over 30% of the total value of the services rendered to the company. Recommendation fully adopted.
The company policy states that the services contracted from the External Auditor, in addition to the audit services, do not constitute over 30% of all services contracted by the company. In 2013, in particular, the percentage of services increased to 12%.
IV 3. The companies must promote rotation of the auditor after two or three terms, provided the terms are of three or four years respectively. Retaining the auditor beyond this period must be based on a specific opinion of the inspection body that expressly considers the auditor's independence and the advantages and costs of substituting the auditor. Recommendation fully adopted.
An External Auditor was appointed in 2012. The company's Supervisory Board issued an opinion on conformity with this recommendation, which was approved in the General Meeting by the company shareholders.
V 1. The company's dealings with qualifying shareholders, or with entities that have a relationship with qualifying shareholders, must be performed under normal market conditions according to the terms of article 20 of the Securities Code. Recommendation fully adopted.
The company has a policy of performing these types of dealings in normal market conditions.
V 2. The supervisory or inspection body must establish the procedures and criteria required to define the relevant level of significance of dealings with qualifying shareholders − or with entities that have any of the relationships stipulated in article 20 (1) of the Securities Code with such shareholders − and the realisation of substantially relevant dealings will continue to be dependent on the prior opinion of said body.
Recommendation fully adopted.
The company has a policy of informing the Supervisory Board of these types of dealings and obtaining a preliminary opinion for dealings exceeding 10 million euros.
VI 1. Through their website, the companies must provide access to information about their evolution and current situation in economic, financial and governance terms, in Portuguese and in English. Recommendation fully adopted.
The company's website, www.sonae.com, includes information that fulfils the requirements of this recommendation.
VI 2. The companies must ensure that there is a department that supports the investor and offers permanent contact with the market, that responds to the requests of investors in good time, and that holds a record of requests submitted and how they were handled.
Recommendation fully adopted.
The company has an Investor Relations Department, which fulfils the requirements of this recommendation.
For the years ended at 31 December 2013 and 2012 (restated – note 1) and for 1 January 2012 (restated – note 1)
| (Amounts expressed in euro) | NOTES | DECEMBER 2013 | DECEMBER 2012 (restated) |
1 JANUARY 2012 (restated and not audited) |
|---|---|---|---|---|
| Assets | ||||
| Non-current assets | ||||
| Tangible assets | 1.c, 1.h and 5 | 5,530,098 | 580,956,944 | 581,223,967 |
| Intangible assets | 1.d, 1.e and 6 | 16,647,260 | 379,528,108 | 389,119,213 |
| Goodwill | 1.f, 1.w and 7 | 28,434,416 | 517,985,506 | 520,782,025 |
| Investments in associated companies and companies jointly controlled |
1.b and 8 | 710,434,285 | 953,082 | 841,170 |
| Investments available for sale | 1.g, 4 and 10 | 115,448 | 212,323 | 212,323 |
| Other non-current assets | 1.g, 1.r, 1.x and 4 | 922,434 | 2,422,660 | 264,973 |
| Deferred tax assets | 1.p, 1.s and 11 | 5,199,886 | 101,134,781 | 103,853,881 |
| Total non-current assets | 767,283,827 | 1,583,193,404 | 1,596,297,552 | |
| Current assets | ||||
| Financial assets at fair value through profit or loss |
1.g, 4 and 9 | 202,442,350 | - | - |
| Inventories | 1.i and 12 | 553,525 | 13,802,149 | 7,318,094 |
| Trade debtors | 1.g, 1.j, 4, 13 and 34 | 36,416,353 | 144,901,658 | 145,841,888 |
| Other current debtors | 1.g, 1.j, 4, 14 and 34 | 23,040,766 | 21,710,096 | 25,886,323 |
| Other current assets | 1.r, 1.x, 4 and 15 | 9,298,406 | 73,523,800 | 70,719,686 |
| Cash and cash equivalents | 1.k, 4, 16 and 34 | 188,014,923 | 61,741,010 | 188,606,310 |
| Total current assets | 459,766,323 | 315,678,713 | 438,372,301 | |
| Total assets | 1,227,050,150 | 1,898,872,117 | 2,034,669,853 | |
| Shareholders' funds and liabilities | ||||
| Shareholders' funds | ||||
| Share capital | 17 | 366,246,868 | 366,246,868 | 366,246,868 |
| Own shares | 1.u and 18 | (7,686,952) | (5,544,847) | (13,594,518) |
| Reserves | 1.t and 39 | 674,091,313 | 646,734,124 | 618,945,566 |
| Consolidated net income/(loss) for the year | 103,838,479 | 75,419,377 | 62,287,398 | |
| 1,136,489,708 | 1,082,855,522 | 1,033,885,314 | ||
| Non-controlling interests | 19 | 269,824 | 387,479 | 515,654 |
| Total Shareholders' funds | 1,136,759,532 | 1,083,243,001 | 1,034,400,968 |
| (Amounts expressed in euro) | NOTES | DECEMBER 2013 | DECEMBER 2012 (restated) |
1 JANUARY 2012 (restated and not audited) |
|---|---|---|---|---|
| CONTINUED | ||||
| Liabilities | ||||
| Non-current liabilities | ||||
| Medium and long-term loans – net of short-term portion |
1.l, 1.m, 4 and 20.a | 24,810,079 | 196,238,739 | 319,873,586 |
| Other non-current financial liabilities | 1.h, 4 and 21 | 67,937 | 17,308,879 | 16,305,644 |
| Provisions for other liabilities and charges | 1.o, 1.s and 22 | 3,060,986 | 43,673,340 | 48,563,051 |
| Deferred tax liabilities | 1.p, 1.s and 11 | 89,522 | 1,089,637 | 5,186,710 |
| Other non-current liabilities | 1.r, 1.x, 4 and 23 | 1,277,304 | 37,731,780 | 49,993,626 |
| Total non-current liabilities | 29,305,828 | 296,042,375 | 439,922,617 | |
| Current liabilities | ||||
| Short-term loans and other loans | 1.l, 1.m, 4 and 20.b | 998,996 | 187,170,148 | 118,405,031 |
| Trade creditors | 4, 24 and 34 | 21,768,279 | 168,755,674 | 172,285,338 |
| Other current financial liabilities | 1.h, 4 and 25 | 70,728 | 3,594,987 | 2,370,901 |
| Other creditors | 4, 26 and 34 | 10,439,327 | 32,644,919 | 43,595,334 |
| Other current liabilities | 1.r, 1.x, 4 and 27 | 27,707,460 | 127,421,013 | 223,689,664 |
| Total current liabilities | 60,984,790 | 519,586,741 | 560,346,268 | |
| Total Shareholders' funds and liabilities | 1,227,050,150 | 1,898,872,117 | 2,034,669,853 |
The notes are an integral part of the consolidated financial statements at 31 December 2013 and 2012 (restated – note 1).
Ricardo André Fraga Costa
Duarte Paulo Teixeira de Azevedo Ângelo Gabriel Ribeirinho Paupério António Bernardo Aranha da Gama Lobo Xavier Frank Emmanuel Dangeard
Miguel Nuno Santos Almeida António Sampaio e Mello David Charles Denholm Hobley Gervais Gilles Pellissier
For the years and quarters ended at 31 December 2013 and 2012 (restated – note 1)
| (Amounts expressed in euro) | NOTES | DECEMBER 2013 | SEPTEMBER TO DECEMBER 2013 (restated and not audited) |
DECEMBER 2012 (RESTATED) |
SEPTEMBER TO DECEMBER 2012 (restated and not audited) |
|---|---|---|---|---|---|
| Sales | 1.r, 28 and 34 | 33,057,911 | 8,059,387 | 32,248,013 | 6,400,000 |
| Services rendered | 1.r, 28 and 34 | 83,916,841 | 22,143,254 | 72,095,860 | 19,663,303 |
| Other operating revenues | 1.q, 29 and 34 | 3,475,123 | 951,133 | 2,014,005 | 971,537 |
| 120,449,875 | 31,153,774 | 106,357,878 | 27,034,840 | ||
| Cost of sales | 1.i, 12 and 22 | (24,753,054) | (6,248,192) | (24,854,049) | (4,791,588) |
| External supplies and services | 1.h, 30 and 34 | (44,474,432) | (9,957,306) | (42,429,435) | (10,943,771) |
| Staff expenses | 1.x, 39 and 42 | (43,318,213) | (10,837,641) | (42,637,552) | (11,978,294) |
| Depreciation and amortisation | 1.c, 1.d, 1.f, 5, 6 and 7 | (6,641,792) | (1,399,493) | (14,143,490) | (5,633,054) |
| Provisions and impairment losses | 1.j, 1.o, 1.w and 22 | (1,708,710) | (712,974) | (1,256,759) | (758,466) |
| Other operating costs | 31 | (283,057) | (70,443) | (286,082) | (116,096) |
| (121,179,258) | (29,226,049) | (125,607,367) | (34,221,269) | ||
| Gains and losses in associated companies and companies jointly controlled |
1.b, 8 and 32 | (490,365) | (2,662,160) | 32,858 | (359,557) |
| Gains and losses on financial assets at fair value through profit or loss |
1.g, 9 and 32 | 46,636,719 | 37,489,324 | - | - |
| Other financial expenses | 1.h, 1.m, 1.v, 1.w, 32 and 34 |
(11,998,760) | (951,023) | (16,510,748) | (4,702,347) |
| Other financial income | 1.v, 32 and 34 | 7,977,160 | 1,036,732 | 2,560,865 | 661,252 |
| Current income / (loss) | 41,395,371 | 36,840,598 | (33,166,514) | (11,587,081) | |
| Income taxation | 1.p, 11 and 33 | (3,873,144) | (1,120,439) | (7,265) | 176,093 |
| Consolidated net income/(loss) for the year of continued operations |
37,522,227 | 35,720,159 | (33,173,779) | (11,410,988) | |
| Consolidated net income/(loss) for the year of discontinued operations |
37 | 66,244,220 | - | 108,605,828 | 22,932,008 |
| Consolidated net income/(loss) for the year | 103,766,447 | 35,720,159 | 75,432,049 | 11,521,020 | |
| Attributed to: | |||||
| Shareholders of parent company | 38 | 103,838,479 | 35,779,066 | 75,419,377 | 11,517,269 |
| Non-controlling interests | (72,032) | (58,907) | 12,672 | 3,751 | |
| Earnings per share | 38 | ||||
| Including discontinued operations: | |||||
| Basic | 0.29 | 0.10 | 0.21 | 0.03 | |
| Diluted | 0.29 | 0.10 | 0.21 | 0.03 | |
| Excluding discontinued operations: | |||||
| Basic | 0.10 | 0.10 | (0.09) | (0.03) | |
| Diluted | 0.10 | 0.10 | (0.09) | (0.03) |
The notes are an integral part of the consolidated financial statements at 31 December 2013 and 2012 (restated – note 1).
Ricardo André Fraga Costa
Duarte Paulo Teixeira de Azevedo Ângelo Gabriel Ribeirinho Paupério António Bernardo Aranha da Gama Lobo Xavier Frank Emmanuel Dangeard
Miguel Nuno Santos Almeida António Sampaio e Mello David Charles Denholm Hobley Gervais Gilles Pellissier
For the years and quarters ended at 31 December 2013 and 2012 (restated – note 1)
| (Amounts expressed in euro) | NOTES | DECEMBER 2013 | SEPTEMBER TO DECEMBER 2013 (restated and not audited) |
DECEMBER 2012 (RESTATED) |
SEPTEMBER TO DECEMBER 2012 (restated and not audited) |
|---|---|---|---|---|---|
| Consolidated net income / (loss) for the year | 103,766,447 | 35,720,159 | 75,432,049 | 11,521,020 | |
| Components of other consolidated comprehensive income, net of tax, that will be reclassified subsequently to profit or loss: |
|||||
| Changes in reserves resulting from the application of equity method |
8 | (2,536,500) | (2,335,500) | 6,010 | 2,351 |
| Changes in currency translation reserve and other |
1.v | (1,155,064) | (383,964) | (1,481,952) | (303,511) |
| Consolidated comprehensive income for the year | 100,074,883 | 33,000,695 | 73,956,107 | 11,219,860 | |
| Attributed to: | |||||
| Shareholders of parent company | 100,146,915 | 33,059,602 | 73,943,435 | 11,216,109 | |
| Non-controlling interests | (72,032) | (58,907) | 12,672 | 3,751 |
The notes are an integral part of the consolidated financial statements at 31 December 2013 and 2012 (restated – note 1).
Ricardo André Fraga Costa
Duarte Paulo Teixeira de Azevedo Ângelo Gabriel Ribeirinho Paupério António Bernardo Aranha da Gama Lobo Xavier Frank Emmanuel Dangeard
Miguel Nuno Santos Almeida António Sampaio e Mello David Charles Denholm Hobley Gervais Gilles Pellissier
| For the years ended at 31 December 2013 and 2012 (restated – note 1) Consolidated move |
ments in shareholders' funds | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| RESERVES | |||||||||||
| (Amounts expressed in euro) | SHARE CAPITAL |
OWN SHARES (note 18) |
SHARE PREMIUM |
LEGAL RESERVES |
RESERVES FOR MEDIUM TERM INCENTIVE PLANS (note 39) |
RESERVES OF OWN SHARES |
OTHER RESERVES |
TOTAL RESERVES |
-CONTROLLING NON- INTERESTS |
NET INCOME / (LOSS) |
TOTAL |
| 2013 | |||||||||||
| Balance at 31 December 2012 | 366,246,868 | (5,544,847) | 775,290,377 | 7,991,192 | 3,650,779 | 5,544,847 | (145,743,071) | 646,734,124 | - | 75,419,377 | 1,082,855,522 |
| Appropriation of the consolidated net result of 2012 | |||||||||||
| Transfers to other reserves | - | - | - | 5,161,492 | - | - | 70,257,885 | 75,419,377 | - | (75,419,377) | - |
| Dividend distribution | - | - | - | - | - | - | (43,281,102) | (43,281,102) | - | - | (43,281,102) |
| Consolidated comprehensive income for the at 31 December 2013 year ended |
- | - | - | - | - | - | (3,691,564) | (3,691,564) | - | 103,838,479 | 100,146,915 |
| Acquisition of own shares | - | (2,500,042) | - | - | - | 2,500,042 | (2,500,042) | - | - | - | (2,500,042) |
| Medium Term Incentive Plans (notes 1.x and Delivery of own shares under the Short and 39) |
- | 357,937 | - | - | (425,568) | (357,937) | 430,292 | (353,213) | - | - | 4,724 |
| of the Medium Term Incentive Plans (notes Effect of the recognition 1.x and 39) |
- | - | - | - | 4,320,629 | - | - | 4,320,629 | - | - | 4,320,629 |
| Early termination of the derivate on own (Notas 34 e 39) shares |
- | - | - | - | - | - | 1,411,644 | 1,411,644 | - | - | 1,411,644 |
| Derecognition of Incentive Plans of Discon operations (note 3.e) tinued |
- | - | - | - | (6,468,582) | - | - | (6,468,582) | - | - | (6,468,582) |
| Balance at 31 Dezember 2013 | 366,246,868 | (7,686,952) | 775,290,377 | 13,152,684 | 1,077,258 | 7,686,952 | (123,115,958) | 674,091,313 | - | 103,838,479 | 1,136,489,708 |
| Non-controlling interests | |||||||||||
| Balance at 31 December 2012 | - | - | - | - | - | - | - | - | 387,479 | - | 387,479 |
| Non-controlling interests in comprehensive income |
- | - | - | - | - | - | - | - | (72,032) | - | (72,032) |
| Dividend distribution | - | - | - | - | - | - | - | - | (29,880) | - | (29,880) |
| Other changes | - | - | - | - | - | - | - | - | (15,743) | - | (15,743) |
| Balance at 31 December 2013 | - | - | - | - | - | - | - | - | 269,824 | - | 269,824 |
| Total | 366,246,868 | (7,686,952) | 775,290,377 | 13,152,684 | 1,077,258 | 7,686,952 | (123,115,958) | 674,091,313 | 269,824 | 103,838,479 | 1,136,759,532 |
112 SONAECOM_ANNUAL REPORT
| ments in shareholders' funds (continued) | For the years ended at 31 December 2013 and 2012 (restated – note 1) |
|---|---|
| Consolidated move |
| RESERVES | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (Amounts expressed in euro) | SHARE CAPITAL |
OWN SHARES (note 18) |
SHARE PREMIUM |
LEGAL RESERVES |
RESERVES FOR MEDIUM TERM INCENTIVE PLANS (note 39) |
RESERVES OF OWN SHARES |
OTHER RESERVES |
TOTAL RESERVES |
-CONTROLLING NON- INTERESTS |
NET INCOME / (LOSS) |
TOTAL |
| 2012 | |||||||||||
| Balance at 31 December 2011 (restated) | 366,246,868 | (13,594,518) | 775,290,377 | 7,991,192 | 7,119,989 | 13,594,518 | (185,050,511) | 618,945,566 | - | 62,287,398 | 1,033,885,314 |
| Appropriation of the consolidated net result of 2011 (restated) | |||||||||||
| Transfers to other reserves (restated) | - | - | - | - | - | - | 62,287,398 | 62,287,398 | - | (62,287,398) | - |
| Dividend distribution | - | - | - | - | - | - | (25,172,240) | (25,172,240) | - | - | (25,172,240) |
| Consolidated comprehensive income for the yearended at 31 December 2012 |
- | - | - | - | - | - | (1,475,942) | (1,475,942) | - | 75,419,377 | 73,943,435 |
| Acquisition of own shares | - | (3,382,977) | - | - | - | 3,382,977 | (3,382,977) | - | - | - | (3,382,977) |
| Medium Term Incentive Plans (notes 1.x and Delivery of own shares under the Short and 39) |
- | 11,432,648 | - | - | (7,927,434) | (11,432,648) | 10,342,721 | (9,017,362) | - | - | 2,415,286 |
| Effect of the recognition of the Medium Term Incentive Plans (notes 1.x and 39) |
- | - | - | - | 4,458,224 | - | - | 4,458,224 | - | - | 4,458,224 |
| Derivate on own shares (notes 34 and 39) | - | - | - | - | - | - | (3,291,520) | (3,291,520) | - | - | (3,291,520) |
| Balance at 31 December 2012 | 366,246,868 | (5,544,847) | 775,290,377 | 7,991,192 | 3,650,779 | 5,544,847 | (145,743,071) | 646,734,124 | - | 75,419,377 | 1,082,855,522 |
| Non-controlling interests | |||||||||||
| Balance at 31 December 2011 | - | - | - | - | - | - | - | - | 515,654 | - | 515,654 |
| Non-controlling interests in comprehensive income |
- | - | - | - | - | - | - | - | 12,672 | - | 12,672 |
| Dividend distribution | - | - | - | - | - | - | - | - | (124,500) | - | (124,500) |
| Other changes | - | - | - | - | - | - | - | - | (16,347) | - | (16,347) |
| Balance at 31 December 2012 | - | - | - | - | - | - | - | - | 387,479 | - | 387,479 |
| Total | 366,246,868 | (5,544,847) | 775,290,377 | 7,991,192 | 3,650,779 | 5,544,847 | (145,743,071) | 646,734,124 | 387,479 | 75,419,377 | 1,083,243,001 |
The notes are an integral part of the consolidated financial statements at 31 December 2013 and 2012 (restated – note 1).
Ricardo André Fraga Costa
| Duarte Paulo Teixeira de Azevedo |
|---|
| Ângelo Gabriel Ribeirinho Paupério |
| António Bernardo Aranha da Gama Lobo Xavier |
| Frank Emmanuel Dangeard |
Miguel Nuno Santos Almeida António Sampaio e Mello David Charles Denholm Hobley Gervais Gilles Pellissier
For the years ended at 31 December 2013 and 2012 (restated – note 1)
| (Amounts expressed in euro) | DECEMBER 2013 | DECEMBER 2012 (restated) |
||
|---|---|---|---|---|
| Operating activities | ||||
| Receipts from trade debtors | 555,100,940 | 790,637,975 | ||
| Payments to trade creditors | (329,681,342) | (468,538,462) | ||
| Payments to employees | (83,146,614) | (103,799,232) | ||
| Cash flows from operating activities | 142,272,984 | 218,300,281 | ||
| Payments / receipts relating to income taxes, net | (4,380,429) | (6,090,960) | ||
| Other payments / receipts relating to operating activities, net | (6,436,770) | (7,879,746) | ||
| Cash flows from operating activities (1) | 131,455,785 | 204,329,575 | ||
| Investing activities | ||||
| Receipts from: | ||||
| Financial investments | 15,557 | - | ||
| Tangible assets | 860,225 | 14,884,601 | ||
| Intangible assets | 1,002,664 | 468,857 | ||
| Interest and similar income | 5,802,467 | 6,407,460 | ||
| Loans granted | 427,850,000 | - | ||
| Dividends | - | 435,530,913 | 11,443 | 21,772,361 |
| Payments for: | ||||
| Financial investments | (1,303,441) | (5,976,854) | ||
| Tangible assets | (69,813,219) | (102,441,172) | ||
| Intangible assets | (28,879,720) | (118,117,761) | ||
| Loans granted | - | (99,996,380) | (1,230,806) | (227,766,593) |
| Cash flows from investing activities (2) | 335,534,533 | (205,994,232) | ||
| Financing activities | ||||
| Receipts from: | ||||
| Loans obtained | 3,925,434 | 3,925,434 | 62,749,401 | 62,749,401 |
| Payments for: | ||||
| Leasing | (2,617,595) | (2,781,029) | ||
| Interest and similar expenses | (13,170,914) | (17,945,269) | ||
| Dividends | (43,310,983) | (25,296,740) | ||
| Acquisition of own shares | (2,500,042) | (3,382,976) | ||
| Loans obtained | (369,952,000) | (431,551,534) | (138,000,000) | (187,406,014) |
| Cash flows from financing activities (3) | (427,626,100) | (124,656,613) | ||
| Net cash flows (4)=(1)+(2)+(3) | 39,364,218 | (126,321,270) | ||
| Effect of the foreign exchanges | (489,036) | (281,024) | ||
| Effect of the discontinued operations | 87,443,813 | - | ||
| Cash and cash equivalents at the beginning of the year | 61,685,720 | 188,288,014 | ||
| Cash and cash equivalents at the end of the year | 188,004,715 | 61,685,720 |
The notes are an integral part of the consolidated financial statements at 31 December 2013 and 2012 (restated – note 1)
Ricardo André Fraga Costa
Duarte Paulo Teixeira de Azevedo Ângelo Gabriel Ribeirinho Paupério António Bernardo Aranha da Gama Lobo Xavier Frank Emmanuel Dangeard
Miguel Nuno Santos Almeida António Sampaio e Mello David Charles Denholm Hobley Gervais Gilles Pellissier
For the years ended at 31 December 2013 and 2012 (restated – note 1)
| DECEMBER 2013 | DECEMBER 2012 (RESTATED) |
|
|---|---|---|
| a) Amounts received of sales | ||
| Distrinews, S.A. | 9,375 | - |
| Infosystems | 6,182 | - |
| 15,557 | - | |
| b) Amounts paid of acquisitions | ||
| Connectiv Solutions, Inc | 1,213,537 | 5,970,672 |
| Saphety Brasil | 56,904 | - |
| Saphety Colombia | 20,500 | - |
| Distrinews, S.A. | 12,500 | - |
| Infosystems | - | 6,182 |
| 1,303,441 | 5,976,854 |
| Cash assets | 188,014,923 | 61,741,010 | |
|---|---|---|---|
| Overdrafts | 10,208 | 55,290 | |
| Cash and cash equivalents | 188,004,715 | 61,685,720 | |
| Overdrafts | 16 and 20 | (10,208) | (55,290) |
| Treasury applications | 16 | 159,210,318 | 54,878,917 |
| Cash at bank | 16 | 28,793,626 | 6,740,186 |
| Cash in hand | 16 | 10,979 | 121,907 |
| NOTES | DECEMBER 2013 | DECEMBER 2012 (restated) |
|
| NOTES | DECEMBER 2013 | DECEMBER 2012 (restated) |
|
|---|---|---|---|
| a) Bank credit obtained and not used | 20 | 16,000,000 | 69,000,000 |
| b) Purchase of company through the issue of shares | Not applicable | Not applicable | |
| c) Conversion of loans into shares | Not applicable | Not applicable |
| ACTIVITY | CASH FLOW FROM OPERATING ACTIVITIES |
CASH FLOW FROM INVESTING ACTIVITIES |
CASH FLOW FROM FINANCING ACTIVITIES |
NET CASH FLOWS |
|---|---|---|---|---|
| 2013 | ||||
| Telecommunication | 145,550,815 | (90,693,038) | (22,210,261) | 32,647,516 |
| Multimedia | (2,855,285) | (850,037) | (55,686) | (3,761,008) |
| Information Systems | (2,301,853) | (3,654,595) | (682,486) | (6,638,934) |
| Holding | (8,937,892) | 430,732,203 | (404,677,667) | 17,116,644 |
| 131,455,785 | 335,534,533 | (427,626,100) | 39,364,218 |
| ACTIVITY | CASH FLOW FROM OPERATING ACTIVITIES |
CASH FLOW FROM INVESTING ACTIVITIES |
CASH FLOW FROM FINANCING ACTIVITIES |
NET CASH FLOWS |
|---|---|---|---|---|
| 2012 (restated) | ||||
| Telecommunication | 204,051,209 | (198,113,464) | (19,804,451) | (13,866,706) |
| Multimedia | (4,264,477) | (753,096) | (7,044) | (5,024,617) |
| Information Systems | 559,005 | (8,280,318) | 5,283,394 | (2,437,919) |
| Holding | 3,983,838 | 1,152,646 | (110,128,512) | (104,992,028) |
| 204,329,575 | (205,994,232) | (124,656,613) | (126,321,270) |
The notes are an integral part of the consolidated financial statements at 31 December 2013 and 2012 (restated – note 1).
Ricardo André Fraga Costa
Duarte Paulo Teixeira de Azevedo Ângelo Gabriel Ribeirinho Paupério António Bernardo Aranha da Gama Lobo Xavier Frank Emmanuel Dangeard
Miguel Nuno Santos Almeida António Sampaio e Mello David Charles Denholm Hobley Gervais Gilles Pellissier
SONAECOM, SGPS, S.A. (hereinafter referred to as 'the Company' or 'Sonaecom') was established on 6 June 1988, under the name Sonae – Tecnologias de Informação, S.A. and has its head office at Lugar de Espido, Via Norte, Maia – Portugal. It is the parent company of the Group of companies listed in notes 2 and 3 ('the Group').
Pargeste, SGPS, S.A.'s subsidiaries in the communications and information technology area were transferred to the Company through a demerger-merger process, executed by public deed dated 30 September 1997.
On 3 November 1999 the Company's share capital was increased, its Articles of Association were modified and its name was changed to Sonae.com, SGPS, S.A.. Since then the Company's corporate object has been the management of investments in other companies. Also on 3 November 1999, the Company's share capital was re-denominated to Euro, being represented by one hundred and fifty million shares with a nominal value of 1 Euro each.
On 1 June 2000, the Company carried out a Combined Share Offer, involving the following:
In addition to the Combined Share Offer, the Company's share capital was increased under the terms explained below. The new shares were fully subscribed for and paid up by Sonae, SGPS, S.A. (a Shareholder of Sonaecom, hereinafter referred to as 'Sonae'). The capital increase was subscribed for and paid up on the date the price of the Combined Share Offer was determined, and paid up in cash, 31,000,000 new ordinary shares of 1 Euro each being issued. The subscription price for the new shares was the same as that fixed for the sale of shares in the aforementioned Combined Share Offer, which was Euro 10.
In addition, in this year, Sonae sold 4,721,739 Sonaecom shares under an option granted to the banks leading the Institutional Offer for Sale and 1,507,865 shares to Sonae Group managers and to the former owners of the companies acquired by Sonaecom. By decision of the Shareholders' General Meeting held on 17 June 2002, Sonaecom's share capital was increased from Euro 181,000,000 to Euro 226,250,000 by public subscription reserved for the existing Shareholders, 45,250,000 new shares of 1 euro each having been fully subscribed for and paid up at the price of Euro 2.25 per share.
On 30 April 2003, the Company's name was changed by public deed to SONAECOM, SGPS, S.A..
By decision of the Shareholders' General Meeting held on 12 September 2005, Sonaecom's share capital was increased by Euro 70,276,868, from Euro 226,250,000 to Euro 296,526,868, by the issuance of 70,276,868 new shares of 1 euro each and with a share premium of Euro 242,455,195, fully subscribed by France Télécom. The corresponding public deed was executed on 15 November 2005.
By decision of the Shareholders General Meeting held on 18 September 2006, Sonaecom's share capital was increased by Euro 69,720,000, from Euro 296,526,868 to Euro 366,246,868, by the issuance of 69,720,000 new shares of 1 euro each and with a share premium of Euro 275,657,217, subscribed by 093X – Telecomunicações Celulares, S.A. ('EDP') and Parpública – Participações Públicas, SGPS, S.A. ('Parpública'). The corresponding public deed was executed on 18 October 2006.
By decision of the Shareholders General Meeting held on 16 April 2008, bearer shares were converted into registered shares.
During the year ended at 31 December 2013, the merger between Zon Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. ('Zon') and Optimus SGPS, SA (note 3.e) was closed. Accordingly, the telecommunications segment was classified, for presentation purposes, as an discontinued operation and the Group's business became of:
Additionally, since the merger mentioned above, the telecommunications segment became jointly controlled (note 8).
The Group operates in Portugal and has subsidiaries (from the information systems consultancy segment) operating in about 16 countries.
Since 1 January 2001, all Group companies based in the Euro zone have adopted the Euro as their base currency for processing, systems and accounting.
The consolidated financial statements are also presented in euro, rounded at unit, and the transactions in foreign currencies are included in accordance with the accounting policies detailed below.
The accompanying financial statements relate to the consolidated financial statements of the Sonaecom Group and have been prepared on a going concern basis, based on the accounting records of the companies included in the consolidation through full consolidation method (note 2) in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). These financial statements were prepared based on the acquisition cost, except for the revaluation of some financial instruments.
For Sonaecom, there are no differences between IFRS as adopted by European Union and IFRS published by the International Accounting Standards Board, with the exception of the start dates of the adoption of the standards indicated below.
Sonaecom adopted IFRS for the first time according to SIC 8 (First-time adoption of IAS) on 1 January 2003.
The following standards, interpretations, amendments and revisions have been approved (endorsed) by the European Union, and have mandatory application to financial years beginning on or after 1 January 2013 and were first adopted in the year ended at 31 December 2013:
| STANDARD / INTERPRETATION | EFFECTIVE DATE (annual periods beginning on or after) |
|---|---|
| IFRS 13 (Fair Value Measurement) |
1-Jan-13 |
| It will improve consistency and reduce complexity by providing, for the first time, a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. |
|
| IAS 12 - Amendments (Deferred tax: Recovery of Underlying Assets) |
1-Jan-12 (*) |
The amendment introduces, in the case of investment properties measured using the fair value model, the presumption that recovery of the carrying amount will normally be through sale, in order to determine their tax impact. As a result of the amendments, SIC 21 - 'Income Taxes—Recovery of Revalued Non-Depreciable Assets' would no longer apply to investment properties carried at fair value. The amendments also incorporate into IAS 12 the remaining guidance previously contained in SIC-21, which is accordingly withdrawn.
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 only in future periods or financial years:
| STANDARD / INTERPRETATION | EFFECTIVE DATE (annual periods beginning on or after) |
|---|---|
| IFRS 10 (Consolidated Financial Statements) |
1-Jan-13(**) |
| Builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. |
|
| IFRS 11 (Companies jointly controlled) |
1-Jan-13(**) |
| Provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form (as is currently the case). The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in jointly controlled entities. |
|
| IFRS 12 (Disclosures of Interests in Other Entities) |
1-Jan-13(**) |
| New and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. |
|
| IAS 27 (Separate Financial Statements) |
1-Jan-13(**) |
| Consolidation requirements previously forming part of IAS 27 have been revised and are now contained in IFRS 10 Consolidated Financial Statements. |
|
| IAS 28 (Investments in Associates and Joint Ventures) |
1-Jan-13(**) |
| The objective of IAS 28 (as amended in 2011) is to prescribe the accounting for investments in associates and to set out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. |
|
| Amendments to IFRS 10, IFRS 12 and IAS 27 (Investment Entities); |
1-Jan-14 |
| The amendments apply to a particular class of business that qualify as investment entities. The admendments provide an exception to the consolidation requirements in IFRS 10. |
|
| IAS 32- Admendments (Offsetting Financial Assets and Financial Liabilities) |
1-Jan-14 |
| IAS 32 is amended to refer to the disclosure requirements in respect of offsetting arrangements. |
|
| Amendments to IAS 36 (Recoverable amount disclosures for Non-Financial Assets) |
1-Jan-14 |
| The amendments introduce additional disclosures and clarify the disclosures required when an asset is impaired and the recoverable amount of assets was based on Fair Value Less Cost of Disposal. |
|
| Amendments to IAS 39 (Novation of Derivatives and Continuation of Hedge Accounting) |
1-Jan-14 |
| The objective of the proposed amendments is to provide an exception to the requirement for the discontinuation of hedge accounting in IAS 39 and IFRS 9 in circumstances when a hedging instrument is required to be novated as a result of laws or regulations. |
(**) In accordance with the EU Regulation which approves 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 January 1, 2014. The early adoption is however permitted.
These standards, although endorsed by the European Union, were not adopted by the Company for the year ended at 31 December 2013, since their application is not yet mandatory. The application of these standards and interpretations, as applicable to the Group will have no material effect on future statements of the Group.
The following standards, interpretations, amendments and revisions have not yet been approved (endorsed) by the European Union, at the date of approval of these financial statements:
| STANDARD / INTERPRETATION | EFFECTIVE DATE (annual periods beginning on or after) |
|---|---|
| IFRS 9 (Financial Instruments) and subsequent amendments |
1-Jan-15 |
| This standard is the first step in the project to replace IAS 39, and it introduces new requirements for classifying and measuring financial assets. Subsequent amendments refer to amendments to IFRS 9 and IFRS 7: Man datory Effective Date and Transition Disclosures issued on 16 December 2011; Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39 issued on 19 November 2013) . |
|
| IAS 19 - Amendments (Defined Benefit Plans: Employee Contributions) |
1-Jul-14 |
| The objective of the amendments is to simplify the accounting for contributions that are independent of the number of years of employee service. |
|
| Annual Improvements to IFRSs 2010–2012 Cycle |
1-Jul-14 |
| Annual Improvements to IFRSs 2010–2012 Cycle is a collection of amend ments to IFRSs in response to eight issues addressed during the 2010–2012 cycle for annual improvements to IFRSs. |
|
| Annual Improvements to IFRSs 2011–2013 Cycle |
1-Jul-14 |
| Annual Improvements to IFRSs 2011–2013 Cycle is a collection of amendments to IFRSs in response to four issues addressed during the 2011–2013 cycle for annual improvements to IFRSs. |
|
| IFRIC 21 Levies (Levies Charged by Public Authorities on Entities that Operate in a Specific Market) |
1-Jan-14 |
| This interpretation clarifies on when a liability to pay a levy imposed by a government (does not include income taxes - see IAS 12 Income taxes) should be recognised by an entity. IFRIC 21 identifies that the obligating event that gives rise to a liability is the activity that triggers the payment of the levy in accordance with the relevant legislation. |
These standards have not yet been approved ('endorsed') by the European Union and, as such, were not adopted by the Group for the year ended at 31 December 2013. Their application is not yet mandatory.
The application of these standards and interpretations, when applicable, will have no material effect on future consolidated financial statements.
The IFRS 11 - Joint arrangements is issued by IASB and endorsed by the European Union with mandatory application only in future periods or financial years after 1 January 2014. During the year ended at 31 December 2013, in order to anticipate possible future impacts of the standard abovementioned, improving the future comparability of the financial statements, the Group decided to report all companies jointly controlled (Sirs, Unipress, Zopt, Infosystems and SSI Angola) according to the equity method, under the IAS 31 - Joint ventures, which is similar to the arragements laid down in IFRS 11.
As set forth by the standards, this change has been applied retrospectively and therefore the consolidated balances sheets at 1 January 2012 and 31 December 2012 and the consolidated profit and loss statements for the year ended at 31 December 2012, were changed.
The effects of these changes in balances sheets at 1 January 2012 and 31 December 2012 and in profit and loss statements for the year ended at 31 December 2012 are as follow:
| (Amounts expressed in Euro) |
BEFORE THE CHANGE |
EFFECTS OF THE CHANGE OF THE CON SOLIDATION METHOD OF THE COMPA NIES JOINTLY CONTROLLED |
BALANCE SHEET RESTATED |
|---|---|---|---|
| Assets | |||
| Tangible assets | 583,413,555 | (2,189,588) | 581,223,967 |
| Intangible assets | 389,121,882 | (2,669) | 389,119,213 |
| Goodwill | 521,103,723 | (321,698) | 520,782,025 |
| Investments in associated companies and companies jointly controlled |
- | 841,170 | 841,170 |
| Other non-current assets |
477,296 | - | 477,296 |
| Deferred tax assets | 103,853,881 | - | 103,853,881 |
| Non-current assets | 1,597,970,337 | (1,672,785) | 1,596,297,552 |
| Trade debtors | 146,137,974 | (296,086) | 145,841,888 |
| Cash and cash equivalents |
189,350,054 | (743,744) | 188,606,310 |
| Other current assets | 104,022,427 | (98,324) | 103,924,103 |
| Current assets | 439,510,455 | (1,138,154) | 438,372,301 |
| Total assets | 2,037,480,792 | (2,810,939) | 2,034,669,853 |
| Liabilities | |||
| Medium and long term loans – net of short-term portion |
320,176,857 | (303,271) | 319,873,586 |
| Other non-current financial liabilities |
17,990,531 | (1,684,887) | 16,305,644 |
| Provisions for other liabilities and charges |
48,549,956 | 13,095 | 48,563,051 |
| Other non-current liabilities |
55,180,336 | - | 55,180,336 |
| Non-current liabilities |
441,897,680 | (1,975,063) | 439,922,617 |
| Short-term loans and other loans |
118,405,031 | - | 118,405,031 |
| Trade creditors | 172,622,586 | (337,248) | 172,285,338 |
| Other current li abilities |
270,154,527 | (498,628) | 269,655,899 |
| Current liabilities | 561,182,144 | (835,876) | 560,346,268 |
| Total liabilities | 1,003,079,824 | (2,810,939) | 1,000,268,885 |
| Shareholders' funds excluding non controlling interests |
1,033,885,314 | - | 1,033,885,314 |
| Non-controlling interests |
515,654 | - | 515,654 |
| Total Shareholders' funds |
1,034,400,968 | - | 1,034,400,968 |
| Total Shareholders' funds and liabilities |
2,037,480,792 | (2,810,939) | 2,034,669,853 |
BALANCE SHEET AT 31 DECEMBER 2012
| BALANCE SHEET AT 31 DECEMBER 2012 | |||
|---|---|---|---|
| (Amounts expressed in Euro) |
BEFORE THE CHANGE |
EFFECTS OF THE CHANGE OF THE CON SOLIDATION METHOD OF THE COMPA NIES JOINTLY CONTROLLED |
BALANCE SHEET RESTATED |
| Assets | |||
| Tangible assets | 582,787,339 | (1,830,395) | 580,956,944 |
| Intangible assets | 379,531,369 | (3,261) | 379,528,108 |
| Goodwill | 518,307,204 | (321,698) | 517,985,506 |
| Investments in associated companies and companies jointly controlled |
- | 928,082 | 928,082 |
| Other non-current assets |
2,634,983 | 25,000 | 2,659,983 |
| Deferred tax assets | 101,134,781 | - | 101,134,781 |
| Non-current assets | 1,584,395,676 | (1,202,272) | 1,583,193,404 |
| Trade debtors | 145,116,712 | (215,054) | 144,901,658 |
| Cash and cash equivalents |
62,419,042 | (678,032) | 61,741,010 |
| Other current assets | 108,992,356 | 43,689 | 109,036,045 |
| Current assets | 316,528,110 | (849,397) | 315,678,713 |
| Total assets | 1,900,923,786 | (2,051,669) | 1,898,872,117 |
| Liabilities | |||
| Medium and long-term loans – net of short-term portion |
196,412,663 | (173,924) | 196,238,739 |
| Other non-current financial liabilities |
18,712,963 | (1,404,084) | 17,308,879 |
| Provisions for other liabilities and charges |
43,612,202 | 61,138 | 43,673,340 |
| Other non-current liabilities |
38,821,417 | - | 38,821,417 |
| Non-current liabilities |
297,559,245 | (1,516,870) | 296,042,375 |
| Short-term loans and other loans |
187,170,148 | - | 187,170,148 |
| Trade creditors | 168,996,364 | (240,690) | 168,755,674 |
| Other current liabilities |
163,955,028 | (294,109) | 163,660,919 |
| Current liabilities | 520,121,540 | (534,799) | 519,586,741 |
| Total liabilities | 817,680,785 | (2,051,669) | 815,629,116 |
| Shareholders' funds excluding non-controlling interests |
1,082,855,522 | - | 1,082,855,522 |
| Non-controlling interests |
387,479 | - | 387,479 |
| Total Shareholders' funds |
1,083,243,001 | - | 1,083,243,001 |
| Total Shareholders' funds and liabilities |
1,900,923,786 | (2,051,669) | 1,898,872,117 |
Also, during the year ended at 31 December 2013, the telecommunications segment (Optimus SA, Be Artis, Be Towering, Sontária and Permar) was classified, for presentation purposes, as a discontinued operation, as a result of a merger by the incorporation of Optimus SGPS in Zon (note 3.e). As set forth by IFRS 5, changes were made in the consolidated profit and loss statements for the years ended at 31 December 2013 and 2012, in order to disclose a single caption in profit and loss statements ('Net income/(loss) for the year of discontinued operations') related to net income/(loss) of discontinued operations.
| (Amounts express in Euro) |
BEFORE THE CHANGE |
EFFECTS OF THE CHANGE OF THE CONSOLIDATION METHOD OF THE COMPANIES JOINTLY CON TROLLED |
RESTATEMENT OF THE TELECOMMUNI CATIONS' CONTRIBUTION TO DISCONTINUED OPERATIONS |
BALANCE SHEET RESTATED |
|---|---|---|---|---|
| Total revenue | 834,728,342 | (1,381,630) | (726,988,834) | 106,357,878 |
| Costs and losses | ||||
| External supplies and services |
(392,774,557) | (139,148) | 350,484,270 | (42,429,435) |
| Depreciation and amortisation |
(153,404,977) | 462,067 | 138,799,420 | (14,143,490) |
| Other operating costs |
(195,965,988) | 1,000,135 | 125,931,411 | (69,034,442) |
| (742,145,522) | 1,323,054 | 615,215,101 | (125,607,367) | |
| Financial results | (14,009,739) | 27,289 | 65,425 | (13,917,025) |
| Income taxation | (3,141,032) | 31,287 | 3,102,480 | (7,265) |
| Consolidated net income/ (loss) for the year of contin ued operations |
75,432,049 | - | (108,605,828) | (33,173,779) |
| Consolidated net income/ (loss) for the year of discontinued operations |
- | - | 108,605,828 | 108,605,828 |
| Consolidated net income/ (loss) for the year of discontinued operations |
75,432,049 | - | - | 75,432,049 |
| Attributed to non-controlling interests |
12,672 | - | - | 12,672 |
| Attributed to shareholders of parent company |
75,419,377 | - | - | 75,419,377 |
| Earnings per share | ||||
| Including discontinued operations: | ||||
| Basic | 0.21 | 0.00 | 0.00 | 0.21 |
| Diluted | 0.21 | 0.00 | 0.00 | 0.21 |
| Excluding discontinued operations: | ||||
| Basic | 0.21 | 0.00 | (0.30) | (0.09) |
| Diluted | 0.21 | 0.00 | (0.30) | (0.09) |
The accounting policies and measurement criteria adopted by the Group on 31 December 2013, with the exception of the above metioned changes, are comparable with those used in the preparation of 31 December 2012 financial statements.
The main accounting policies used in the preparation of the accompanying consolidated financial statements are as follows:
Investments in companies in which the Group has direct or indirect voting rights at Shareholders' General Meetings, in excess of 50%, or in which it has control over the financial and operating policies (definition of control used by the Group) were fully consolidated in the accompanying consolidated financial statements. Third party participations in the Shareholders' equity and net results of those companies are recorded separately in the consolidated balance sheet and in the consolidated profit and loss statement, respectively, under the caption 'Non-controlling interests'.
Total comprehensive income is attributed to the owners of the Shareholders of parent company and the non-controlling interests even if this results in a deficit balance of non-controlling interests.
In the acquisition of subsidiaries, the purchase method is applied. The results of subsidiaries bought or sold during the year are included in the profit and loss statement as from the date of acquisition (or of control acquisition) or up to the date of sale (or of control cession). Intra-Group transactions, balances and dividends are eliminated.
The expenses incurred with the acquisition of investments in Group companies are recorded as cost when they are incurred.
The fully consolidated companies are listed in note 2.
Investments in associated companies correspond to investments in which the Group has significant influence (generally investments representing between 20% and 50% of a company's share capital) and are recorded using the equity method.
The investments in companies jointly controlled are also recorded using the equity method. The classification of these investments is determinated based on Shareholders Agreements, which regulate the shared control.
In accordance with the equity method, investments are adjusted annually by the amount corresponding to the Group's share of the net results of associated companies, against a corresponding entry to gain or loss for the year, and by the amount of dividends received, as well as by other changes in the equity of the associated companies, which are recorded by a corresponding entry under the caption 'Other reserves'. An assessment of the investments in associated companies and companies jointly controlled is performed annually, with the aim of detecting possible impairment situations.
When the Group's share of accumulated losses of an associated company or a company jointly controlled exceeds the book value of the investment, the investment is recorded at nil value, except when the Group has assumed commitments to the associated company or a company jointly controlled, a situation when a provision is recorded under the caption 'Provisions for other liabilities and charges'.
The difference between the acquisition price of the investments in associated companies and companies jointly controlled and the fair value of identifiable assets and liabilities at the time of their acquisition, when positive, is recorded as Goodwill , included in the investment value and, when negative, after a reassessment, is recorded, directly, in the profit and loss statement under the caption 'Gains and losses in companies in associated companies and companies jointly controlled'.
A description of the associated companies and companies jointly controlled is disclosed in note 8.
Tangible assets are recorded at their acquisition cost less accumulated depreciation and less estimated accumulated impairment losses.
Depreciations are calculated on a straight-line monthly basis as from the date the assets are available for use in the necessary conditions to operate as intended by the management, by a corresponding charge under the profit and loss statement caption 'Depreciation and amortisation'.
Impairment losses detected in the realisation value of tangible assets are recorded in the year in which they arise, by a corresponding charge under the caption 'Depreciation and amortisation' in the profit and loss statement.
The annual depreciation rates used correspond to the estimated useful life of the assets, which are as follows:
| YEARS OF USEFUL LIFE | |
|---|---|
| Buildings and other constructions | 1 - 20 |
| Plant and machinery | 4 - 20 |
| Fixtures and fittings | 1 - 15 |
| Vehicles | 1 - 4 |
| Other tangible assets | 4 - 20 |
Current maintenance and repair costs of tangible assets are recorded as costs in the year in which they occur. Improvements of significant amount, which increase the estimated useful life of the assets, are capitalised and depreciated in accordance with the remaining estimated useful life of the corresponding assets.
The estimated costs related with the mandatory dismantling and removal of tangible assets, incurred by the Group, are capitalised and depreciated in accordance with the estimated useful life of the corresponding assets.
Work in progress corresponds to tangible assets still in the construction/development stage which are recorded at their acquisition cost. These assets are depreciated as from the moment they are in condition to be used and when they are ready to start operating as intended by the management.
Intangible assets are recorded at their acquisition cost less accumulated amortisation and less estimated accumulated impairment losses. Intangible assets are only recognised if it is likely that they will bring future economic benefits to the Group, if the Group controls them and if their cost can be reasonably measured.
Intangible assets comprise, essentially, software, brands. patents, costs incurred with the acquisition of customers' portfolios (value attributed under the purchase price allocation in business combinations) and know-how.
Amortisations of intangible assets are calculated on a straightline monthly basis, over the estimated useful life of the assets (one to nineteen years), as from the month in which the corresponding expenses are incurred. The amortisation of the customer's portfolios is provided on a straight-line basis over the estimated average retention period of the customers (six years).
Expenditures with internally-generated intangible assets, namely research and development expenditures, are recognised in the profit and loss statement when incurred.
Development expenditures can only be recognised as an intangible asset if the Group demonstrates the ability to complete the project and is able to put it in use or available for sale.
Amortisation for the period is recorded in the profit and loss statement under the caption 'Depreciation and amortisation'.
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.
Sonaecom Group does not hold any brands or patents with undetermined useful life, therefore the second half of the above referred paragraph is not applicable.
The differences between the price of investments in subsidiaries added the value of non-controlling interests, and the amount attributed to the fair value of the identifiable assets and liabilities at the time of their acquisition, when positive, are recorded under the caption 'Goodwill', and, when negative, after a reappreciation of its calculation, are recorded directly in the profit and loss statement. The Group will choose, on an acquisition-by-acquisition basis, to measure non-controlling interests either at their proportionate interest on the fair value of the assets and liabilities acquired, or at the fair value of the non-controlling interests themselves. Until 1 January 2010, non-controlling interests were always measured at their proportionate interest on the fair value of the acquired assets and liabilities.
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 that existed at the acquisition date, otherwise these changes must be recognised in profit or loss.
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 to generate a loss of control, should be derecognised assets and liabilities of the entity and any interest retained in the entity sold should be remeasured at fair value and any gain or loss calculated on the sale is recorded in results.
Until 1 January 2004, 'Goodwill' was amortised over the estimated period of recovery of the investments, usually 10 years, and the annual amortisation was recorded in the profit and loss statement under the caption 'Depreciation and amortisation'. Since 1 January 2004 and in accordance with the IFRS 3 – 'Business Combinations', the Group has ceased the amortisation of the 'Goodwill', subjecting them to impairment tests (paragraph w). Impairment losses of Goodwill are recorded in the profit and loss statement for the period under the caption 'Depreciation and amortisation'.
The Group classifies its financial instruments in the following categories: 'financial assets at fair value through profit or loss', 'loans and receivables', 'held-to-maturity investments', and 'available-for-sale financial assets'. The classification depends on the purpose for which the investments were acquired.
The classification of the investments is determined at the initial recognition and re-evaluated every quarter.
This category has two sub-categories: financial assets held for trading and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if it has been acquired mainly with the purpose of selling it in the short term or if the adoption of this method allows reducing or eliminating an accounting mismatch. Derivatives are also registered as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to mature within 12 months of the balance sheet date.
Loans and receivables are non-derivative financial assets with fixed or variable payments that are not quoted in an active market. These financial investments arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable.
Loans and receivables are carried at amortised cost using the effective interest method, deducted from any impairment losses.
Loans and receivables are recorded as current assets, except when their maturity is greater than 12 months from the balance sheet date, a situation in which they are classified as non-current assets. Loans and receivables are included in the captions 'Trade debtors' and 'Other current debtors' in the balance sheet.
Held-to-maturity investments are non-derivative financial assets with fixed or variable payments and with fixed maturities that the Group's management has the positive intention and ability to hold until their maturity.
At 31 December 2013 the Group did not hold any 'Held-tomaturity investment'.
Available-for-sale financial assets are non-derivative investments that are either designated in this category or not classified in any of the other above referred categories. They are included in non-current assets unless management intends to dispose them within 12 months of the balance sheet date.
Purchases and sales of investments are recognised on tradedate – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. The 'Financial assets at fair value through profit or loss' are initially recognised at fair value and the transaction costs are recorded in the profit and loss statement. Investments are derecognised when the rights to receive cash flows from the investments have expired or all substantial risks and rewards of their ownership have been transferred.
'Available-for-sale financial assets' and 'Financial assets at fair value through profit or loss' are subsequently carried at fair value.
'Loans and receivables' and 'Held-to-maturity investments' are carried at amortised cost using the effective interest method.
Realised and unrealised gains and losses arising from changes in the fair value of financial assets classified at fair value through profit or loss are recognised in the profit and loss statement. Realised and unrealised gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are recognised in equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the profit and loss statement as gains or losses from investment securities.
The fair value of quoted investments is based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using other valuation techniques. These include the use of recent arm's length transactions, reference to similar instruments, discounted cash flow analysis, and option pricing models refined to reflect the issuer's specific circumstances. If none of these techniques can be used, the Group values those investments at cost net of any identified impairment losses. The fair value of listed investments is determined based on the closing Euronext share price at the balance sheet date.
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In case of equity securities classified as available-for-sale, a significant (above 25%) or prolonged (in two consecutive quarters) decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If such evidence exists for availablefor-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment losses on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the profit and loss statement.
Lease contracts are classified as financial leases, if, in substance, all risks and rewards associated with the detention of the leased asset are transferred by the lease contract or as operational leases, if, in substance, there is no transfer of risks and rewards associated with the detention of the leased assets. The lease contracts are classified as financial or operational in accordance with the substance and not with the form of the respective contracts.
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 corresponding 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 recognised as expenses in the profit and loss statement for the period to which they relate.
Assets under long-term rental contracts are recorded in accordance with the operational lease method. In accordance with this method, the rents paid are recognised as an expense, over the rental period.
Inventories are stated at their acquisition cost, net of any impairment losses, which reflects their estimated net realisable value.
Accumulated inventory impairment losses reflect the difference between the acquisition cost and the realisable amount of inventories, as well as the estimated impairment losses due to low turnover, obsolescence and deterioration, and are registered in profit and loss statement, in 'Cost of sales'.
Trade and other current debtors are recorded at their net realisable value and do not include interests, since the discount effect is not significant.
These financial instruments arise when the Group provides money, supplies goods or provides services directly to a debtor with no intention of trading the receivable.
The amounts of these captions are presented net of any impairment losses and are registered in profit and loss statement in heading 'Provisions and impairment losses'. Future reversals of impairment losses are recorded in the profit and loss statement under the caption 'Provisions and impairment losses'.
Amounts included under the caption 'Cash and cash equivalents' correspond to amounts held in cash and term bank deposits and other treasury applications where the risk of change in value is insignificant.
The consolidated cash flow statement has been prepared in accordance with IAS 7, using the direct method. The Group classifies, under the caption 'Cash and cash equivalents', investments that mature in less than three months, for which the risk of change in value is insignificant. The caption 'Cash and cash equivalents' in the cash flow statement also includes bank overdrafts, which are reflected in the balance sheet caption 'Short-term loans and other loans'.
The cash flow statement is classified by operating, financing and investing activities. Operating activities include collections from customers, payments to suppliers, payments to personnel and other flows related to operating activities. Cash flows from investing activities include the acquisition and sale of investments in associated, subsidiary companies and companies jointly controlled as well as receipts and payments resulting from the purchase and sale of fixed assets. Cash flows from financing activities include payments and receipts relating to loans obtained and finance lease contracts.
All amounts included under this caption are likely to be realised in the short term and there are no amounts given or pledged as guarantee.
Loans are recorded as liabilities by the 'amortised cost'. Any expenses incurred in setting up loans are recorded as a deduction to the nominal debt and recognised during the period of the loan, based on the effective interest rate method. The interests incurred but not yet due are added to the loans caption until their payment.
Financial expenses relating to loans obtained are generally recognised as expenses at the time they are incurred. 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.
The Group only uses derivatives in the management of its financial risks to hedge against such risks. The Group does not use derivatives for trading purposes.
The cash flow hedges used by the Group are related to:
In cases where the hedge instrument is not effective, the amounts that arise from the adjustments to fair value are recorded directly in the profit and loss statement.
At 31 December 2013, the Group had foreign exchange forwards to hedge the foreign currency risk related to account receivables in dollars (note 1.v), in addition to those mentioned in note 1.x).
Provisions are recognised when, and only when, the Group has a present obligation (either legal or implicit) resulting from a past event, the resolution of which is likely to involve the disbursement of funds by an amount that can be reasonably estimated. Provisions are reviewed at the balance sheet date and adjusted to reflect the best estimate at that date.
Provisions for restructurings are only registered if the Group has a detailed plan and if that plan has already been communicated to the parties involved.
Contingent liabilities are not recognised in the consolidated financial statements but are disclosed in the notes, if the possibility of a cash outflow affecting future economic benefits is remote.
Contingent assets are not recognised in the consolidated financial statements but are disclosed in the notes when future economic benefits are likely to occur.
'Income tax' expense represents the sum of the tax currently payable and deferred tax. Income tax is recognised in accordance with IAS 12 – 'Income Taxes'.
Sonaecom has adopted, since 1 January 2008, the special regime for the taxation of groups of companies, under which, the provision for income tax is determined on the basis of the estimated taxable income of all the companies covered by that regime, in accordance with such rules. The special regime for the taxation of groups of companies covers all subsidiaries on which the Group holds at least 90% of their share capital, with its headquarters located in Portugal and subject to Corporate Income Tax (IRC). The remaining Group companies not covered by the special regime for the taxation of groups of companies are taxed individually based on their respective taxable income, in accordance with the tax rules in force in the location of the headquarters of each company.
Deferred taxes are calculated using the liability method and reflect the timing differences between the amount of assets and liabilities for accounting purposes and the respective amounts for tax purposes.
Deferred tax assets are only recognised when there is reasonable expectation that sufficient taxable profits shall arise in the future to allow such deferred tax assets to be used. At the end of each year the recorded and unrecorded deferred tax assets are revised and they are reduced whenever their realisation ceases to be probable, or increased if future taxable profits are, likely, enabling the recovery of such assets (note 11).
Deferred taxes are calculated with the tax rate that is expected to be in force at the time the asset or liability will be used based on decreed tax rate or substantialy decreed tax rate at balance sheet date.
Whenever deferred taxes derive from assets or liabilities directly registered in Shareholders' funds, its recording is also made under the Shareholders' funds caption. In all other situations, deferred taxes are always recorded in the profit and loss statement.
Subsidies awarded to finance personnel costs are recognised as less cost during the period in which the Group incurs the associated costs and are included in the profit and loss statement under the caption 'Staff expenses'.
Subsidies awarded to finance investments are recorded as deferred income on the Balance Sheet and are included in the profit and loss statement under the caption 'Other operating revenues'. Subsidies are recognized during the estimated useful life of the corresponding assets.
Expenses and income are recorded in the period to which they relate, regardless of their date of payment or receipt. Estimated amounts are used when actual amounts are not known.
The captions of 'Other non-current assets', 'Other current assets', 'Other non-current liabilities' and 'Other current liabilities' include expenses and income relating to the current period, where payment and receipt will occur in future periods, as well as payments and receipts in the current period but which relate to future periods. The latter shall be included by the corresponding amounts in the results of the periods that they relate to.
The costs attributable to current year and whose expenses will only occur in future years are estimated and recorded under the caption 'Other current liabilities' and 'Other noncurrent liabilities', when it is possible to estimate reliably the amount and the timing of occurrence of the expense. If there is uncertainty regarding both the date of disbursement of funds, and the amount of the obligation, the value is classified as Provisions (note 1.o).
Sales revenues are recognised in the consolidated profit and loss statement when the significant risks and rewards associated with the ownership of the assets are transferred to the buyer and the amount of the corresponding revenue can be reasonably quantified. Sales are recognised before taxes and net of discounts. The revenues and costs of the consultancy projects developed in the information systems consultancy segment are recognised in each period, according to the percentage of completion method.
Non-current financial assets and liabilities are recorded at fair value and, in each period, the financial actualisation of the fair value is recorded in the profit and loss statement under the captions 'Other financial expenses' and 'Other financial income'.
Dividends are recognised when the Shareholders' rights to receive such amounts are appropriately established and communicated.
Assets and liabilities due in more than one year from the date of the balance sheet are classified, respectively, as non-current assets and non-current liabilities.
In addition, considering their nature, the 'Deferred taxes' and the 'Provisions for other liabilities and charges', are classified as non-current assets and liabilities (notes 11 and 22).
Portuguese commercial legislation requires that at least 5% of the 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 case of liquidation of the Company, but may be used to absorb losses, after all the other reserves are exhausted, or to increase the share capital.
The share premiums relate to premiums generated in the issuance of capital or in capital increases. According to Portuguese Commercial law, share premiums follow the same requirements of 'Legal reserves', ie, they are not distributable, except in case of liquidation, but they can be used to absorb losses, after all the other reserves are exhausted or to increase share capital.
According to IFRS 2 – 'Share-based Payment', the responsibility related with the Medium Term Incentive Plans is registered under the heading of 'Reserves for Medium Term Incentive Plans', which are not distributable and which can not be used to absorb losses.
Hedging reserve reflects the changes in fair value of 'cash-flow' hedges derivatives that are considered effective (note 1.n)) and it is non-distributable nor can it be used to absorb losses.
The own shares reserve reflects the acquisition value of the own shares and follows the same requirements of legal reserve.
Under Portuguese law, the amount of distributable reserves is determined in accordance with the individual financial statements of the Company, presented in accordance with IFRS. Additionally, the increments resulting from the application of fair value through equity components, including its implementation through net results, shall be distributed only when the elements that gave rise to them are sold, liquidated or exercised or when they finish their use, in the case of tangible or intangible assets. Therefore, at 31 December 2013, Sonaecom, SGPS, S.A. didn't have free reserves distributable.
Own shares are recorded as a deduction of Shareholders' funds. Gains or losses arising from the sale of own shares are recorded under the heading 'Other reserves'.
All assets and liabilities expressed in foreign currency were translated into euro using the exchange rates in force at the balance sheet date.
Favourable and unfavourable foreign exchange differences resulting from changes in the rates in force at transaction date and those in force at the date of collection, payment or at the balance sheet date are recorded as income and expenses in the consolidated profit and loss statement of the year, in financial results.
Entities operating abroad with organisational, economic and financial autonomy are treated as foreign entities.
Assets and liabilities of the financial statements of foreign entities are translated into Euro using the exchange rates in force at the balance sheet date, while expenses and income in such financial statements are translated into euro using the average exchange rate for the period. The resulting exchange differences are recorded under the Shareholders' funds caption 'Other reserves'.
Goodwill and adjustments to fair value generated in the acquisitions of foreign entities reporting in a functional currency other than Euro are translated into Euro using the exchange rates prevailing at the balance sheet date.
The following rates were used to translate into Euro the financial statements of foreign subsidiaries and the balances in foreign currency:
| 2013 | 2012 | |||
|---|---|---|---|---|
| 31 December |
Average | 31 December |
Average | |
| Pounds Sterling | 1.1995 | 1.1780 | 1.2253 | 1.2337 |
| Brazilian Real | 0.3070 | 0.3508 | 0.3699 | 0.4000 |
| American Dollar | 0.7251 | 0.7533 | 0.7579 | 0.7787 |
| Polish Zloti | 0.2407 | 0.2383 | 0.2455 | 0.2391 |
| Australian Dollar | 0.6484 | 0.7294 | 0.7867 | 0.8063 |
| Mexican Peso | 0.0553 | 0.0591 | 0.0582 | 0.0592 |
| Egyptian Pound | 0.1044 | 0.1097 | 0.1200 | 0.1282 |
| Malaysian Ringgit | 0.2211 | 0.2393 | 0.2479 | 0.2521 |
| Chilean Peso | 0.0014 | 0.0015 | 0.0016 | 0.0016 |
| Singapore Dollar | 0.5743 | 0.6021 | 0.6207 | 0.6232 |
| Swiss Franc | 0.8146 | 0.8125 | 0.8284 | 0.8297 |
| Swedish Krona | 0.1129 | 0.1156 | 0.1165 | 0.1149 |
| South African Rand |
0.0687 | 0.0783 | 0.0895 | 0.0950 |
| Angolan Kwanza | 0.0074 | 0.0078 | 0.0079 | 0.0082 |
| Moroccan Dirham | 0.0890 | 0.0897 | 0.0897 | 0.0902 |
At 31 December 2013, the Group had foreign exchange forwards amount to USD 4,060,461, fixing the exchange rate for EUR, which have an average maturity of 2 months.
Impairment tests are performed at the date of each balance sheet and whenever an event or change of circumstances indicates that the recorded amount of an asset may not be recoverable. Whenever the book value of an asset is greater than the amount recoverable, an impairment loss is recognised and recorded in the profit and loss statement under the caption 'Depreciation and amortisation' in the case of fixed assets and goodwill, under the caption 'Other financial expenses' in the case of financial investments or under the caption 'Provisions and impairment losses', in relation to the other assets. The recoverable amount is the greater of the net selling price and the value in use. Net selling price is the amount obtainable upon the sale of an asset in a transaction within the capability of the parties involved, less the costs directly related to the sale. The value in use is the present value of the estimated future cash flows expected to result from the continued use of the asset and of its sale at the end of its useful life. The recoverable amount is estimated for each asset individually or, if this is not possible, for the cash-generating unit to which the asset belongs.
Evidence of the existence of impairment in accounts receivables appears when:
For certain categories of financial assets for which it is not possible to determine the impairment for each asset individually, the analysis is made for a group of assets. Evidence of an impairment loss in a portfolio of accounts receivable may include past experience in terms of collections, increasing number of delays in collections, as well as changes in national or local economic conditions that are related with the collections capacity.
For goodwill and financial investments in associated companies, the recoverable amount, calculated in terms of value in use, is determined based on the most recent business plans duly approved by the Group's Board of Directors. For goodwill and financial investments in companies jointly controlled the recoverable amount is determinated taking into account with several information as business plans approved by the Board of Directors and the average ratings of external reviewers (researches).
For Accounts receivables, the Group uses historical and statistical information to estimate the amounts in impairment. For Inventories, the impairment is calculated based on market evidence and several indicators of stock rotation.
The accounting treatment of Medium Term Incentive Plans is based on IFRS 2 – 'Share-based Payments'.
Under IFRS 2, when the settlement of plans established by the Group involves the delivery of Sonaecom's own shares, the estimated responsibility is recorded, as a credit entry, under the caption 'Medium Term Incentive Plans Reserve', within the heading 'Shareholders' funds' and is charged as an expense under the caption 'Staff expenses' in the profit and loss statement.
The quantification of this responsibility is based on fair value and is recognised over the vesting period of each plan (from the award date of the plan until its vesting or settlement date). The total responsibility, at any point of time, is calculated based on the proportion of the vesting period that has 'elapsed' up to the respective accounting date.
When the responsibilities associated with any plan are covered by a hedging contract, ie, when those responsibilities are replaced by a fixed amount payable to a third party and when Sonaecom is no longer the party that will deliver the Sonaecom shares, at the settlement date of each plan, the above accounting treatment is subject to the following changes:
For plans settled in cash, the estimated liability is recorded under the balance sheet captions 'Other non-current liabilities' and 'Other current liabilities' by a corresponding entry under the profit and loss statement caption 'Staff expenses', for the cost relating to the vesting period that has 'elapsed' up to the respective accounting date. The liability is quantified based on the fair value of the shares as of each balance sheet date.
When the liability is covered by a hedging contract, recognition is made in the same way as described above, but with the liability being quantified based on the contractually fixed amount.
Equity-settled plans to be liquidated through the delivery of shares of the parent company are recorded as if they were settled in cash, which means that the estimated liability is recorded under the balance sheet captions 'Other non-current liabilities' and 'Other current liabilities' by a corresponding
entry under the profit and loss statement caption 'Staff expenses', for the cost relating to the deferred period elapsed. The liability is quantified based on the fair value of the shares as of each balance sheet date.
For 2011 Sonaecom shares plan, the Company signed with Sonae-SGPS, S.A. a contract that agrees to the transfer of Sonaecom SGPS, S.A. shares for employees and board members of the Group as requested by Sonaecom and under the MTIP of Sonaecom and fixed the shares' acquisition price. The remaining Sonaecom share plans are covered through the detention of own shares. The impacts associated to the Medium Term Incentive Plans are registered, in the balance sheet, under the caption 'Medium Term Incentive Plans Reserve'. The cost is recognized under the profit and loss statement caption 'Staff expenses'.
Regarding the plans liquidated through the delivery of shares of the parent company, the company entered into hedging contracts with an external entity under which the acquisition price of those shares was fixed.Therefore, the responsibility is recorded based on that fixed price, proportionally to the period of time elapsed since the award date until the date of record, under the captions 'Other non-current liabilities' and 'Other current liabilities'. The cost is recognised on the income statement under the caption 'Staff expenses'.
Events occurring after the date of the balance sheet which provide additional information about conditions prevailing at the time of the balance sheet (adjusting events) are reflected in the consolidated financial statements. Events occurring after the balance sheet date that provide information on post-balance sheet conditions (non-adjusting events), when material, are disclosed in the notes to the consolidated financial statements.
The most significant accounting estimates reflected in the consolidated financial statements of the years ended at 31 December 2013 and 2012, are as follows:
Estimates used are based on the best information available during the preparation of the consolidated financial statements and are based on the best knowledge of past and present events. Although future events are neither foreseeable nor controlled by the Group, some could occur and have impact on such estimates. Changes to the estimates used by the management that occur after the approval date of these consolidated financial statements, will be recognised in net income, in accordance with IAS 8 – 'Accounting Policies, Changes in Accounting Estimates and Errors', using a prospective methodology.
The main estimates and assumptions in relation to future events included in the preparation of these consolidated financial statements are disclosed in the corresponding notes, when applicable.
Due to its activities, the Group is exposed to a variety of financial risks such as market risk, liquidity risk and credit risk.
These risks arise from the unpredictability of financial markets, which affect the capacity of project cash flows and profits. The Group financial risk management, subject to a long-term ongoing perspective, seeks to minimise potential adverse effects that derive from that uncertainty, using, whenever it is possible and advisable, derivative financial instruments to hedge the exposure to such risks (note 1.n).
The Group is also exposed to equity price risks arising from equity investments, although they are usually maintained for strategic purposes.
The Group operates internationally, having subsidiaries that operate in countries with a different currency than Euro namely Brazil, United Kingdom, Poland, United States of America, Mexico, Australia, Egypt, Colombia, Panama, Singapore, Angola and Malaysia (branch) and so it is exposed to foreign exchange rate risk.
Foreign exchange risk management seeks to minimise the volatility of investments and transactions made in foreign currencies and contributes to reduce the sensitivity of Group results to changes in foreign exchange rates.
Whenever possible, the Group uses natural hedges to manage exposure, by offsetting credits granted and credits received expressed in the same currency. When such a procedure is not possible, the Group adopts derivative financial hedging instruments (note 1.n).
The Group's exposure to foreign exchange rate risk, results essentially from the fact that some of its subsidiaries report in a currency different from euro, making the risk of operational activity immaterial.
The amount of assets and liabilities (in Euro) belonging to the Group and recorded in a different currency is as follows:
| ASSETS | LIABILITIES | |||
|---|---|---|---|---|
| 31 December 2013 |
31 December 2012 |
31 December 2013 |
31 December 2012 |
|
| American Dollar | 21,637,176 | 32,707,010 | 20,865,270 | 21,340,761 |
| Australian Dollar | 91,470 | 305,350 | 268,625 | 725,109 |
| Egyptian Pound | 515,284 | 263,579 | – | – |
| Pounds Sterling | 5,261,738 | 5,655,658 | 5,623,137 | 5,460,702 |
| Mexican Peso | 2,769,540 | 4,400,339 | 1,281,814 | 2,428,601 |
| Brazilian Real | 6,222,138 | 8,613,476 | 4,829,559 | 8,206,410 |
| Malaysian Ringgit | 648,169 | 443,425 | 431,156 | 486,415 |
| Polish Zloti | 150,473 | 595,894 | 361,454 | 1,093,950 |
| Singapore Dollar | 404,516 | 456,970 | 31,174 | 42,279 |
| Swiss Franc | 345,616 | 70,411 | – | 346 |
| Pesos Colombianos |
49,911 | - | 114,726 | – |
The Group's sensitivity to the variations of the exchange rate is as follows:
| 2013 | 2012 | ||||
|---|---|---|---|---|---|
| Change in exchange rates |
Income | Share holders' funds |
Income | Share holders' funds |
|
| American Dollar |
5% | 35,495 | 3,101 | 504,175 | 64,137 |
| Australian Dollar |
5% | (2,929) | (5,928) | (18,495) | (2,493) |
| Swiss Franc |
5% | 17,281 | - | 3,503 | - |
| Egyptian Pound |
5% | 25,764 | - | 13,179 | - |
| Pounds Sterling |
5% | 132,546 | (150,616) | 133,033 | (123,285) |
| Mexican Peso |
5% | 44,162 | 30,225 | 49,863 | 48,724 |
| Brazilian Real |
5% | (604) | 70,233 | (182) | 20,535 |
| Malaysian Ringgit |
5% | 17,071 | (6,221) | 4,116 | (6,265) |
| Polish Zloti | 5% | (10,633) | 84 | (29,511) | 4,608 |
| Singapore Dollar |
5% | 18,663 | 4 | 20,172 | 562 |
| Euro | 5% | (118,973) | - | (443,912) | - |
| Pesos Colombi anos |
5% | 1,051 | (4,291) | - | - |
| 158,893 | (63,410) | 235,941 | 6,524 |
Sonaecom's total debt is indexed to variable rates, exposing the total cost of debt to a high risk of volatility. The impact of this volatility on the Group results or on its Shareholders' funds is mitigated by the effect of the following factors (i) relatively low level of financial leverage; (ii) possibility to use derivative financial instruments that hedge the interest rate risk, as mentioned below; (iii) possible correlation between the level of market interest rates and economic growth having the latter a positive effect in other lines of the Group's consolidated results (particularly operational), and in this way partially offsetting the increase of financial costs ('natural hedge'); and (iv) the existence of stand alone or consolidated liquidity which is also bearing interest at a variable rate.
The Group only uses derivatives or similar transactions to hedge interest rate risks considered significant. Three main principles are followed in all instruments selected and used to hedge interest rate risk:
As all Sonaecom's borrowings (note 20) are at variable rates, interest rate swaps and other derivatives are used, when it is deemed necessary, to hedge future changes in cash flow relating to interest payments. Interest rate swaps have the financial effect of converting the respective borrowings from floating rates to fixed rates. Under the interest rate swaps, the Group agrees with third parties (banks) to exchange, in pre-determined periods, the difference between the amount of interest calculated at the fixed contract rate and the floating rate at the time of re-fixing, by reference to the respective agreed notional amounts.
The counterparties of the derivative hedging instruments are limited to highly rated financial institutions, being the Group's policy, when contracting such instruments, to give preference to financial institutions that form part of its financing transactions. In order to select the counterparty for occasional operations, Sonaecom requests proposals and indicative prices from a representative number of banks in order to ensure adequate competitiveness of these operations.
In determining the fair value of hedging operations, the Group uses certain methods, such as option valuation and discounted future cash flow models, using assumptions based on market interest rates prevailing at the balance sheet date.
Comparative financial institution quotes for the specific or similar instruments are used as a benchmark for the valuation.
The fair value of the derivatives contracted, that are considered as fair value hedges or the ones that are considered not sufficiently effective for cash flow hedge (in accordance with the provisions established in IAS 39), are recognised under borrowings captions and changes in the fair value of such derivatives are recognised directly in the profit and loss statement for the year. The fair value of derivatives of cash flow hedge, that are considered effective according to IAS 39, are recognised under borrowing captions and changes in the fair value are recognised in equity.
Sonaecom's Board of Directors approves the terms and conditions of the financing with significant impact in the Group, based on the analysis of the debt structure, the risks and the different options in the market, particularly as to the type of interest rate (fixed / variable). Under the policy defined above, the Executive Committee is responsible for the decision on the occasional interest rate hedging contracts, through the monitoring of the conditions and alternatives existing in the market.
The analysis of sensibility to interest rate risk is presented in note 20.
The existence of liquidity in the Group requires the definition of some policies for an efficient and secure management of the liquidity, allowing us to maximise the profitability and to minimise the opportunity costs related to that liquidity.
The liquidity risk management has a threefold objective: (i) Liquidity, ie, to ensure the permanent access in the most efficient way to obtain sufficient funds to settle current payments within the respective dates of maturity as well as any eventual not forecasted requests for funds, within the deadlines set for this; (ii) Safety, ie to minimise the probability of default in any reimbursement of application of funds; and (iii) Financial Efficiency, ie, to ensure that the Group maximises the value / minimises the opportunity cost of holding excess liquidity in the short term.
The main underlying policies correspond to the variety of instruments allowed, the maximum acceptable level of risk, the maximum amount of exposure by counterparty and the maximum periods for investments.
The existing liquidity in the Group should be applied to the alternatives and by the order described below:
The applications in the market are limited to eligible counterparties, with ratings previously established by the Board and limited to certain maximum amounts by counterparty.
The definition of maximum amounts intends to ensure that the application of liquidity in excess is made in a prudent way and taking into consideration the best practices in terms of bank relationships.
The maturity of applications should equal the forecasted payments (or the applications should be easily convertible, in the case of asset investments, to allow urgent and not estimated payments), considering a threshold for eventual deviations on the estimates. The threshold depends on the accuracy level of treasury estimates and would be determined by the business. The accuracy of the estimates is an important variable to quantify the amounts and the maturity of the applications in the market.
The maturity analysis for the loans obtained is presented in note 20.
The Group's exposure to credit risk is mainly associated with the accounts receivable related to current operational activi ties. The credit risk associated to financial operations is miti gated by the fact that the Group only negotiates with entities with high credit quality.
The management of this risk seeks to guarantee that the amounts owing are effectively collected within the periods negotiated without affecting the financial health of the Group. The Group uses credit rating agencies and has specific depart ments responsible for risk control, collections and manage ment of processes in litigation, as well as credit insurances, which all contribute to the mitigation of credit risk.
The amounts included in the financial statements related to trade debtors and other debtors, net of impairment losses, represent the maximum exposure of the Group to credit risk.
Group companies included in the consolidation through full consolidation method, their head offices, main activities, Shareholders and percentage of share capital held at 31 December 2013 and 2012, are as follows:
PERCENTAGE OF SHARE CAPITAL HELD
| 2013 | 2012 | ||||||
|---|---|---|---|---|---|---|---|
| Company (Commercial brand) | Head office |
Main activity | Shareholder | Direct Effective* | Direct Effective* | ||
| Parent company | |||||||
| SONAECOM, S.G.P.S., S.A. ('Sonaecom') |
Maia | Management of shareholdings. | - | - | - | – | – |
| Subsidiaries | |||||||
| Be Artis – Concepção, Construção e Gestão de Redes de Comunicações, S.A. ('Artis') (a) |
Maia | Design, construction, management and exploitation of electronic communications networks and their equipment and infrastructure, management of technologic assets and rendering of related services. |
Optimus SGPS | - | - | 100% | 100% |
| Be Towering – Gestão de Torres de Telecomunicações, S.A. ('Be Towering') (a) |
Maia | Implementation, installation and exploitation of towers and other sites for the instalment of telecommunications equipment. |
Optimus SGPS | - | - | 100% | 100% |
| Cape Technologies Limited ('Cape Technologies') |
Dublin | Rendering of consultancy services in the area of information systems. |
We Do | 100% | 100% | 100% | 100% |
| Connectiv Solutions Inc. ('Connectiv') (b) |
Delaware | Rendering of consultancy services in the area of information systems. |
We Do USA | - | - | 100% | 100% |
| Digitmarket – Sistemas de Informação, S.A. ('Digitmarket' – using the brand 'Bizdirect') |
Maia | Development of management platforms and commercialisation of products, services and information, with the internet as its main support. |
Sonae com SI | 75.10% | 75.10% | 75.10% | 75.10% |
| Lugares Virtuais, S.A. ('Lugares Virtuais') |
Maia | Organisation and management of electronic online portals, content acquisition, management of electronic auctions, acquisition and deployment of products and services electronically and any related activities. |
Miauger | 100% | 100% | 100% | 100% |
| Mainroad – Serviços em Tecnologias de Informação, S.A. ('Mainroad') |
Maia | Rendering of consultancy services in IT areas. | Sonae com SI | 100% | 100% | 100% | 100% |
| Miauger – Organização e Gestão de Leilões Electrónicos, S.A. ('Miauger') |
Maia | Organisation and management of electronic auctions of products and services on-line. |
Sonaecom | 100% | 100% | 100% | 100% |
| Optimus - Comunicações, S.A. ('Optimus') (a) |
Maia | Implementation, operation, exploitation and offer of networks and rendering services of electronic comunications and related resources; offer and commercialisation of products and equipments of electronic communications. |
Optimus SGPS | - | - | 100% | 100% |
| Optimus, S.G.P.S., S.A. ('Optimus SGPS') (a) |
Maia | Management of shareholdings in the area of telecommunications. |
Sonaecom | - | - | 100% | 100% |
| PCJ - Público, Comunicação e Jornalismo, S.A. ('PCJ') |
Maia | Editing, composition and publication of periodical and non-periodical material and the exploration of radio and TV stations and studios. |
Sonaecom | 100% | 100% | 100% | 100% |
| Per-Mar – Sociedade de Construções, S.A. ('Per-Mar') (a) |
Maia | Purchase, sale, renting and operation of property and commercial establishments. |
Optimus SGPS | - | - | 100% | 100% |
| Praesidium Services Limited ('Praesidium Services') |
Berkshire | Rendering of consultancy services in the area of information systems. |
We Do UK | 100% | 100% | 100% | 100% |
| Público – Comunicação Social, S.A. ('Público') |
Oporto | Editing, composition and publication of periodical and non-periodical material. |
Sonaecom | 100% | 100% | 100% | 100% |
| Saphety Level – Trusted Services, S.A. ('Saphety') |
Maia | Rendering services, training, consultancy services in the area of communication, process and electronic certification of data; trade, development and representation of software. |
Sonae com SI | 86.995% 86.995% 86.995% 86.995% | |||
| Saphety Brasil Transações Eletrônicas Ltda. ('Saphety Brasil') (c) |
São Paulo |
Rendering services, training, consultancy services in the area of communication, process and electronic certification of data; electronic identification, storage and availability of databases and electronic payments; trade, development and representation of software related with these services. |
Saphety | 99.8% 86.821% | – | – |
| 2013 | 2012 | ||||||
|---|---|---|---|---|---|---|---|
| Company (Commercial brand) | Head office |
Main activity | Shareholder | Direct Effective* | Direct Effective* | ||
| Saphety – Transacciones Electronicas SAS ('Saphety Colômbia')(d) |
Bogotá | Rendering services, training, consultancy services in the area of communication, process and electronic certification of data; elec tronic identification, storage and availability of databases and electronic payments; trade, development and representation of software related with these services. |
Saphety | 100% 86.995% | – | – | |
| Sonaecom - Serviços Partilhados, S.A. ('Sonaecom SP') |
Maia | Support, management consulting and adminis tration, particularly in the areas of accounting, taxation, administrative procedures, logistics, human resources and training. |
Sonaecom | 100% | 100% | 100% | 100% |
| Sonae com – Sistemas de Informação, S.G.P.S., S.A. ('Sonae com SI') |
Maia | Management of shareholdings in the area of corporate ventures and joint ventures. |
Sonaecom | 100% | 100% | 100% | 100% |
| Sonaecom - Sistemas de Infor mación Espanã, S.L. ('SSI Espanã') |
Madrid | Rendering of consultancy services in the area of information systems. |
Sonae com SI | 100% | 100% | 100% | 100% |
| Sonaecom BV | Amster dam |
Management of shareholdings. | Sonaecom | 100% | 100% | 100% | 100% |
| Sonaetelecom BV | Amster dam |
Management of shareholdings. | Sonaecom | 100% | 100% | 100% | 100% |
| Sontária - Empreendimentos Imobiliários, S.A. ('Sontária') (a) |
Maia | Realisation of urbanisation and building con struction, planning, urban management, studies, construction and property management, buy and sale of properties and resale of purchased for that purpose. |
Optimus SGPS | - | - | 100% | 100% |
| Tecnológica Telecomunicações, LTDA. ('Tecnológica') |
Rio de Janeiro |
Rendering of consultancy and technical assistance in the area of IT systems and telecommunications. |
We Do Brasil | 99.99% | 99.90% | 99.99% | 99.90% |
| We Do Consulting – Sistemas de Informação, S.A. ('We Do') |
Maia | Rendering of consultancy services in the area of information systems. |
Sonae com SI | 100% | 100% | 100% | 100% |
| Wedo do Brasil Soluções Informáticas, Ltda. ('We Do Brasil') |
Rio de Janeiro |
Commercialisation of software and hardware; rendering of consultancy and technical assistance related to information technology and data processing. |
We Do | 99.91% | 99.91% | 99.91% | 99.91% |
| We Do Poland Sp. Z.o.o. ('We Do Poland') |
Poznan | Rendering of consultancy services in the area of information systems. |
Cape Technologies |
100% | 100% | 100% | 100% |
| We Do Technologies Americas, Inc ('We Do USA') |
Delaware | Rendering of consultancy services in the area of information systems. |
Cape Technologies |
100% | 100% | 100% | 100% |
| We Do Technologies Australia PTY Limited ('We Do Asia') |
Sydney | Rendering of consultancy services in the area of information systems. |
Cape Technologies |
100% | 100% | 100% | 100% |
| We Do Technologies BV ('We Do BV') |
Amster dam |
Management of shareholdings. | We Do | 100% | 100% | 100% | 100% |
| We Do Technologies BV – Malaysian Branch ('We Do Malásia') |
Kuala Lumpur |
Rendering of consultancy services in the area of information systems. |
We Do BV | 100% | 100% | 100% | 100% |
| We Do Technologies Chile SpA ('We Do Chile') (e) |
Chile | Rendering of consultancy services in the area of information systems. |
We Do BV | – | – | 100% | 100% |
| We Do Technologies Egypt LLC ('We Do Egypt') |
Cairo | Rendering of consultancy services in the area of information systems. |
We Do BV Sonaecom BV Sonaetelecom BV |
90% 5% 5% |
90% 5% 5% |
90% 5% 5% |
90% 5% 5% |
| We Do Technologies (UK) Limited ('We Do UK') |
Berkshire | Management of shareholdings. | We Do | 100% | 100% | 100% | 100% |
| We Do Technologies Mexico, S de R.L. ('We Do Mexico') |
Mexico City |
Rendering of consultancy services in the area of information systems. |
Sonaecom BV We Do BV |
0.001% 99.999% |
0.001% 99.999% |
5% 95% |
5% 95% |
| We Do Technologies Panamá S.A. ('We Do Panamá') |
Panamá City |
Rendering of consultancy services in the area of information systems. |
We Do BV | 100% | 100% | 100% | 100% |
| We Do Technologies Singapore PTE. LTD. ('We Do Singapura') |
Singa pore |
Rendering of consultancy services in the area of information systems. |
We Do BV | 100% | 100% | 100% | 100% |
* Sonaecom effective participation
(a) Companies included in Group Zopt consolidation perimeter, following the merger between Optimus SGPS and Zon (note 1.e)
(b) Company incorporated, by merger, on We Do USA in January 2013
(c) Company adquired in February 2013
(d) Company established in April 2013
(e) Company dissolved in May 2013
All the above companies were included in the consolidation in accordance with the full consolidation method under the terms of IAS 27 – 'Consolidated and Separate Financial Statements' (majority of voting rights, through the ownership of shares in the companies).
During the years ended at 31 December 2013 and 2012, the following changes occurred in the composition of the Group:
| SHAREHOLDER | SUBSIDIARY | DATE | SHARE CAPITAL | CURRENT % SHAREHOLDING |
|---|---|---|---|---|
| 2013 | ||||
| Saphety | Saphety Colômbia | Apr-13 | 50,000,000 COP* |
100% |
| 2012 | ||||
| Sonaecom | Zopt | Dec-12 | 50,000 EUR | 50% |
| Sonaecom | Sonaecom SP | Jan-12 | 50,000 EUR | 100% |
* Corresponds to circa Euro 19.000.
| PURCHASER | SUBSIDIARY | DATE | % ACQUIRED | CURRENT % SHAREHOLDING |
|---|---|---|---|---|
| 2013 | ||||
| Saphety | Saphety Brasil | Feb-13 | 99.8% | 99.8% |
| 2012 | ||||
| We Do USA | Connectiv | Apr-12* | 100% | 100% |
| Sonae com SI | Infosystems | Jun-12 | 50% | 50% |
| Infosystems | SSI Angola | Jun-12 | 100% | 100% |
* The contract's signature date was April 2012, with effects from 1 May 2012.
At 30 April 2012, the group acquired the entire share capital of Connectiv Solutions. Following that, the company started from 1 May 2012 to consolidate the financial statements using the full consolidation method (note 7). At 1 January 2013, Connectiv was incorporated, by merger, in WeDo USA.
| SHAREHOLDER | SUBSIDIARY | DATE | % SHAREHOLDING |
|---|---|---|---|
| 2013 | |||
| We Do BV | We Do Chile | May-13 | 100% |
| d) Sales | |||
| SHAREHOLDER | SUBSIDIARY | DATE | % SHAREHOLDING |
| 2013 | |||
| Sonae com SI | Infosystems | Nov-13 | 50% |
Following the announcement made, on 14 December 2012, between Sonaecom, SGPS, S.A., Kento Holding Limited and Jadeium BV (currently named Unitel International Holdings, BV, collectively referred to as 'Kento/Jadeium'), of having reached an agreement to recommend to the Boards of Zon Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. ('Zon') and Optimus SGPS, SA a merger between the two companies, on 11 January 2013, Sonaecom, SGPS, S.A. carried out a capital increase in kind, transferring 81.807% of its financial participation in Optimus SGPS, S.A. to ZOPT,SGPS, S.A. (vehicle used for this purpose), conditional upon completion of the merger.
Thus, following the above mentioned agreement, on 27 August 2013, and after fulfilling all the remedies required to the operation, the merger was closed. Sonaecom considers this to be the date on which Zopt took control of Zon Optimus, having 50,01% of its share capital. Accordingly, in the same day, it was registered the capital increase in kind with the transference of 81.807% Sonaecom's financial participation in Optimus SGPS, S.A. to ZOPT,SGPS, S.A ('Zopt'). As a consequence, Sonaecom held a 50% stake in Zopt, as well as shareholder loans to be received from Zopt amounting to Euro 230 million (note 8), which would later be converted on supplementary capital and reduced to Euro 115 million. Additionally, the remaining stake of 18.193% in Optimus SGPS, was converted into a minority stake of 7.28% in Zon Optimus (note 9).
Resulting from a 'Shareholders Agreement' between the parties involved in the merger, Sonacom and Kento/Jadeium Group agreed not to acquire any shares of Zon Optimus, with the exception of the shares acquired by Sonaecom as a result of the operation.
For this reason, the 'Shareholders Agreement' also foresees that after 2 years from the date of the formal closing of the merger, and for a period of three months, the Group Kento / Jadeium may exercise a call option over half of the shares of Zon Optimus that Sonaecom holds at the date of the exercise of call option, at a price equal to the weighted average price of the previous month.
After the share capital increase of Zopt and the closing of the merger between Optimus SGPS and Zon, Sonaecom derecognised in consolidated accounts, the assets and liabilities fully consolidated of Optimus SGPS and its subsidiaries amounting to Euro 992 million. Sonaecom has also recognized an investment in Zopt amounting to Euro 598 million1 , loans to be received from Zopt amounting Euro 230 million (note 8) and an investment registered at fair value through Zon Optimus shares (the conversion of 20,921,650 Optimus SGPS shares, representing 18.193% of the share capital, to 37,489,324 Zon Optimus shares, representing 7.28% of the share capital), at the market price of 27 August 2013 (date of the closing of the merger), amounting to Euro 156 million (note 9).
Following the merger, was performed on Zopt a preliminary assessment of the fair value of assets acquired and assumed liabilities through this operation. The allocation of the acquisition price is still subject to changes until the conclusion of a period of one year from the date of acquisition, in accordance with IFRS 3 - Business Combinations. Nevertheless, the Company does not expect significant changes in its financial position as a result from any changes to the allocation made. The detail of Zon Group's net assets and Goodwill identified under this transaction are as follows:
| (Amounts expressed in Euro) | VALUES BEFORE ACQUISITION | ADJUSTMENTS TO FAIR VALUE | FAIR VALUE |
|---|---|---|---|
| Acquired assets | |||
| Tangible assets | 598,675 | 57,301 | 655,976 |
| Intangible assets | 137,644 | 170,575 | 308,219 |
| Investments in group companies | 33,646 | 284,807 | 318,453 |
| Deferred tax assets | 55,972 | 10,381 | 66,353 |
| Inventories | 18,034 | - | 18,034 |
| Accounts receivable and other assets | 169,888 | 1,861 | 171,749 |
| Cash and cash equivalents | 157,914 | - | 157,914 |
| 843,971 | 523,064 | 1,367,035 | |
| Acquired liabilities | |||
| Borrowings | 817,435 | 7,634 | 825,069 |
| Provisions | 25,948 | 7,798 | 33,746 |
| Deferred tax liabilities | 7,450 | 68,591 | 76,041 |
| Share plan | 3,694 | - | 3,694 |
| Accounts payable and other liabilities | 296,169 | 2,062 | 298,231 |
| Minorities | 9,662 | - | 9,662 |
| 1,160,358 | 86,085 | 1,246,443 | |
| Net assets and liabilities | 11,415 | 438,840 | 450,255 |
| Goodwill (note 8) | 1,049,745 | ||
| Acquisition price | 1,500,000 |
1 The Zopt participation of 598 million euros (598 = ((2.850 X 50,01% )-230)X 50%) results from the valuation of Zon Optimus, amounting to 2,850 million euros. This corresponds to the sum of the valuation of the capital increase in Zopt made by Zon and Optimus in 1,500 million euros and 1,000 million euros, respectivetly (the valuation was made by entities involved in the capital increase and the merger project) and the minimum synergies estimated, disclosed in the merger project in the amount of 350 million euros, deducted from loans totaling 230 million euros (level 3 of inputs in the hierarchy of fair value). It was decided that Zon market price at the date of the closing of the merger didn't reflected the fair value of Zon Optimus (the argument for not using the Zon share price at the date of the close of the merger, as abovementioned, is proven by the positive evolution of Zon Optimus share price since the date of the merger until 31 December 2013 (2,782 million euros versus 2,141, price at 27 August 2013, merger date)). For this reason, the market capitalization of Zon was not considered as a reference for valuing the Zopt investment. The valuation of Zon and Optimus was based on internally and analysts' projections, regarding the main economic indicators, including operating results and investment. For this purpose, was used a weighted average cost of capital of 9.5% and growth rate of 3%.
The fair value of net assets acquired was determined through various valuation methodologies for each type of asset or liability based on the best information available. The main fair value adjustments made in this process were : (i) valuation of Cines TV and TV Series channels (EUR +99.3 million), which will be amortised straight-line over a period of 10 years, (ii) portfolio customers (EUR +71.3 million), which will be amortised straight-line over the estimated average period of customer retention , (iii) financial investments (EUR +304 million) including EUR +267 million in estimated future economic benefits ('goodwill') of subsidiaries , valuations of channels in the amount of EUR +29 million, valuation of client portfolios in the amount of EUR +17 million , among others, and their respective associated deferred taxes , (iv) increase of EUR +57.3 million in the book value of basic equipment , (v) changes in the fair value of borrowings in the amount of EUR -7.6 million , and (vi) Contingent liabilities relating to present obligations amounting to EUR -16,7 million.
| (Amounts expressed in euro) | VALUES BEFORE ACQUISITION | ADJUSTMENTS TO FAIR VALUE | FAIR VALUE |
|---|---|---|---|
| Acquired assets | |||
| Tangible assets | 569,441 | (62,616) | 506,825 |
| Intangible assets | 353,331 | 45,480 | 398,811 |
| Deferred tax assets | 100,976 | 27,626 | 128,602 |
| Inventories | 19,125 | (1,384) | 17,741 |
| Accounts receivable and other assets | 224,165 | - | 224,165 |
| Cash and cash equivalents | 17,987 | - | 17,987 |
| 1,285,025 | 9,106 | 1,294,131 | |
| Acquired liabilities | |||
| Borrowings | 452,362 | - | 452,362 |
| Provisions | 35,224 | 30,091 | 65,315 |
| Deferred tax liabilities | 1,142 | 10,997 | 12,139 |
| Share plan | 6,469 | 3,144 | 9,613 |
| Accounts payable and other liabilities | 287,368 | 15,326 | 302,694 |
| 782,565 | 59,558 | 842,123 | |
| Net assets and liabilities | 502,460 | (50,452) | 452,008 |
| Goodwill (note 8) | 547,992 | ||
| Acquisition price | 1,000,000 |
The detail of Optimus Group's net assets and Goodwill identified under this transaction are as follows:
The fair value of net assets acquired was determined through several valuation methodologies for each type of asset or liability, based on the best information available. The main fair value adjustments made in this process were: (i) customer portfolio (+23.4 million euros), which will be amortised linearly based on the estimated average time of customer retention; (ii) telecom licenses (+12.7 million euros), which will be amortised over their the estimated useful life; (iii) infrastructure reconstruction and replacement equipment costs and other adjustments on basic equipment in the amount of -22.7 million euros; (iv) adjustment of -27.7 million euros to carrying amount of the assets falling within by the commitments made to the Competition Authority, under the merger operation, in particular, the agreement on an option to acquire the fiber network of Optimus; (v) contingent liabilities related to present obligations in the amount of -30.0 million euros, as permitted by IFRS 3, and (vi) contractual obligations in the amount of -15.3 million euros related to long-term contracts whose prices are different from market prices.
The methodologies used in the main fair value adjustments were Discounted cash flows (Level 3) with the exception to Rooftops and Towers that was used the Rebuilding costs (Level 2), to Basic Equipment that was used the Replacement costs (Level 2) and to Contractual obligations that was used the Comparision with today fees charged (Level 2).
In identifying the fair value of acquired assets and liabilities the Group's management make estimates, assumptions and judgments such as: (i) the average period of retention of Optimus' customers used in the valuation of the customer portfolio; (ii) the average time of use of existing 2G/3G and LTE technologies and revenue growth as a result of the emergence of other new technologies, used in the valuation of the telecom licenses, among others. Although these estimates were based on the best information available at the date of preparation of the consolidated financial statements, current and future results may differ from these estimates.
Several scenarios have been considered in the valuations. The sensitivity analyzes performed have not led to significant changes in the allocation of the fair value of assets and liabilities. For the remaining assets and liabilities were not identified significant differences between the fair value and their book value.
As usual on mergers and acquisitions, also in this operation, there was a part of the acquisition price which was not possible to allocate to the fair value of some identified assets and liabilities, that was considered as Goodwill and recorded in "Intangible Assets". This Goodwill is related to a number of different elements, which cannot be individually quantified and isolated in a viable way and include, for example, synergies, qualified workforce and technical skills.
Thus, as a result of the derecognition of the investment in Optimus SGPS and its subsidiaries, the recognition of the investments in Zopt and Zon Optimus, and the loans to be received from Zopt, it was registered a capital loss of 9 million euros, as follows:
| (Amounts expressed in Euro) | |
|---|---|
| Assets and liabilities derecognized | (992,397,240) |
| Compensation received | 983,447,575 |
| Gain/(Loss) resulting from the disposal (note 37) | (8,949,665) |
The compensation received can be detailed as follows:
| (Amounts expressed in Euro) | |
|---|---|
| Participation in Zopt (note 8) | 597,641,944 |
| Loans Zopt (note 8) | 230,000,000 |
| Zon Optimus shares (note 9) | 155,805,631 |
| 983,447,575 |
The impacts in balance sheet of the output of the telecommunications sector companies in August 2013 resulted of this operation, are detaled as follows:
| (Amounts expressed in euro) | NOTES | 27 AUGUST 2013 |
|---|---|---|
| Assets | ||
| Non-current assets | ||
| Tangible assets | 5 | (562,475,126) |
| Intangible assets | 6 | (353,993,403) |
| Goodwill | 7 | (485,150,340) |
| Other non-current assets | 312,080,798 | |
| Deferred tax assets | 11 | (98,625,767) |
| Total non-current assets | (1,188,163,838) | |
| Current assets | ||
| Inventories | 12 | (19,124,520) |
| Trade debtors | (127,955,743) | |
| Other current assets | (82,942,364) | |
| Cash and cash equivalents | (17,986,673) | |
| Total current assets | (248,009,300) | |
| Shareholders' funds and liabilities | ||
| Medium term incentive plans reserves | 6,468,582 | |
| Others | 5,464 | |
| Total Shareholders' funds | 6,474,046 | |
| Liabilities | ||
| Non-current liabilities | ||
| Medium and long-term loans – net of short-term portion | (813,080) | |
| Other non-current financial liabilities | 17,879,658 | |
| Provisions for other liabilities and charges | 22 | 35,247,971 |
| Deferred tax liabilities | 259,753 | |
| Other non-current liabilities | 31,672,299 | |
| Total non-current liabilities | 84,246,601 | |
| Current liabilities | ||
| Short-term loans and other loans | 115,535,594 | |
| Trade creditors | 119,124,642 | |
| Other current financial liabilities | 2,660,326 | |
| Other creditors | 15,254,142 | |
| Other current liabilities | 100,480,547 | |
| Total current liabilities | 353,055,251 | |
| Total assets and liabilities derecognized | (992,397,240) |
At 31 December 2013 and 2012, the breakdown of financial instruments was as follows:
| 2013 | |||||||
|---|---|---|---|---|---|---|---|
| Loans and receivables |
Investments available for sale |
Financial assets at fair value through profit or loss |
Other financial assets |
Subtotal | Others not covered by IFRS 7 |
Total | |
| Non-current assets | |||||||
| Investments available for sale (note 10) |
- | 115,448 | - | - | 115,448 | - | 115,448 |
| Other non-current assets | 922,434 | - | - | - | 922,434 | - | 922,434 |
| 922,434 | 115,448 | - | - | 1,037,882 | - | 1,037,882 | |
| Current assets | |||||||
| Financial assets at fair value through profit or loss (note 9) |
- | - | 202,442,350 | - | 202,442,350 | - | 202,442,350 |
| Trade debtors (note13) | 36,416,353 | - | - | - | 36,416,353 | - | 36,416,353 |
| Other current debtors (note 14) | 17,177,732 | - | - | - | 17,177,732 | 5,863,034 | 23,040,766 |
| Other current assets (note 15) | - | - | - | 7,043,665 | 7,043,665 | 2,254,741 | 9,298,406 |
| Cash and cash equivalents (note 16) |
188,014,923 | - | - | - | 188,014,923 | - | 188,014,923 |
| 241,609,008 | - | 202,442,350 | 7,043,665 | 451,095,023 | 8,117,775 | 459,212,798 |
| 2012 (restated) |
|||||||
|---|---|---|---|---|---|---|---|
| Loans and receivables |
Investments available for sale |
Financial assets at fair value through profit or loss |
Other financial assets |
Subtotal | Others not covered by IFRS 7 |
Total | |
| Non-current assets | |||||||
| Investments available for sale (note 10) |
- | 212,323 | - | - | 212,323 | - | 212,323 |
| Other non-current assets | 2,422,660 | - | - | - | 2,422,660 | - | 2,422,660 |
| 2,422,660 | 212,323 | - | - | 2,634,983 | - | 2,634,983 | |
| Current assets | |||||||
| Trade debtors (note13) | 144,901,658 | - | - | - | 144,901,658 | - | 144,901,658 |
| Other current debtors (note 14) | 15,710,457 | - | - | - | 15,710,457 | 5,999,639 | 21,710,096 |
| Other current assets (note 15) | - | - | - | 56,563,995 | 56,563,995 | 16,959,805 | 73,523,800 |
| Cash and cash equivalents (note 16) |
61,741,010 | - | - | - | 61,741,010 | - | 61,741,010 |
| 222,353,125 | - | - | 56,563,995 | 278,917,120 | 22,959,444 | 301,876,564 |
| 2013 | |||||
|---|---|---|---|---|---|
| Liabilities recorded at amortised cost |
Other financial liabilities |
Subtotal | Others not covered by IFRS 7 |
Total | |
| Non-current liabilities | |||||
| Medium and long-term loans net of short-term portion (note 20) |
24,810,079 | - | 24,810,079 | - | 24,810,079 |
| Other non-current financial liabilities (note 21) | - | 67,937 | 67,937 | - | 67,937 |
| Other non-current liabilities (note 23) | - | 969,434 | 969,434 | 307,870 | 1,277,304 |
| 24,810,079 | 1,037,371 | 25,847,450 | 307,870 | 26,155,320 | |
| Current liabilities | |||||
| Short-term loans and other loans (note 20) |
998,996 | - | 998,996 | - | 998,996 |
| Trade creditors (note 24) | - | 21,768,279 | 21,768,279 | - | 21,768,279 |
| Other current financial liabilities (note 25) | - | 70,728 | 70,728 | - | 70,728 |
| Other creditors (note 26) | - | 6,153,540 | 6,153,540 | 4,285,787 | 10,439,327 |
| Other current liabilities (note 27) | - | 19,223,723 | 19,223,723 | 8,483,737 | 27,707,460 |
| 998,996 | 47,216,270 | 48,215,266 | 12,769,524 | 60,984,790 |
| 2012 (restated) |
|||||
|---|---|---|---|---|---|
| Liabilities recorded at amortised cost |
Other financial liabilities |
Subtotal | Others not covered by IFRS 7 |
Total | |
| Non-current liabilities | |||||
| Medium and long-term loans net of short-term portion (note 20) |
196,238,739 | - | 196,238,739 | - | 196,238,739 |
| Other non-current financial liabilities (note 21) | - | 17,308,879 | 17,308,879 | - | 17,308,879 |
| Other non-current liabilities (note 23) | - | 37,469,733 | 37,469,733 | 262,047 | 37,731,780 |
| 196,238,739 | 54,778,612 | 251,017,351 | 262,047 | 251,279,398 | |
| Current liabilities | |||||
| Short-term loans and other loans (note 20) |
187,170,148 | - | 187,170,148 | - | 187,170,148 |
| Trade creditors (note 24) | - | 168,755,674 | 168,755,674 | - | 168,755,674 |
| Other current financial liabilities (note 25) | - | 3,594,987 | 3,594,987 | - | 3,594,987 |
| Other creditors (note 26) | - | 22,094,727 | 22,094,727 | 10,550,192 | 32,644,919 |
| Other current liabilities (note 27) | - | 99,489,318 | 99,489,318 | 27,931,695 | 127,421,013 |
| 187,170,148 | 293,934,706 | 481,104,854 | 38,481,887 | 519,586,741 |
Considering the nature of the balances, the amounts to be paid and received to/from 'State and other public entities' as well as specialized costs related to the share based plans were considered outside the scope of IFRS 7. On the other hand, the deferred costs/profits recorded in the captions 'Other current assets', 'Other non-current assets', 'Other current liabilities' and 'Other noncurrent liabilities' were considered non-financial instruments.
The Board of Directors believes that, the fair value of the breakdown of financial instruments recorded at amortised cost or registered at the present value of the payments does not differ significantly from their book value. This decision is based in the contractual terms of each financial instrument.
The movement in tangible assets and in the corresponding accumulated depreciation and impairment losses in the years ended at 31 December 2013 and 2012 was as follows:
| 2013 | |||||||
|---|---|---|---|---|---|---|---|
| Land, Buildings and other constructions |
Plant and machinery |
Vehicles | Fixtures and fittings |
Other tangible assets |
Work in progress |
Total | |
| Gross assets | |||||||
| Balance at 31 December 2012 (restated - note 1) |
301,133,284 | 1,072,287,146 | 171,736 | 213,226,929 | 6,715,058 | 20,665,640 | 1,614,199,793 |
| Additions | 18,694 | 3,081,762 | 34,691 | 11,151,440 | 1,187 | 27,990,128 | 42,277,902 |
| Disposals | (547,779) | (2,821,787) | (15,282) | (382,671) | (793) | (125,388) | (3,893,700) |
| Transfers and write-offs | 5,239,931 | 32,156,750 | (69,323) | (809,232) | 99,472 | (36,488,232) | 129,366 |
| Discontinued operations (note 3.e) | (298,400,130) (1,093,255,014) | (85,728) (216,172,869) | (6,563,851) | (10,739,576) (1,625,217,168) | |||
| Balance at 31 December 2013 | 7,444,000 | 11,448,857 | 36,094 | 7,013,597 | 251,073 | 1,302,572 | 27,496,193 |
| Accumulated depreciation and impairment losses | |||||||
| Balance at 31 December 2012 (restated - note 1) |
168,923,346 | 666,298,617 | 151,192 | 191,742,065 | 6,127,629 | - 1,033,242,849 | |
| Depreciation for the year | 5,554,901 | 37,667,093 | 18,195 | 12,477,309 | 178,349 | - | 55,895,847 |
| Disposals | (288,854) | (2,091,168) | (6,232) | (276,941) | (793) | - | (2,663,988) |
| Transfers and write-offs | (36,230) | (1,399,715) | (67,149) | (275,117) | 11,640 | - | (1,766,571) |
| Discontinued operations (note 3.e) | (169,538,697) (689,432,249) | (83,381) (197,605,951) | (6,081,764) | - (1,062,742,042) | |||
| Balance at 31 December 2013 | 4,614,466 | 11,042,578 | 12,625 | 6,061,365 | 235,061 | - | 21,966,095 |
| Net value | 2,829,534 | 406,279 | 23,469 | 952,232 | 16,012 | 1,302,572 | 5,530,098 |
| 2012 (restated) |
|||||||
|---|---|---|---|---|---|---|---|
| Land, Buildings and other constructions |
Plant and machinery |
Vehicles | Fixtures and fittings |
Other tangible assets |
Work in progress |
Total | |
| Gross assets | |||||||
| Balance at 31 December 2011 (restated - note 1) |
301,781,480 1,031,000,168 | 166,398 | 201,288,050 | 6,675,820 | 36,269,347 | 1,577,181,263 | |
| New companies (note 3.b) | – | 103,084 | – | 1,004,738 | – | – | 1,107,822 |
| Additions | 653,822 | 5,406,695 | 5,338 | 15,070,820 | 10,229 | 90,702,314 | 111,849,218 |
| Disposals | (1,014,141) | (46,440,567) | – | (1,678,053) | (24,839) | (470,333) | (49,627,933) |
| Transfers and write-offs | (287,877) | 82,217,766 | – | (2,458,626) | 53,848 (105,835,688) | (26,310,577) | |
| Balance at 31 December 2012 | 301,133,284 | 1,072,287,146 | 171,736 | 213,226,929 | 6,715,058 | 20,665,640 | 1,614,199,793 |
| Accumulated depreciation and impairment losses | |||||||
| Balance at 31 December 2011 (restated - note 1) |
161,013,681 | 649,522,298 | 120,601 | 179,561,095 | 5,739,621 | – | 995,957,296 |
| New companies (note 3.b) | – | 90,165 | – | 441,202 | – | – | 531,367 |
| Depreciation for the year | 8,753,685 | 51,994,893 | 30,591 | 18,340,035 | 395,191 | – | 79,514,395 |
| Disposals | (568,166) | (34,836,491) | – | (962,893) | (7,183) | – | (36,374,733) |
| Transfers and write-offs | (275,854) | (472,248) | – | (5,637,374) | – | – | (6,385,476) |
| Balance at 31 December 2012 | 168,923,346 | 666,298,617 | 151,192 | 191,742,065 | 6,127,629 | – 1,033,242,849 | |
| Net value | 132,209,938 | 405,988,529 | 20,544 | 21,484,864 | 587,429 | 20,665,640 | 580,956,944 |
The additions that occurred during the years ended at 31 December 2013 and 2012 included: assets associated with the UMTS operation (Universal Mobile Telecommunications Service), HSDPA (Kanguru Express), GSM (Global Standard for Mobile Communications), GPRS (General Packet Radio Service), FTTH (Fibre-to-the-Home) and LTE (Long Term Evolution). At 31 December 2013, following the merger between Optimus SGPS and Zon and the consequent derecognition of the assets of the telecommunications segment (note 3.e), the assets above mentioned were no longer part of the final balance (note 3.e).
Additions, disposals and transfers are, mainly, related to the area of telecommunications during the first eight months of the year.
At 31 December 2013, the depreciations of the year of Euro 55,895,847 include an amountof 54,548,733 euros related to the depretiations of assets of discontinued operations (notes 3.e and 37) and an amount of Euro 1,347,114 related to continued operations, so that the reconciliation to 'Proft and loss statement' is as follows:
| CONTINUED OPERATIONS | DISCONTINUED OPERATIONS (Note 37) |
TOTAL | |
|---|---|---|---|
| Tangible assets | 1,347,114 | 54,548,733 | 55,895,847 |
| Intangible assets (note 6) | 4,324,678 | 38,799,082 | 43,123,760 |
| Goodwill (note 7) | 970,000 | - | 970,000 |
| 6,641,792 | 93,347,815 | 99,989,607 |
At 31 December 2013, additions include about Euro 5.4 million of capitalizations of personnel costs related to own work (about Euro 8.3 million at 31 December 2012), mainly related to network development projects.
At 31 December 2012, disposals include the sale of a set of assets related with 2G, 3G and Micro-Wave network.
The acquisition cost of 'Tangible assets' and 'Intangible assets' held by the Group under finance lease contracts, amounted to Euro 920,831 and Euro 36,494,166 as of 31 December 2013 and 2012, and their net book value as of those dates amounted to Euro 100,728 and Euro 19,580,292, respectively. During the year ended at 31 December 2013, the finance lease contracts of Optimus-Comunicações SA and Be Artis, were derecognised (note 3.e).
At 31 December 2012, the heading 'Tangible assets' included an amount of Euro 25.1 million, related to the net book value of the telecommunications equipment delivered to customers, under free lease agreements with a pre-defined period, which are being amortised over the duration of their contracts. During the year ended at 31 December 2013, the entire amount was derecognised (note 3.e).
At 31 December 2013 and 2012, the heading 'Tangible assets' does not include any asset pledged or given as a guarantee for loans obtained, except for the assets acquired under financial lease contracts.
'Tangible assets in progress' at 31 December 2013 and 2012 were made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Development of mobile/fixed network | - | 15,652,408 |
| Information systems / IT equipment | 455,656 | 1,514,961 |
| Other projects in progress | 846,916 | 3,498,271 |
| 1,302,572 | 20,665,640 |
The variation in 'Tangible assets in progress' is due to the derecognition of the telecommunications' assets (note 3.e).
| 2013 | 2012 | |
|---|---|---|
| Network | - | 9,344,084 |
| Information systems | - | 997,717 |
| - | 10,341,801 |
At 31 December 2013 and 2012, the amounts of commitments to third parties relating to investments to be made were as follows:
During the year ended at 31 December 2013, there are no commitments to third parties relating to investments to be made, because, all of them were related to telecommunications companies (note 3.e).
In the years ended at 31 December 2013 and 2012, the movement occurred in Intangible assets and in the corresponding accumulated amortisation and impairment losses, was as follows:
| 2013 | ||||
|---|---|---|---|---|
| Brands and patents and other rights |
Software | Intangible assets in progress |
Total | |
| Gross assets | ||||
| Balance at 31 December 2012 (restated - note 1) | 471,734,531 | 324,743,860 | 22,694,448 | 819,172,839 |
| Additions | 15,347,168 | 945,238 | 15,429,479 | 31,721,885 |
| Disposals | (1,000,000) | (2,868) | - | (1,002,868) |
| Transfers and write-offs | 3,292,284 | 9,762,754 | (12,218,518) | 836,520 |
| Discontinued operations (note 3.e) | (479,025,843) | (304,909,635) | (21,344,001) | (805,279,479) |
| Balance at 31 December 2013 | 10,348,140 | 30,539,349 | 4,561,408 | 45,448,897 |
| Accumulated amortisation and impairment losses | ||||
| Balance at 31 December 2012 (restated - note 1) | 184,502,817 | 255,141,914 | - | 439,644,731 |
| Amortisation for the year | 29,196,162 | 13,927,598 | - | 43,123,760 |
| Disposals | (1,000,000) | (641) | - | (1,000,641) |
| Transfers and write-offs | (67,651) | (1,612,486) | - | (1,680,137) |
| Discontinued operations (note 3.e) | (205,489,969) | (245,796,107) | - | (451,286,076) |
| Balance at 31 December 2013 | 7,141,359 | 21,660,278 | - | 28,801,637 |
| Net value | 3,206,781 | 8,879,071 | 4,561,408 | 16,647,260 |
| 2012 (restated) | ||||
|---|---|---|---|---|
| Brands and patents and other rights |
Software | Intangible assets in progress | Total | |
| Gross assets | ||||
| Balance at 31 December 2011 (restated - note 1) | 361,656,297 | 296,352,012 | 117,812,301 | 775,820,610 |
| New companies (note 3.b) | 1,608,263 | 1,686,153 | – | 3,294,416 |
| Additions | 23,909,212 | 1,562,514 | 18,706,336 | 44,178,062 |
| Disposals | – | (75,744) | – | (75,744) |
| Transfers and write-offs | 84,560,759 | 25,218,925 | (113,824,189) | (4,044,505) |
| Balance at 31 December 2012 | 471,734,531 | 324,743,860 | 22,694,448 | 819,172,839 |
| Accumulated amortisation and impairment losses | ||||
| Balance at 31 December 2011 (restated - note 1) | 153,158,980 | 233,542,417 | – | 386,701,397 |
| New companies (note 3.b) | – | 55,004 | – | 55,004 |
| Amortisation for the year | 43,551,013 | 21,877,502 | – | 65,428,515 |
| Disposals | – | (27,511) | – | (27,511) |
| Transfers and write-offs | (12,207,176) | (305,498) | – | (12,512,674) |
| Balance at 31 December 2012 | 184,502,817 | 255,141,914 | – | 439,644,731 |
| Net value | 287,231,714 | 69,601,946 | 22,694,448 | 379,528,108 |
Under the agreed terms resulting from the grant of the UMTS License, Optimus – Comunicações, S.A., committed, in previous years, to contribute to the promotion and development of an 'Information Society' in Portugal. The total amount of the obligations assumed arose to Euro 274 million which will have to be realised until the end of 2015. In accordance with the Agreement established on 5 June 2007 with the Ministry of Public Works, Transportation and Communications (MOPTC), part of these commitments, up to Euro 159 million, would be realised through own projects eligible as contributions to the 'Information Society' which will be incurred under the normal course of Optimus – Comunicações, S.A.'s business (investments in network and technology, if not directly related with the accomplishment of other obligations inherent to the attribution of the UMTS License, and activities of research, development and promotion of services, contents and applications). These own projects must be recognised by the MOPTC and by entities created specifically for this purpose. The total amount was already incurred and validated by the above referred entities, so, at this date, there are no additional responsibilities related to these commitments. These charges were recorded in the financial statements at the moment the projects were carried out and the estimated costs became known.
The remaining commitments, up to Euro 116 million, has been realised, as agreed between Optimus – Comunicações S.A. and MOPTC, through contributions to the 'Iniciativas E' project (modem offers, discounts on tariffs, cash contributions, among others, assigned to the widespread use of broadband internet for students and teachers). These contributions are made through the 'Fund for the Information Society', now known as the 'Fundação para as Comunicações Móveis' (Foundation for Mobile Communications), established by the three mobile operators with businesses in Portugal. All responsibility was recognised as an additional cost of UMTS license, against an entry in the captions 'Other non-current liabilities' and 'Other current liabilities'. In the year ended at 31 December 2013, all the responsibilities with such commitments were derecognized from the consolidated financial statements, following the merger between Optimus SGPS and Zon and, subsequently, the derecognition of the assets and liabilities of the telecommunications segment (note 3.e).
Intangible assets in the year ended at 31 December 2012, include an amount of approximately Euro 110 million, corresponding to the current value of future payments related with the acquisition of rights of use for frequency (spectrum) bands of 800 MHz, 1800 MHz and 2600 MHz, which will be used to develop 4th generation services (LTE - Long Term Evolution). The payable amount totals Euro 113 million. In January 2012, an amount of Euro 83 million and in January 2013, an amount of Euro 6 million were already paid. The remaining amount can be paid in four annual installments of Euro 6 million, having the company, at each annual payment, the option to anticipate the payment of the amount in debt. During the year ended 31 December 2012, considering the availability of LTE (Long Term Evolution) technology (although still subject to restrictions in some areas of the country) and the subsequent launching the commercial operation, a fraction of the present value of future payments related to the acquisition of rights of use for 4th generation frequencies services was transferred from work in progress (Euro 92.9 million) and the amortisation was started, for an estimated period until 2041. In the year ended at 31 December 2013, this asset was derecognized, following the merger between Optimus SGPS and Zon and, subsequently, the derecognition of the assets and liabilities of the telecommunications segment (note 3.e)..
Additions, disposals and transfers are, mainly, related to the area of telecommunications during the first eight months of the year.
At 31 December 2013, the amortisation of the year of Euro 43,123,760 include an amount of Euro 38,799,082 related to the amortisation of assets of discontinued operations (notes 3.e and 37) and an amount of Euro 4,324,678 related to continued operations.
At 31 December 2012, the Group kept recorded under the heading 'Intangible assets – brands and contents' the amounts of Euro 170,425,449, that correspond to the investments net of depreciations made in the development of the UMTS network, including: (i) Euro 54,005,186 related to the license; (ii) Euro 18,045,113 related to the agreement signed in 2002 between Oni Way and the other three mobile telecommunication operators with activity in Portugal; (iii) Euro 5,542,199 related to a contribution to the 'Fundação para as Comunicações Móveis', established in 2007, under an agreement entered with 'MOPCT' and the three mobile telecommunication operators in Portugal; and (iv) Euro 88,218,718 related with the programme 'Initiatives E', these last two associated to the commitments assumed by the Group in relation to the 'Information Society'. In the year ended at 31 December 2013, these assets were derecognized, following the merger between Optimus SGPS and Zon and, subsequently, the derecognition of the assets and liabilities of the telecommunications segment (note 3.e).
The caption 'Brands and patents and other rights' includes also, in the year ended at 31 December 2012, an amount of about Euro 13.1 million net of amortisation that corresponds to the costs incurred for customers' loyalty contracts. In the year ended at 31 December 2013, this asset was derecognized, following the merger between Optimus SGPS and Zon and, subsequently, the derecognition of the assets and liabilities of the telecommunications segment (note 3.e).
Intangible and tangible assets include interest and other financial expenses incurred, directly related to the construction of certain items of work in progress. At 31 December 2012, the total net amount of financial expenses capitalization amounted to Euro 9,605,147.The amounts capitalised in the years ended at 31 December 2013 and 2012 were Euro 462,097 and Euro 1,589,280, respectively. An interest capitalisation rate of 4.5%, which corresponds to the average interest rate supported by the Group. In the year ended at 31 December 2013, these assets were derecognized, following the merger between Optimus SGPS and Zon and, subsequently, the derecognition of the assets and liabilities of the telecommunications segment (note 3.e).
At 31 December 2013, additions include about Euro 7.7 million of capitalizations of personnel costs related to own work (about Euro 8.4 million at 31 December 2012), mainly related to IT software and RAID and NetClarus products development projects. The assessment of impairment for the main tangible and intangible assets, in the various segments, is carried out as described in note 7 ('Goodwill'), to the extent that such assets are closely related to the overall activity of the segment and consequently cannot be analysed separately.
For the years ended at 31 December 2013 and 2012, the movements occurred in Goodwill were as follows:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Opening balance | 517,985,506 | 520,782,025 |
| Acquisition of Connectiv and goodwill adjustment (note 1.f) | (3,066,150) | 5,167,775 |
| Discontinued operations (note 3.e) | (485,150,340) | - |
| Other movements of the year | (364,600) | 35,706 |
| Impairment | (970,000) | (8,000,000) |
| Closing balance | 28,434,416 | 517,985,506 |
For the year ended at 31 December 2013 and 2012, the caption 'Other movements of the year' includes, mainly, the effects of the exchange rate update of the Goodwill.
In the year ended at 31 December 2013, the amounts under the caption 'Discontinued operations (note 3.e)' are related to the merger between Optimus SGPS and Zon and, subsequently, the derecognition of the assets and liabilities of the telecommunications segment (note 3.e).
Thus , Goodwill at 31 December 2013 was made up as follows:
| INFORMATION SYSTEMS | MULTIMEDIA | ||
|---|---|---|---|
| 2013 | |||
| Goodwill | 22,404,416 | 6,030,000 | |
| INFORMATION SYSTEMS | MULTIMEDIA | TELECOMMUNICATIONS | |
| 2012 (restated) | |||
| Goodwill | 25,835,165 | 7,000,000 | 485,150,341 |
At 30 April 2012, the group acquired the entire share capital of Connectiv Solutions. Following that, the company started from 1 May 2012 to consolidate the financial statements using the full consolidation method (note 3.b).
Connectiv main activity is the rendering of consulting services in the area of information systems.
The acquisition price was allocated as following:
| (Amounts expressed in Euro) | VALUES BEFORE ACQUISITION |
ADJUSTMENTS TO FAIR VALUE |
FAIR VALUE |
|---|---|---|---|
| Acquired assets | |||
| Tangible assets | 576,455 | - | 576,455 |
| Intangible assets | 49,303 | 3,190,109 | 3,239,412 |
| Other current debtors | 1,155,221 | - | 1,155,221 |
| Other assets | 116,744 | - | 116,744 |
| Cash and cash equivalents | 315,304 | - | 315,304 |
| 2,213,027 | 3,190,109 | 5,403,136 | |
| Acquired liabilities | |||
| Other creditors | 184,608 | - | 184,608 |
| Other liabilities | 1,144,459 | - | 1,144,459 |
| 1,329,067 | - | 1,329,067 | |
| Net assets and liabilities | 883,960 | 3,190,109 | 4,074,069 |
| Acquisition price | 9,241,844 | ||
| Goodwill initialy estimated | 5,167,775 | ||
| Adjustments to initial price | 412,703 | ||
| Know-how allocation | (3,478,853) | ||
| Final Goodwill | 2,101,625 |
Following the acquisition of Connectiv Solutions, the company has made a preliminary assessment of the fair value of acquired assets and assumed liabilities, of which result the recognision of software and clients portfolio in the amount of Euro 3,190,109.
As usual on mergers and acquisitions, also in the acquisition of Connectiv, there was a part of the acquisition price which was not possible to be allocated to the fair value of some identified assets and liabilities,that was considered as Goodwill. This Goodwill is related to a number of different elements, which cannot be individually quantified and isolated in a viable way and include, for example, synergies, qualified workforce, technical skills and market power. The total amount of this Goodwill will be considered as fiscal cost in Connectiv accounts, for a period of 15 years, according with the United States of America law.
The acquisition price includes a deferred amount of USD 2 million (1 million paid in 2013 and 1 million to be paid in 2014) and a contingent amount to be paid annually, during 4 years, depending on the performance of the company in terms of revenue, which was estimated in about USD 2 million (USD 658 thousand have already been paid in the year ended at 31 December 2013). For the year ended at 31 December 2013, the contingent amount payable was adjusted by USD 547,579 (Euro 412,703) and an amount of USD 4,547,579 (Euro 3,478,653), which is being amortized over a period of 28 months was allocated to know-how, which generated an adjustment to initial Goodwill, in accordance with IFRS 3 Business Combinations, as this adjustment occur in the period permited by IFRS 3 to goodwill allocation.
At 1 January 2013, Connectiv was incorporated, by merger, in WeDo Americas (note 2).
The contribution of Connectiv to the consolidated net income attributed to Sonaecom's Shareholders, in the year ended at 31 December 2012, was positive of Euro 1,649 thousand.
| (Amounts expressed in Euro) | Contribution at 31 December 2012 |
|---|---|
| Total Revenues | 4,698,827 |
| Costs and losses | |
| External supplies and services | (681,089) |
| Staff expenses | (1,781,922) |
| Depreciations and amortisations | (574,471) |
| Earnings before interest and taxes | 1,661,345 |
| Financial Results | (17,961) |
| Income Tax | 5,809 |
| Net income attributed to shareholders of parent company | 1,649,193 |
If Connectiv had been consolidated since 1 January 2012, the values of consolidated operating revenues and net income, before non-controlling interests, for the year ended at 31 December 2012, would be as follows:
| (Amounts expressed in Euro) | 31 December 2012 ('Pro-forma') restated |
|---|---|
| Consolidated operating revenues | 109,325,832 |
| Net income before non-controlling interests | 75,662,935 |
The contribution of Connectiv to the consolidated balance sheet of Sonaecom at 31 December 2012, excluding the goodwill generated as a result of the acquisition of Connectiv, is as follows:
| (Amounts expressed in Euro) | Contribution at 31 December 2012 |
|---|---|
| Assets | |
| Tangible Assets | 442,122 |
| Intangible Assets | 3,406,144 |
| Trade debtors | 909,800 |
| Cash and cash equivalents | 1,303,877 |
| Other assets | 549,298 |
| Total assets | 6,611,241 |
| Liabilities | |
| Non-current Liabilities | 47,116 |
| Current liabilities | 871,038 |
| Total liabilities | 918,154 |
| Net assets | 5,693,087 |
The evaluation of the existence of impairment losses in Goodwill is made by taking into account the cash-generating units, based on the most recent business plans duly approved by the Group's Board of Directors, which are made on an annual basis unless there is evidence of impairment and prepared according to cash flow projections for periods of five years. In the area of information systems, the assumptions used are essentially based on the various businesses of the Group and the growth of the several geographic areas where the Group operates. The discount rates used were based on the estimated weighted average cost of capital, which depends on the business segment of each subsidiary, as indicated in the table below. In perpetuity, the Group considered a growth rate of 3% in the area of information systems and 0% in Multimedia area. In situations where the measurement of the existence, or not, of impairment is made based on the net selling price, values of similar transactions and other proposals made are used. Regarding the area of telecommunications (Zopt), the assessment of whether or not the impairment is determined taking into account with several information as business plans approved by the Board of Directors and the average ratings of external reviewers (researches).
| Information Systems | Multimedia | Telecommunications | |
|---|---|---|---|
| Assumptions | |||
| Basis of recoverable amount | Value in use | Value in use | Value in use |
| Discount rate | 13.0% | 12.0% | 9.0% |
| Growth rate in perpetuity | 3.0% | 0.0% | 2.0% |
Due to the worsening of the financial crisis, which caused a significant deterioration of the Portugal's macroeconomic scenario in the last years, the advertising market suffered a sharp decline . This situation along with, the bearish forecasts for the next years, aggravated the outlook for future developments. Sales of newspapers and related products have been declining, affecting the projections of cash flows of the multimedia segment, leding the record of a loss in the amount of Euro 970 thousand and Euro 8 million in the year ended at 31 December 2013 and 2012, respectivetly, under the caption 'Depreciation and amortisation' of the Income Statement, in accordance with the policy described in note 1.w. The deviation between both years is related with the restructuring process that the Multimedia group is experiencing.
The evidence of impairment analysis, the revision of the projections and impairment tests did not lead to clearance of losses, in the years ended at 31 December 2013 and 2012. In the Information Systems and Multimedia segment, the sensitivity analysis performed, as required by IAS 36 - Impairment of Assets, did not lead to material changes in the recoverable amounts and therefore did not result in additional losses.
The associated companies and the companies jointly controlled, their head offices, percentage of ownership and value in profit and loss statement on 31 December 2013 and 2012, are as follows:
| 31 December 2013 31 December 2012 31 December 2013 (restated - note 1) Head Office Direct Total Direct Total |
PERCENTAGE OF OWNERSHIP | VALUE IN PROFIT AND LOSS STATEMENT | ||||||
|---|---|---|---|---|---|---|---|---|
| 31 December 2012 | ||||||||
| ZOPT (a)(b) | Porto | 50% | 50% | 50% | 50% | (523,500) | - | |
| Unipress – Centro Gráfico, Lda. ('Unipress') Vila Nova 50% 50% 50% 50% 44,967 de Gaia |
85,074 | |||||||
| Sociedade Independente de Radiodifusão Porto 45% 45% 45% 45% (44,245) Sonora, S.A. ('S.I.R.S.' – usando a marca 'Rádio Nova') |
(48,044) | |||||||
| Infosystems (b) Luanda Sold 50% 50% 32,413 |
(4,172) | |||||||
| Total (Nota 32) (490,365) |
32,858 |
(a) Company established in December 2012.
(b) Includes the results of the subsidiaries,proportionally to capital held.
The associated companies and companies jointly controlled have been consolidated by the equity method.
At 31 December 2013 the group only held jointly controlled companies.
During the years ended at 31 December 2013 and 2012, the movement occurred in investments in associated companies and companies jointly controlled, were as follows:
| 31 December 2013 | 31 December 2012 (restated - note 1) | ||||||
|---|---|---|---|---|---|---|---|
| Ownership value |
Goodwill | Total investment |
Ownership value |
Goodwill | Total investment |
||
| Investments in associated companies and companies jointly controlled | |||||||
| Balance at 1 January | 631,382 | 321,700 | 953,082 | 519,470 | 321,700 | 841,170 | |
| Additions | 625,114,444 | 87,527,500 | 712,641,944 | 25,000 | - | 25,000 | |
| Disposals | (34,251) | - | (34,251) | - | - | - | |
| Equity method | |||||||
| Effect on gains and losses (note 32) | (446,120) | - | (446,120) | 80,902 | - | 80,902 | |
| Effect on reserves | (2,536,500) | - | (2,536,500) | 6,010 | - | 6,010 | |
| Dividends | (143,870) | - | (143,870) | - | - | - | |
| Total investment in associated companies and companies jointly controlled |
622,585,085 | 87,849,200 | 710,434,285 | 631,382 | 321,700 | 953,082 | |
| Impairment losses (note 22) | (105,384) | - | (105,384) | (61,139) | - | (61,139) | |
| Net value | 622,479,701 | 87,849,200 | 710,328,901 | 570,243 | 321,700 | 891,943 |
The caption 'Equity method – Effect on reserves', includes, mainly, the effects of the exchange rate update of the incorporation on consolidated financial statements of Zopt of entities with an functional currency different from euro.
In the year ended at 31 December 2013, the increase in Investments in associated companies and companies jointly controlled corresponds to:
| 2013 | |
|---|---|
| Zopt | |
| Participation in Zopt (note 3.e) | 597,641,944 |
| Supplementary capital in Zopt (note 3.e) | 230,000,000 |
| Sold of supplementary capital of Zopt (note 3.e) | (115,000,000) |
| Total | 712,641,944 |
The Goodwill amount, additional to the amount existing on financial statements of Zopt, amounting to Euro 87,527,500 results from the difference between the value of the investment (Euro 712,641,944) and the ownership on Zopt value (Euro 625,114,444), once was not identified any additional assets and liabilities allocation for being already recorded at fair value on financial statements of Zopt on the date of the Zon Optimus merger operation.
The breakdown, by company, of the Investments in associated companies and companies jointly controlled, is as follows:
| 31 December 2013 | 31 December 2012 (restated - note 1) |
||||||
|---|---|---|---|---|---|---|---|
| Ownership value |
Goodwill | Total investment |
Ownership value |
Goodwill | Total investment |
||
| Investments in associated companies and companies jointly controlled | |||||||
| Zopt | 622,079,444 | 87,527,500 | 709,606,944 | 25,000 | - | 25,000 | |
| Unipress | 505,641 | 321,700 | 827,341 | 604,544 | 321,700 | 926,244 | |
| SIRS | (105,384) | - | (105,384) | (61,139) | - | (61,139) | |
| Infosystems | - | - | - | 1,838 | - | 1,838 | |
| Total | 622,479,701 | 87,849,200 | 710,328,901 | 570,243 | 321,700 | 891,943 |
| (Amounts expressed in thounsand Euro) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Company | % holding | Asset | Liability | Equity | Revenue | Operational results |
Net result | |
| ZOPT* | 50% | 4,413,649 | 1,902,694 | 2,510,955 | 476,848 | 167,278 | (1,949) | |
| Unipress | 50% | 4,726 | 3,714 | 1,011 | 3,360 | 972 | 149 | |
| SIRS | 45% | 321 | 555 | (234) | 815 | (24) | (98) |
* Consolidated accounts of Zopt Group, prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union (EU).
The equity includes non controlling interests.
| (Amounts expressed in thousands of Euro) | DECEMBER 2013 | DECEMBER 2012 |
|---|---|---|
| Assets | ||
| Tangible assets | 1,153,257 | - |
| Intangible assets | 694,518 | - |
| Goodwill (note 3.e) | 1,597,737 | - |
| Deferred tax assets | 172,453 | - |
| Other non-current assets | 340,833 | - |
| Non-current assets | 3,958,798 | - |
| Trade debtors | 276,630 | - |
| Cash and cash equivalents | 74,390 | 50 |
| Other current assets | 103,831 | - |
| Current assets | 454,851 | 50 |
| Total assets | 4,413,649 | 50 |
| Liabilities | ||
| Medium and long-term loans – net of short-term portion | 932,770 | - |
| Provisions for other liabilities and charges | 95,698 | - |
| Other non-current liabilities | 108,471 | - |
| Non-current liabilities | 1,136,939 | - |
| Short-term loans and other loans | 215,791 | - |
| Trade creditors | 296,915 | - |
| Other current liabilities | 253,049 | - |
| Current liabilities | 765,755 | - |
| Total liabilities | 1,902,694 | - |
| Shareholders' funds excluding non-controlling interests | 1,250,729 | 50 |
| Non-controlling interests | 1,260,226 | - |
| Total Shareholders' funds | 2,510,955 | 50 |
| Total Shareholders' funds and liabilities | 4,413,649 | 50 |
| (Amounts expressed in thousands of Euro) | DECEMBER 2013 | DECEMBER 2012 |
|---|---|---|
| Total revenue | 476,848 | - |
| Costs and losses | ||
| Direct costs and External supplies and services | (204,528) | - |
| Depreciation and amortisation | (116,718) | - |
| Other operating costs | (134,793) | - |
| (456,039) | - | |
| Financial results | (16,663) | - |
| Income taxation | (6,095) | - |
| Consolidated net income/(loss) for the year | (1,949) | - |
| Consolidated net income/(loss) for the year attributed to non-controlling interests | (852) | - |
| Attributed to shareholders of parent company | (1,097) | - |
The value on the income statement related to Zopt results from net income/(loss) of Zon Optimus of 4 months, the net income/ (loss) of Zopt, the impact on results of the process of allocating the fair value to the assets and liabilities acquired by Zopt and removing the effect of minority interests.
In February 2004, pursuant to Article 13 of the Authorisation Directive (Directive 2002/20/EC of 7 June), Law 5/2004 of 10 February (Electronic Communications Law) established in its Article 106 the Municipal Wayleave Tax (TMDP) as consideration for the 'rights and costs of the installation, passage and crossing, in a determined area, of the public and private municipal domain' by the systems, equipment and other resources of companies offering public electronic communications networks and services.
The TMDP charge is levied on 'each invoice issued by the companies offering public electronic communications networks and services at a fixed location to all end customers within the respective municipality', and is calculated as a maximum percentage of 0.25% of the amount of each invoice. Some municipalities, despite approving the TMDP, have continued to collect Occupancy Taxes, while others have opted to maintain the latter taxes rather than approving the TMDP.
In the light of legal advice on the matter, the Group is of the view that the TMDP is the only tax that should be collected as consideration for the above mentioned rights, namely the right of installation, for which reason it has challenged the public highway Occupancy Taxes charged to it by municipalities, since it deems such taxes illegal. It must also be highlighted that under the scope of an administrative complaint, a decision has been made by some municipalities, which have either subscribed to the Group's interpretation or decided that they may only opt for one rate or the other, as it is not possible for the TMDP and public road Occupancy Rates to overlap.
Meanwhile, various judicial judgments have been issued on the substantive issue, including by the Supreme Administrative Court (two appeals are pending to the Constitutional Court presented in two proceedings by the C.M Lisboa) that uphold the position and understanding of ZON TV Cabo, with the result that there are good prospects that this dispute will be definitively resolved in favour of ZON TV Cabo by the majority of municipalities.
With the entry into force of Decree-Law 123/2009, this matter has been definitively resolved for the future. This law clearly states (in line with Group's interpretation of the previous legislation) that the TMDP is payable for the use and usufruct of property in the public or private municipal domain which involves the construction or installation, by companies that offer public electronic communications networks and services, of infrastructures for housing electronic communications in accordance with the terms of the Electronic Communications Law, and that no other taxes, official fees or consideration are due.
During the course of the 2003 to 2013 financial years, certain companies of the ZON Optimus Group were the subject of tax inspections for the 2001 to 2011 financial years. Following these inspections, ZON Optimus, as the controlling company of the Tax Group, and companies not covered by Tax Group, were notified of the corrections made to the Group's tax losses, to VAT and stamp tax and to make the payments related to the corrections made to the above exercises. The total amount of the notifications is about 30.7 million euros. Note that the Group considered that the corrections were unfounded, and contested the amounts mentioned. The Group provided the bank guarantees demanded by the Tax Authorities in connection with these proceedings.
At end of year 2013 and taking advantage of the extraordinary settlement scheme of tax debts, the Group settled 7.7 million euros (corresponding to notifications in the amount of 18 million euros less accrued interests). This amount was recorded as 'taxes receivable' non current net of the provision recorded in the amount of 3.5 million euros. As belief of the Board of Directors of the Zopt group, supported by our lawyers and tax advisors, the risk of loss of these proceedings is not likely and the outcome thereof will not affect materially the consolidated position.
Already in 2014, a ZON TV Cabo provider's of marketing services has brought a civil lawsuit seeking a payment of about 1,243,000 euros, by the alleged early termination of contract and for compensation. It is belief of the Board that the arguments used are not correct, so the outcome of the proceeding will not result in significant impact on the financial statements of the group.
Law n.º 55/2012, which establishes the principles of state action under the promotion, development and protection of cinema and cinematographic and audiovisual activities in Portugal, was published on September 6, 2012. This Law was enacted in 2013 (DL 9/2013) for the sole purpose of liquidating and charging publicity rates for showing films and charging television distribution operators.
Meanwhile, is pending approval in Parliament an amendment to the Cinema Law which reduces the fee amount from 2014. Overall, it was agreed by the operators.
During the year 2013, the Group settled the payment of 2013's fees as they have been notified by the Institute of Cinema and Audiovisual.
Sport TV Portugal, S.A. was fined by the Competition Authority to the value of 3,730 thousand euros for the alleged abuse of its dominant position in the domestic market of subscription channels with premium sport content. Sport TV is not in agreement with the decision and has therefore decided to appeal against the same to the competent judicial authorities.
The general conditions that affect the agreement and termination of this contract between ZON Optimus and its clients, establish that if the products and services provided by the client can no longer be used prior to the end of the binding period, the client is obliged to immediately pay damages.
As of December 2013, damages were charged by ZON TV Cabo and Optimus to a total of 21,337 thousand euros and 172,331 thousand euros, respectively, of which 953 thousand euros and 2,053 thousand euros, respectively, were received in the year and in the last four months of the year, respectively.
At 31 December 2013, accounts receivable and accounts payable include 37,139,253 euros and 29,913,608 euros, respectively, resulting from a dispute between the subsidiary Optimus – Comunicações, S.A. and, essentially, the operator TMN – Telecomunicações Móveis, S.A., in relation to the indefinition of interconnection tariffs, recorded in the year ended at 31 December 2001. In the lower court, the decision was favorable to Optimus. The 'Tribunal da Relação' (Court of Appeal), on appeal, rejected the intentions of TMN. However, TMN again appealed to the 'Supremo Tribunal de Justiça' (Supreme Court), for final and permanent decision, who upheld the decision of the 'Tribunal da Relação' (Court of Appeal), thus concluding that the interconnection prices for 2001 were not defined. The settlement of outstanding amounts will depend on the price that will be established.
At 31 December 2013, there is recorded a provision to cover the offense proceedings in the amount of approximately 4.5 million euros, established by the National Commission for Data Protection ('CNDP') against Optimus subsidiary, for alleged violations of rules relating to legal protection of data. During the design phase of decision, Optimus argued, firstly, a set of procedural irregularities and, secondly, a set of fact and law arguments that the Board understood to impose a final decision to dismiss the case. However, on 16 January 2014, Optimus received a settlement notice regarding the fine imposed by the CNPD, against which will appeal to the courts. The Board of Directors believes to obtain a favorable decision.
In August 2013, Sonaecom Group began to hold Zon Optimus shares recorded at fair value through profit or loss, as a result of the merger between Optimus SGPS ans Zon (note 3.e), since it is the initial classification of an asset held for a sale purpose in a short-time (note 43). In accordance with the 'Shareholders Agreement', these shares neither concedes any additional vote right or affect the shared control situation with Zon Optimus.
The movements occurred in financial assets at fair value through profit or loss, in 31 December 2013 were as follows:
| 2013 | |||||
|---|---|---|---|---|---|
| Financial assets at fair value through profit or loss | Opening balance | Increases (note 3.e) |
Decreases | Fair value adjustments |
Closing balance |
| Zon Optimus | - | 155,805,631 | - | 46,636,719 | 202,442,350 |
The fair value adjustments are recorded under the caption ''Gains and losses on Group companies' in Profit and Loss Statement (note 32).
| Shares (7.28%) | 37,489,324 |
|---|---|
| Level of inputs in the hierarchy of fair value | Nível 1 |
| Valuation method | Quoted price on the stock exchange |
| Quoted price* | 5,4 |
| Fair value | 202,442,350 |
* Used the share price of 31 December 2013 in the determination of the fair value.
This investment was classified as a current asset, following the launching by Sonaecom, of the partial and voluntary offer for the acquisition of own shares (note 43).
At 31 December 2013 and 2012, this caption included investments classified as available-for-sale and was made up as follows:
| % | 2013 | 2012 | |
|---|---|---|---|
| Lusa – Agência de Notícias e Portugal, S.A. | 1.38% | 197,344 | 197,344 |
| VISAPRESS - Gestão de Conteúdos dos Média, CRL | 10.00% | 5,000 | 5,000 |
| Others | - | 13,104 | 9,979 |
| Impairment losses | (100,000) | - | |
| 115,448 | 212,323 |
During the year ended at 31 December 2013, the movement occurred on the heading 'Investments available for sale', corresponded to the incorporation of the company Distrinews, SA in which Público subscribed 25% of its capital in the amount of Euro 12,500, and subsequent sale of 75% of the capital held in the same entity in the amount of Euro 9,375, and to the the constitution of an impairment loss amount to Euro 100,000 related to investment in Lusa, registered in 'Other financial expenses' in profit and loss statement (note 32).
During the year ended at 31 December 2012, the heading 'Investments available for sale' did not present any movements.
At 31 December 2013, these investments correspond to shareholdings of immaterial amount, in unlisted companies, in which the Group has no significant influence, and in which the acquisition cost of such investments is a reasonable estimation of their fair value, adjusted where applicable, by the respective impairment losses.
The assessment of impairment in the investments described above is performed through comparisons with the value of the percentage of share capital detained by the Group and with multiples of sales and EBITDA of companies of the same sector.
The financial information regarding these investments is detailed below (in thousands of euro):
| ASSETS | SHAREHOLDERS' FUNDS |
GROSS DEBT | TURNOVER | OPERATIONAL RESULTS |
NET INCOME | |
|---|---|---|---|---|---|---|
| Lusa – Agência de Notícias de Portugal, S.A.(1) |
14,267 | 6,841 | 1,215 | 19,485 | 957 | 261 |
| VISAPRESS - Gestão de Conteúdos dos Média, CRL(1) |
102 | 2 | - | 128 | 37 | 37 |
(1) Amounts expressed in thousands euro at 31 December 2012.
Deferred tax assets at 31 December 2013 and 2012, amounted to Euro 5,199,886 and Euro 101,134,781, respectively, and arose, mainly, from tax losses carried forward, from differences between the accounting and tax amount of some fixed assets and from others temporary differences. The movements in deferred tax assets in the years ended at 31 December 2013 and 2012 were as follows:
| 2013 | ||||||
|---|---|---|---|---|---|---|
| Balance at 31 December 2012 |
Movements in deferred tax of year |
Utilization of deferred tax |
Record/ (reverse) of deffered tax of previous years |
Discontinued operations (note 3.e) |
Balance at 31 December 2013 |
|
| Tax losses | 6,172,973 | 1,160,777 | (928,527) | (1,054,642) | (4,501,586) | 848,995 |
| Tax provisions not accepted and other temporary differences |
36,302,876 | (75,391) | - | 4,718,206 | (39,434,788) | 1,510,903 |
| Tax benefits (SIFIDE and RFAI) | 9,709,216 | 5,088,052 | (1,320,450) | (5,900) | (12,524,383) | 946,535 |
| Adjustments in the conversion to IAS/IFRS | 13,249,801 | (4,416,654) | - | 1,392,244 | (10,225,164) | 227 |
| Temporary differences arising from the securitisation of receivables |
3,220,000 | - | (2,146,667) | - | (1,073,333) | - |
| Differences between the tax and accounting amount of certain fixed assets and others |
32,510,701 | (3,849,386) | - | 4,202,742 | (30,866,513) | 1,997,545 |
| Sub-total | 101,165,567 | (2,092,602) | (4,395,644) | 9,252,651 | (98,625,767) | 5,304,205 |
| Discontinued operations | 95,065,947 | (2,407,278) | (3,249,921) | 9,217,018 | (98,625,767) | - |
| Continued operations (note 33) | 6,099,620 | 314,676 | (1,145,723) | 35,632 | - | 5,304,205 |
| Others | (30,786) | (73,533) | - | - | - | (104,319) |
| Closing balance | 101,134,781 | (6,351,339) | (4,395,644) | 9,252,651 | (98,625,767) | 5,199,886 |
| 2012 | ||||||
|---|---|---|---|---|---|---|
| Balance at 31 December 2011 |
Movements in deferred tax of year |
Utilization of deferred tax |
Record/ (reverse) of deffered tax of previous years |
Discontinued operations (note 3.d) |
Balance at 31 December 2012 |
|
| Tax losses | 7,152,769 | - | (689,620) | (290,176) | - | 6,172,973 |
| Tax provisions not accepted and other temporary differences |
26,591,262 | (2,768,023) | - | 12,479,637 | - | 36,302,876 |
| Tax benefits (SIFIDE and RFAI) | 3,519,525 | - | - | 6,189,691 | - | 9,709,216 |
| Adjustments in the conversion to IAS/IFRS | 20,203,355 | (6,953,554) | - | - | - | 13,249,801 |
| Temporary differences arising from the securitisation of receivables |
6,440,000 | - | (3,220,000) | - | - | 3,220,000 |
| Differences between the tax and accounting amount of certain fixed assets and others |
39,975,219 | (7,464,518) | - | - | - | 32,510,701 |
| Sub-total effect on results | 103,882,130 | (17,186,095) | (3,909,620) | 18,379,152 | - | 101,165,567 |
| Others | (28,249) | (2,537) | - | - | - | (30,786) |
| Closing balance | 103,853,881 | (17,188,632) | (3,909,620) | 18,379,152 | - | 101,134,781 |
The 'Tax provisions not accepted and other temporary differences' include temporary differences related to the value of the UMTS license, of the subsidiary Optimus. In consolidated financial statements and in accordance with IAS / IFRS, the license was amortised linearly, by the estimated period of useful life. For tax purposes, until the year 2009, the UMTS license was amortised using, on the first five years of commercial operation, from 2004 to 2008, incremental monthly basis depending of the capacity of the network installed, which would be applied after the straight-line monthly basis until the term of the license. Thus, the group recorded deferred tax assets relating to the temporary differences between the value of the license for tax purposes and the value recorded in the consolidated financial statements. In the year ended at 31 December 2013, these assets are no longer part of the final balance and are recorded in 'Discontinued operations (note 3.e)', following the merger between Optimus SGPS and Zon and, subsequently, the derecognition of the assets and liabilities of the telecommunications segment (note 3.e).
Deferred taxes related to the IAS / IFRS conversion adjustments correspond to the temporary differences generated in the companies included in consolidation and result from the fact that IAS / IFRS conversion adjustments, recorded in these companies at 31 December 2009, already considered in consolidated financial statements under IAS / IFRS, from previous years, only be considered for tax purposes, linearly, for a period of five years between 2010 and 2014.
At 31 December 2008, deferred tax assets were recognised in the amount of Euro 16.1 million with regard to the securitisation of future receivables completed in December 2008. As a result of that operation, and in accordance with the provisions of Decreto-Lei nº 219/2001 (Decree-Law) of 4 August, an amount of Euro 100 million was generated from that operation and it was added for purposes of determining the taxable income for the year 2008, thereby generating a temporary difference between accounting and taxable income result, which led to the recognition of a deferred tax asset to the extent, that its use was, with reasonable safety, probable at that date. Until 30 August 2013, an amount of Euro 15 million was reversed corresponding to the reversal of the above referred temporary difference. In the year ended at 31 December 2013, these assets are no longer part of the final balance and are recorded in 'Discontinued operations (note 3.e)', following the merger between Optimus SGPS and Zon and, subsequently, the derecognition of the assets and liabilities of the telecommunications segment (note 3.e).
At 31 December 2013 and 2012, assessments of the deferred tax assets to be recovered and recognised were made. Potential deferred tax assets were recorded to the extent that future taxable profits were expected to be generated against which the tax losses and deductible tax differences could be used. These assessments were made based on the most recent business plans duly approved by the Board of Directors of the Group companies, which are periodically reviewed and updated. The main criteria used in those business plans are described in note 7.
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 the temporary differences in Portuguese companies, including provisions not accepted and impairment losses, was 24.5%. It wasn't considered the state surcharge, as it was understood to be unlikely the taxation of temporary differences during the estimated period when the referred rate will be applicable. Tax benefits, related to deductions from taxable income, are considered at 100%, and in some cases, their full acceptance is dependent on the approval of the authorities that concede such tax benefits. For foreign companies was used the rate in force in each country.
| COMPANIES EXCLUDED OF THE TAX GROUP | 2013 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Nature | Companies included in the tax group |
Digitmarket | WeDo Brasil |
WeDo USA |
Sonecom Sistemas de Informação Espanha |
WeDo Mexico |
Saphety Brasil |
Total | Total Sonaecom Group |
| Tax losses: | |||||||||
| To be used until 2021 | - | - | - | - | - | 153,061 | - | 153,061 | 153,061 |
| To be used until 2022 | - | - | - | - | - | 28,236 | - | 28,236 | 28,236 |
| To be used until 2023 | - | - | - | - | - | 188,701 | - | 188,701 | 188,701 |
| To be used until 2025 | - | - | - | - | 151,545 | - | - | 151,545 | 151,545 |
| To be used until 2030 | - | - | - | 123,739 | 7,393 | - | - | 131,132 | 131,132 |
| To be used until 2033 | - | - | - | 196,320 | - | - | - | 196,320 | 196,320 |
| Tax losses | - | - | - | 320,059 | 158,938 | 369,998 | - | 848,995 | 848,995 |
| Tax provisions not accepted and other temporary differences |
983,891 | 19,770 | 444,704 | - | - | 59,452 | 3,086 | 527,012 | 1,510,903 |
| Tax benefits (SIFIDE and RFAI) | 930,654 | - | - | 15,881 | - | - | - | 15,881 | 946,535 |
| Adjustments in the conversion to IAS/IFRS |
- | 227 | - | - | - | - | - | 227 | 227 |
| Differences between the tax and accounting amount of certain fixed assets and others |
- | - | - | - | - | - | - | - | 1,997,545 |
| Others | - | - | (77,697) | (13,093) | - | (13,144) | (385) | (104,319) | (104,319) |
| Total | 1,914,545 | 19,997 | 367,007 | 322,847 | 158,938 | 416,306 | 2,701 | 1,287,796 | 5,199,886 |
In accordance with the tax returns and other information prepared by the companies that have registered deferred tax assets, the detail of such deferred tax assets, by nature, at 31 December 2013 was as follows:
At 31 December 2013 and 2012, the Group has other situations where potential deferred tax assets could be recognised, but since it is not expected that sufficient taxable profits will be generated in the future to cover those losses, such deferred tax assets were not recorded:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Tax losses | 5,988,664 | 22,481,012 |
| Temporary differences (provisions not accepted for tax purposes and other temporary diferences) | 34,979,707 | 35,720,549 |
| Others | 1,254,119 | 7,378,263 |
| 42,222,490 | 65,579,824 |
At 31 Deceber 2013 and 2012, tax losses for which deferred tax assets were not recognised have the following due dates:
| DUE DATE | 2013 | 2012 (restated - note1) |
|---|---|---|
| 2013 | - | 13,848,361 |
| 2014 | 407,763 | 694,361 |
| 2015 | 1,261,963 | 3,953,553 |
| 2016 | 304,480 | 395,966 |
| 2017 | 209,237 | 180,294 |
| 2018 | 216,766 | 48,023 |
| 2019 | 331,156 | 331,156 |
| 2020 | 28,467 | 10,130 |
| 2021 | 53,860 | 53,860 |
| 2022 | 53,174 | - |
| 2027 | - | - |
| 2030 | 84,942 | 84,676 |
| 2031 | 105,369 | - |
| Unlimited | 2,931,487 | 2,880,632 |
| 5,988,664 | 22,481,012 |
The years 2019 and following are applicable to the subsidiaries incorporated in countries in which the reporting period of tax losses is greater than five years.
The deferred tax liabilities at 31 December 2013 amounting to Euro 89,522 (2012: Euro 1,089,637), result mainly from temporary differences between tax and accounting results of intangible assets.
The movement that occurred in deferred tax liabilities in the years ended at 31 December 2013 and 2012 were as follows:
| 2013 | 2012 | |
|---|---|---|
| Opening balance (restated - note 1) | (1,089,637) | (5,186,710) |
| Temporary differences between accounting and tax result | 740,362 | 3,606,259 |
| Discontinued operations | 740,173 | - |
| Continued operations (impact on results (note 33) | 189 | - |
| Discontinued operations (note 3.e) | 259,753 | - |
| Sub-total effect on results (note 33) | 189 | 3,606,259 |
| Others | - | 490,814 |
| Closing balance | (89,522) | (1,089,637) |
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Earnings before taxes | 41,395,371 | (33,166,514) |
| Income tax rate (25%) | (10,348,843) | 8,291,629 |
| Deferred tax assets not recognised in the individual accounts and / or resulting from consolidation adjustments and other adjustments to taxable income |
3,962,964 | (8,054,083) |
| Record/(reverse) of deferred tax assets related to previous years and tax benefits | 564,199 | (80,225) |
| Use of tax losses and tax benefits without record of deferred tax asset in previous years | 2,702,328 | 69,655 |
| Temporary differences for the year without record of deferred tax assets | (403,722) | (234,241) |
| Record of deferred tax liabilities | (350,070) | - |
| Income taxation recorded in the year (note 33) | (3,873,144) | (7,265) |
The reconciliation between the earnings before taxes and the taxes recorded for the years ended at 31 December 2013 and 2012 is as follows:
The tax rate used to reconcile the tax expense and the accounting profit was 25% because it is the standard rate of the corporate income tax in Portugal in 2013 and 2012.
Portuguese Tax Authorities can review the income tax returns of the Company and of its subsidiaries with head office in Portugal for a period of four years (five years for Social Security), except when tax losses have been generated, tax benefits have been granted or when any review, claim or impugnation is in course, in which circumstances, the periods are extended or suspended. Consequently, tax returns of each year, since the year 2009 (inclusive) are still subject to such review. The Board of Directors believes that any correction that may arise as a result of such review would not have a significant impact on the accompanying consolidated financial statements.
For the year ended at 31 December 2010, the subsidiary (at that date) Optimus was notified of the Report of Tax Inspection, where it considers that it is inappropriate the increase, when calculating the taxable profit for the year 2008, of the amount of Euro 100 million, with respect to initial price of future credits transferred to securitization. The Settlement Note, was receipt on April 2011. Given the principle of periodization of taxable income, Optimus was subsequently notified of the improper deduction of the amount of Euro 20 million in the calculation of taxable income for the years 2009 (Report of the Tax Inspection and tax settlement notice received in December 2011 and January 2012, respectively) and 2010 (Report of the Tax Inspection and the tax settlement notice received in January and May 2013, respectively). Since the increases made in 2008, was not accepted by not comply with Article 18 of the CIRC, also in the years following, the deduction corresponding to credits generated in that year, will eliminate the calculation of taxable income, to meet the annual amortisation hired as part of the operation (20 million per year during 5 years). Since the Board of Directors believes that the contingency is not probable, there has been no recorded any contingent liability. At 31 December 2013, Optimus is no longer part of the consolidation of the group Sonaecom by integral method as a result of the merger of Optimus SGPS with Zon (note 3 e).
Supported by the Company's lawyers and Tax consultants, the Board of Directors believes that there are no liabilities not provisioned in the consolidated financial statements, associated to probable tax contingencies that should have been registered or disclosed in the accompanying financial statements, at 31 December 2013.
At 31 December 2013 and 2012, this caption was made up as follows:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Raw materials | 427,855 | 615,561 |
| Merchandise | 150,670 | 17,564,377 |
| 578,525 | 18,179,938 | |
| Accumulated impairment losses on inventories (note 22) | (25,000) | (4,377,789) |
| 553,525 | 13,802,149 | |
The deviation occurred between both years in Inventories includes the effect of the derecognition of the amounts of the telecommunications segment following the merger between Optimus SGPS and Zon (note 3.e).
The cost of goods sold in the years ended at 31 December 2013 and 2012 amounted to Euro 24,753,054 and Euro 24,854,049 respectively and was determined as follows:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Opening inventories | 18,179,938 | 20,119,326 |
| Purchases | 51,803,061 | 87,856,290 |
| Increase of accumulated impairment losses on inventories (note 22) | 466,664 | 286,548 |
| Inventory adjustments | (4,514,410) | (22,454,352) |
| Output of the telecommunications sector companies (note 3.e) | (19,124,520) | - |
| Descontinued operations (note 37) | (21,479,154) | (42,773,825) |
| Closing inventories | (578,525) | (18,179,938) |
| 24,753,054 | 24,854,049 |
The amounts recorded under the caption 'Inventory adjustments' at 31 December 2013 and 2012 correspond, essentially, to the transfer of telecommunications handsets from the caption 'Inventories' to the caption 'Tangible assets', as a result of the rental contracts agreements signed with customers by the subsidiary Optimus – Comunicações S.A. (note 5). These amounts were, in the year ended at 31 December 2013, derecognized following the merger between Optimus SGPS and Zon (note 3.e).
The accumulated impairment losses on inventories reflect the difference between the acquisition cost and market net realisable value of the inventory, as well as the estimate of impairment losses due to low stock turnover, obsolescence and deterioration. The accumulated impairment losses are registered in the caption 'Cost of sales' (note 1.i).
At 31 December 2013 and 2012, this caption was made up as follows:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Trade debtors: | ||
| Telecommunications | - | 114,202,453 |
| Information Systems | 32,032,744 | 27,448,614 |
| Multimedia and others | 4,383,609 | 3,250,591 |
| 36,416,353 | 144,901,658 | |
| Doubtful debtors | 3,889,900 | 82,069,573 |
| 40,306,253 | 226,971,231 | |
| Impairment losses in accounts receivable (note 22) | (3,889,900) | (82,069,573) |
| 36,416,353 | 144,901,658 |
The deviation occurred between both years in Trade debtors includes the effect of the derecognition of the amounts of the telecommunications segment following the merger between Optimus SGPS and Zon (note 3.e).
At 31 December 2013 and 2012, the accumulated impairment losses by segment were made up as follows:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Impairment losses in accounts receivable: | ||
| Telecommunications | - | 78,364,692 |
| Information Systems | 1,965,707 | 826,448 |
| Multimedia and others | 1,924,193 | 2,878,433 |
| 3,889,900 | 82,069,573 |
The Group's exposure to credit risk is mainly related to accounts receivable arising from its operational activity. The amounts included in the balance sheet are net of cumulative doubtful debtors impairment losses that were estimated by the Group, taking into consideration its past experience and an assessment of the current macroeconomic environment. The Board of Directors believes that the book value of the accounts receivable does not differ significantly from its fair value.
Trade debtors by age at 31 December 2013 and 2012 were as follows:
| DUE WITHOUT IMPAIRMENT | DUE WITH IMPAIRMENT | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Total | Not due | Until 30 days |
From 30 to 90 days |
More than 90 days |
Until 90 days |
From 90 to 180 days |
From 180 to 360 days |
More than 360 days |
|
| 2013 | |||||||||
| Trade debtors | 40,306,253 | 16,421,523 | 7,189,764 | 4,782,586 | 4,719,780 | 954,061 | 856,685 | 1,179,790 | 4,202,064 |
| 2012 (restated - note 1) |
|||||||||
| Trade debtors | 226,971,231 | 56,273,468 | 18,849,974 | 16,904,689 | 24,301,920 | 3,957,205 | 2,829,239 | 6,284,433 | 97,570,303 |
At 31 December 2013, of the total amount of accounts receivable impaired and overdue for more than 90 days, net of VAT, that the Group expects and makes efforts to recover, around 80% were covered by impairment adjustments.
Credit risk monitoring, which is performed on a continuous basis, can be resumed as follows:
(i) In the case of regular customers, impairment adjustment is calculated by applying an uncollectibility percentage based on historical data regarding collections, to the accounts receivables overdue.
(ii) In the case of the remaining accounts receivable, impairment adjustments are determined on a stand-alone basis, based on the age of the receivables, net of the amounts payable and the information of the financial situation of the debtor.
At 31 December 2013 and 2012, this caption was made up as follows:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| State and other public entities | 5,863,034 | 5,999,639 |
| Advances to suppliers | 534,960 | 1,094,385 |
| Information Society | - | 10,918,467 |
| Other debtors | 16,752,397 | 4,523,476 |
| Accumulated impairment losses in accounts receivable (note 22) | (109,625) | (825,871) |
| 23,040,766 | 21,710,096 |
At 31 December 2012, the net position of the Sonaecom Group with the 'Fundação para as Comunicações Móveis', under the 'Iniciativas E' programme, amounts to a receivable of Euro 10,918,467. At 31 December 2013 these amounts were desrecognized following te merger between Optimus SGPS and Zon and the consequent desrecognition of the assets and liabilities of the telecommunications sector (note 3.e).
At 31 December 2013, the caption 'Other debtors' include an amountreferred to the to chosen of Sonaecom SGPS, SA to benefit from the scheme of Outstanding Debts Settlement of Tax and Social Security, and carried out a payment totaling of circa Euro 5 million related essentially to VAT. The Board of Directors believes that these amounts are not due and there are no material liabilities associated that has no provision and that should be disclosed.
Other debtors and advances to suppliers by age at 31 December 2013 and 2012 are as follows:
| DUE WITHOUT IMPAIRMENT | DUE WITH IMPAIRMENT | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Total | Not due | Until 30 days |
From 30 to 90 days |
More than 90 days |
Until 90 days |
From 90 to 180 days |
From 180 to 360 days |
More than 360 days |
|
| 2013 | |||||||||
| Advances to suppliers | 534,960 | 52,663 | 239,007 | 3,136 | 240,154 | - | - | - | - |
| Other debtors | 16,752,397 | 364,583 | 4,489,285 | 3,228,261 | 8,464,783 | - | - | 5,197 | 200,288 |
| 17,287,357 | 417,246 | 4,728,292 | 3,231,397 | 8,704,937 | - | - | 5,197 | 200,288 | |
| 2012 (restated - note 1) |
|||||||||
| Information Society | 10,918,467 | - | - | - | 10,918,467 | - | - | - | - |
| Advances to suppliers | 1,094,385 | 499,074 | 401,079 | 41,385 | 105,392 | 47,455 | - | - | - |
| Other debtors | 4,523,476 | 464,725 | 1,371,274 | 65,567 | 2,227,429 | 188,097 | 60 | 22,063 | 184,261 |
| 16,536,328 | 963,799 | 1,772,353 | 106,952 | 13,251,288 | 235,552 | 60 | 22,063 | 184,261 |
The amounts due and without impairment correspond, mostly, to Sonae Group companies and other entities, without credit risk.
At 31 December 2013 and 2012, this caption was made up as follows:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Invoices to be issued to clients for services rendered | 6,242,561 | 36,638,133 |
| Specialised work paid in advance | 1,892,828 | 15,410,725 |
| Invoices to be issued to operators (note 3.e) | - | 18,473,505 |
| Other accrued income | 783,419 | 1,142,523 |
| Prepaid rents | 293,202 | 923,483 |
| Rappel discounts (annual quantity discounts) | 17,684 | 290,640 |
| Other costs paid in advance | 68,712 | 644,791 |
| 9,298,406 | 73,523,800 |
The results of the projects in progress, carried out by the information systems segment, are recognised based on the completion percentage method, which is calculated taking into consideration the relation between the costs already incurred and the works performed to date and the comparison to the total estimated costs for the same project, except when these are not representative of the stage of completion of the project.
At 31 December 2013 and 2012, projects in progress could be summarised as follows:
| 2013 | 2012 | |
|---|---|---|
| Number of projects in progress | 664 | 415 |
| Total costs recognised | 18,133,225 | 17,860,214 |
| Total revenues recognised | 30,823,190 | 24,926,025 |
| Total deferred revenues (note 27) | 5,944,035 | 8,313,048 |
| Total accrued revenues | 4,680,950 | 4,567,092 |
At 31 December 2013 and 2012, the detail of cash and cash equivalents was as follows:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Cash | 10,979 | 121,908 |
| Bank deposits repayable on demand | 28,793,626 | 6,740,185 |
| Treasury applications | 159,210,318 | 54,878,917 |
| Cash and cash equivalents | 188,014,923 | 61,741,010 |
| Bank overdrafts (note 20) | (10,208) | (55,290) |
| 188,004,715 | 61,685,720 |
| 2013 | 2012 | |
|---|---|---|
| Sonae Investments BV | - | 16,810,000 |
| Bank applications | 159,210,318 | 38,068,917 |
| 159,210,318 | 54,878,917 | |
During the year ended at 31 December 2013, the above mentioned treasury applications bear interests at an average rate of 1.69% (2.48% in 2012).
At 31 December 2013 and 2012, the share capital of Sonaecom was comprised by 366,246,868 ordinary registered shares of 1 Euro each. At those dates, the Shareholder structure was as follows:
| 2013 | 2012 | |||
|---|---|---|---|---|
| Number of Shares |
% | Number of Shares |
% | |
| Sontel BV | 194,063,119 | 52.99% | 194,063,119 | 52.99% |
| Shares traded on the Portuguese Stock Exchange ('Free Float') | 82,152,012 | 22.42% | 78,681,339 | 21.48% |
| Sonae SGPS | 76,679,374 | 20.94% | 3,430,000 | 0.94% |
| Goldman Sachs* | 7,780,349 | 2.12% | - | 0.00% |
| Own shares (Note 18) | 5,571,014 | 1.52% | 4,321,038 | 1.18% |
| Efanor Investimentos, SGPS, S.A | 1,000 | 0.00% | 1,000 | 0.00% |
| Atlas Service Belgium** | - | - | 73,249,374 | 20.00% |
| Millenium BCP *** | - | - | 12,500,998 | 3.41% |
| 366,246,868 | 100.00% | 366,246,868 | 100.00% |
* On 23 October 2013, Goldman Sachs Group, Inc. informed Sonaecom about the completion of a qualifying holding of 2.12% in Sonaecom, corresponding to 7,780,349 shares and voting rights.
** At 15 February 2013, Sonae and France Télécom ('FT-Orange') have concluded an agreement, which consisted in the assignment of a call and a put option, respectively, of the 20% stake in Sonaecom, held at that date by a subsidiary of FT-Orange. At 9 September 2013, the abovementioned option was exercised by Sonae and FT-Orange respectively.
*** The number of shares held by Millenium BCP, according with the information obtained on 15 May 2013, has been included in 'Free Float' because it does not correspond to a qualified participation.
All shares that comprise the share capital of Sonaecom, are authorised, subscribed and paid. All shares have the same rights and each share corresponds to one vote.
During the year ended at 31 December 2013, Sonaecom delivered to its employees 250,024 own shares under its Short and Medium Term Incentive Plan.
Additionally, during the year ended at 31 December 2013, Sonaecom acquired 1,500,000 shares (at an average price of Euro 1.667), holding at 31 December 2013, 5,571,014 own shares, representative of 1.52% of its share capital at the average acquisition cost of Euro 1.380.
Non-controlling interests at 31 December 2013 and 2012 are made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Digitmarket | 375,209 | 359,878 |
| Saphety | (71,967) | 27,109 |
| Others | (33,418) | 492 |
| 269,824 | 387,479 |
| AMOUNT OUTSTANDING | ||||||
|---|---|---|---|---|---|---|
| Company | Issue denomination | Limit | Maturity | Type of reimbursement |
2013 | 2012 (restated - note 1) |
| Sonaecom SGPS | Obrigações Sonaecom SGPS 2011 | 100,000,000 | Mar-15 | Final | - | 100,000,000 |
| Obrigações Sonaecom SGPS 2010 | 40,000,000 | Mar-15 | Final | - | 40,000,000 | |
| Obrigações Sonaecom SGPS 2012 | 20,000,000 | Jul-15 | Parcel | - | 20,000,000 | |
| Obrigações Sonaecom SGPS 2013 | 20,000,000 | Jun-16 | Final | 20,000,000 | - | |
| Costs associated with financing set-up | - | - | - | (58,271) | (1,586,070) | |
| Interests incurred but not yet due | - | - | - | 61,767 | 1,745,019 | |
| 20,003,496 | 160,158,949 | |||||
| Sonaecom SGPS | Commercial paper | 30,000,000 | Jul-15 | - | - | 30,000,000 |
| Costs associated with financing set-up | - | - | - | - | (70,090) | |
| Interests incurred but not yet due | - | - | - | - | 150,771 | |
| - | 30,080,681 | |||||
| WeDo USA | Bank loan | - | Apr-19 | - | 4,449,538 | 5,684,400 |
| Saphety | Minority Shareholder loans | - | - | - | 451,322 | 451,322 |
| Costs associated with financing set-up | - | - | - | (121,435) | (168,023) | |
| Interests incurred but not yet due | - | - | - | 27,158 | 31,410 | |
| 4,806,583 | 5,999,109 | |||||
| 24,810,079 | 196,238,739 |
| AMOUNT OUTSTANDING | ||||||
|---|---|---|---|---|---|---|
| Company | Issue denomination | Limit | Maturity | Type of reimbursement |
2013 | 2012 (restated - note 1) |
| Sonaecom SGPS | Obrigações Sonaecom SGPS 2005 | 150,000,000 | Jun-13 | Final | - | 150,000,000 |
| Obrigações Sonaecom SGPS 2010 | 30,000,000 | Fev-13 | Final | - | 30,000,000 | |
| Costs associated with financing set-up | - | - | - | - | (262,458) | |
| Interest incurred but not yet due | - | - | - | - | 377,316 | |
| - | 180,114,858 | |||||
| Optimus SA | Other loans | - | - | - | - | 7,000,000 |
| WeDo USA | Bank loan | - | Apr-14 | - | 988,788 | - |
| Several | Bank overdrafts (note 16) | - | - | - | 10,208 | 55,290 |
| 998,996 | 7,055,290 | |||||
| 998,996 | 187,170,148 | |||||
In June 2005, Sonaecom signed a Bond Loan, privately placed, amounting to Euro 150 million without guarantees and with a maturity of eight years. The bonds bear interest at floating rate, indexed to Euribor and paid semiannually. This issue was organised and mounted by Millennium BCP Investimento. During the year ended at 31 December 2013, Sonaecom settled the entire amount of the bond loan and respective interest expenses.
In February and March 2010, Sonaecom signed two other Bond Loans, both privately placed, in the amount of Euro 30 and 40 million, without guarantees and maturities of 3 and 5 years respectively. Both loans bear interest at floating rate indexed to Euribor, and paid semiannually. The issues were organised and mounted by, respectively, Banco Espirito Santo de Investimento and Caixa - Banco de Investimento. These bond issues were traded on Euronext Lisbon market. At 4 February 2013, the Company settled the bond loan of Euro 30 million. During the year ended at 31 December 2013, following the merger, the Boan Loan of Euro 40 million was transferred to Zon Optimus.
In September 2011, Sonaecom signed a Bond Loan, privately placed, amounting to Euro 100 million without guarantees and with a maturity of three and half years. The bonds bear interest at floating rate, indexed to Euribor and paid semiannually. This issue was organised and mounted by BNP Paribas, ING Belgium SA/NV and WestLB AG. During the year ended at 31 December 2013, Portigon AG (previously named WestLB AG), transferred an amount of Euro 33.300.000 (corresponding to its entire participation in the loan) to Erste Abwicklungsanstalt ('EAA'), a state entity in German. During the year ended at 31 December 2013, following the merger, the Boan Loan of Euro 100 million was transferred to Zon Optimus.
In July 2012, Sonaecom signed a Bond Loan, privately placed, amounting to Euro 20 million without guarantees and with the maturity of three years. The bonds bear interest at floating rate, indexed to Euribor and paid semiannually. This issue was organised and mounted by Banco BPI. During the year ended at 31 December 2013, following the merger, the Boan Loan of Euro 20 million was fully reimbursed and, subsequently, transferred to Zon Optimus the capacity to use this facility, in the form of commercial paper by the same amount.
In May 2013, Sonaecom signed a Boan Loan, privately placed, amounting to Euro 20 million, without guarantees and with a maturity date of three years. The bonds bear interest at floating rate indexed to Euribor and paid semiannually. This issue was organized and mounted by Caixa Económica Montepio Geral.
All the loans above are unsecured and the fulfillment of the obligations under these loans is exclusively guaranteed by the underlying activities and the indebted company cash flows generation capacity.
The average interest rate of the bond loans, in the year 2013, was 2.71% (3.01% in 2012).
In July 2007, Sonaecom contracted a Commercial Paper Programme Issuance with a maximum amount of Euro 250 million with subscription grant and maturity of five years, organised by Banco Santander de Negócios Portugal and by Caixa – Banco de Investimento. According to the original terms, this programme was reduced to the amount of Euro 150 million in July 2010. In 30 July 2012, Sonaecom settled the entire amount used of commercial paper and respective interest expenses. The placing underwriting consortium was composed by the following institutions: Banco Santander Totta, Caixa Geral de Depósitos, Banco BPI, Banco Bilbao Vizcaya Argentaria (Portugal), Banco Comercial Português and BNP Paribas Branch office (in Portugal).
In June 2010, Sonaecom contracted a Commercial Paper Programme Issuance with a maximum amount of Euro 15 million with subscription grant and maturity of tree years, organised by Caixa Económica Montepio Geral. In June 2013 an addition was made to the contract that lasted for one year, automatically renewable for equal periods up to a maximum of 5 years. In 31 December 2013, this credit line was not being used.
In July 2012, Sonaecom contracted a Commercial Paper Programme Issuance with a maximum amount of Euro 30 million with subscription grant and maturity of tree years, organised by Caixa – Banco de Investimento and Caixa Geral de Depósitos. Additionally, in the same period, Sonaecom contracted a Commercial Paper Programmes with a maximum of Euro 25 million with subscription grant and effective for a period of one year, organised by Banco Santander Totta. During the year ended at 31 December 2013, following the merger, the two Commercial Paper Programme were fully reimbursed and, subsequently, transferred to Zon Optimus the capacity to use this facility.
In May 2013, Sonaecom contracted a Commercial Paper Programme Issuance with maximum amounts of 30 million with subscription grant and maturity of eighteen months, organised by Banco Espírito Santo de Investimento and Banco Espírito Santo. During the year ended at 31 December 2013, following the merger, the Commercial Paper Programme of Euro 30 million was fully reimbursed and, subsequently, transferred to Zon Optimus the capacity to use this facility.
In June 2013, Sonaecom contracted a Commercial Paper Programme Issuance with a maximum amounts of 100 million with subscription grant and maturity of one year, organised by Banco Comercial Português. During the year ended at 31 December 2013, following the merger, the Commercial Paper Programme of Euro 100 million was fully reimbursed and, subsequently, transferred to Zon Optimus the capacity to use this facility.
The average interest rate of the Commercial Paper Programmes, in the year 2013, was 4.26% (1.52% in 2012).
All the loans above are unsecured and the fulfillment of the obligations under these loans is exclusively guaranteed by the underlying activities and the indebted company cash flows generation capacity.
In April 2012, WeDo Americas contracted a long term loan, amounted to USD 7,5 million with the maturity of seven years, organised by Espirito Santo Bank. Repayment of this loan is due in 11 equal semiannual payments, with the first to be made in April 2014.
On 31 December 2013, the main financial constraints (covenants) included in debt contracts are related with the bond issue completed by Sonaecom in May 2013, totaling Euro 20 million, organised by Caixa Económica Montepio Geral and establishing the obligation to ensure that consolidated net debt does not exceed three times the consolidated EBITDA. Additionally, both this loan, as well as other loans are covered by Sonaecom negative pledge clauses, which impose certain restrictions on the mortgaging or pledging of the material subsidiaries' tangible assets and require the upholding of control over Wedo USA (regarding this company bank loan). The penalties applicable in the event of default in these covenants are generally the early payment of the loans obtained.
On 31 December 2013 and at present date, Sonaecom was fully compliant with all the financial constraints above mentioned.
Sonaecom has also a short term bank credit line, in the form of current or overdraft account commitment, in the amount of Euro 1 million. These credit lines, usually, have maturities up to one year, automatically renewable, except in case of termination by either party, with some periods of notice. During the year ended at 31 December 2013, following the merger, the bank credit line of shortterm portion amounting Euro 10 million of Banco Popular was transferred to Zon Optimus.
All these loans and bank credit lines bear interest at market rates, indexed to the Euribor for the respective term, and were all contracted in Euro.
At 31 December 2013 and 2012, the repayment schedule of medium and long-term loans and of interests (nominal values), for bonds, commercial paper and for WeDo Americas bank loan were as follows (values based on the latest interest rate established for each type of loan):
| WITHIN 12 MONTHS |
BETWEEN 12 AND 24 MONTHS |
BETWEEN 24 AND 36 MONTHS |
BETWEEN 36 AND 48 MONTHS |
BETWEEN 48 AND 60 MONTHS |
BETWEEN 60 AND 72 MONTHS |
|
|---|---|---|---|---|---|---|
| 2013 | ||||||
| Bond loan: | ||||||
| Reimbursements | - | - | 20,000,000 | - | - | - |
| Interests | 980,278 | 980,278 | 424,318 | - | - | - |
| Commercial paper: | ||||||
| Reimbursements | - | - | - | - | - | - |
| Interests | - | - | - | - | - | - |
| Other loans: | ||||||
| Reimbursements | - | 988,786 | 988,786 | 988,786 | 988,786 | 494,394 |
| Interests | 134,394 | 108,363 | 82,549 | 56,231 | 30,273 | 4,242 |
| 1,114,672 | 2,077,427 | 21,495,653 | 1,045,017 | 1,019,059 | 498,636 |
| WITHIN 12 MONTHS |
BETWEEN 12 AND 24 MONTHS |
BETWEEN 24 AND 36 MONTHS |
BETWEEN 36 AND 48 MONTHS |
BETWEEN 48 AND 60 MONTHS |
BETWEEN 60 AND 72 MONTHS |
|
|---|---|---|---|---|---|---|
| 2012 | ||||||
| Bond loan: | ||||||
| Reimbursements | - | - | 160,000,000 | - | - | - |
| Interests | 5,840,405 | 5,726,552 | 1,398,895 | - | - | - |
| Commercial paper: | ||||||
| Reimbursements | - | - | 30,000,000 | - | - | - |
| Interests | 1,168,913 | 1,168,913 | 678,930 | - | - | - |
| Other loans: | ||||||
| Reimbursements | - | 1,072,718 | 1,072,718 | 1,072,718 | 1,072,718 | 1,072,718 |
| Interests | 140,294 | 101,319 | 79,212 | 56,703 | 34,349 | 7,307 |
| 7,149,612 | 8,069,502 | 193,229,755 | 1,129,421 | 1,107,067 | 1,080,025 |
Although the maturity of commercial paper issuance is between one week to six months, the counterparties assumed the placement and the maintenance of those limits for a period of one to three years. As so, such liabilities are recorded in the medium and long term in the year ended at 31 December 2012.
Minority Shareholder loans have no maturity defined.
| MATURITY | ||||||
|---|---|---|---|---|---|---|
| Company | Credit | Limit | Amount outstanding |
Amount available |
Until 12 months |
More than 12 months |
| 2013 | ||||||
| Sonaecom | Commercial paper | 15,000,000 | - | 15,000,000 | x | |
| Sonaecom | Bond loan | 20,000,000 | 20,000,000 | - | x | |
| Sonaecom | Authorised overdrafts | 1,000,000 | - | 1,000,000 | x | |
| WeDo USA | Bank loan | 5,438,326 | 5,438,326 | - | x | x |
| Several | Several | - | 10,208 | - | x | |
| 41,438,326 | 25,448,534 | 16,000,000 | ||||
| 2012 (restated - Note 1) | ||||||
| Sonaecom | Commercial paper | 30,000,000 | 30,000,000 | - | x | |
| Sonaecom | Commercial paper | 25,000,000 | - | 25,000,000 | x | |
| Sonaecom | Commercial paper | 15,000,000 | - | 15,000,000 | x | |
| Sonaecom | Bond loan | 150,000,000 | 150,000,000 | - | x | |
| Sonaecom | Bond loan | 100,000,000 | 100,000,000 | - | x | |
| Sonaecom | Bond loan | 40,000,000 | 40,000,000 | - | x | |
| Sonaecom | Bond loan | 30,000,000 | 30,000,000 | - | x | |
| Sonaecom | Bond loan | 20,000,000 | 20,000,000 | - | x | |
| Sonaecom | Overdraft facilities | 16,500,000 | - | 16,500,000 | x | |
| Sonaecom | Authorised overdrafts* | 10,000,000 | - | 10,000,000 | x | |
| Sonaecom | Authorised overdrafts | 2,500,000 | - | 2,500,000 | x | |
| WeDo USA | Bank loan | 5,684,400 | 5,684,400 | - | x | |
| Several | Several | - | 7,055,290 | - | x | |
| 444,684,400 | 382,739,690 | 69,000,000 |
At 31 December 2013 and 2012, the available credit lines of the Group were as follows:
* Can also be used in the form of commercial paper.
At 31 December 2013 and 2012, there are no interest rate hedging instruments therefore the total gross debit is exposed to changes in market interest rates.
Based on the debt exposed to variable rates at the end of 2013, and considering the applications and bank balances at the same date, if market interest rates has rised (fallen), in average, 75bp during the year 2013, the interest paid that year would be decreased (increased ) in an amount of approximately Euro 1,000,000.
At 31 December 2013 and 2012, this caption was made up of accounts payable to tangible and intangible assets suppliers related to lease contracts which are due in more than one year in the amount of Euro 67,937 and Euro 17,308,879, respectively. This variation is due to the derecognition of the financial liabilities of the telecommunications segment (note 3.e).
At 31 December 2013 and 2012, the payment of these amounts was due as follows:
| 2013 | 2012 (restated - note 1) | |||
|---|---|---|---|---|
| Lease payments |
Present value of lease payments |
Lease payments |
Present value of lease payments |
|
| 2012 | - | - | 4,702,802 | 3,594,987 |
| 2013 | 76,294 | 70,728 | 3,477,615 | 2,615,655 |
| 2014 | 41,332 | 38,286 | 3,351,597 | 2,628,909 |
| 2015 | 26,142 | 25,040 | 2,365,819 | 1,772,586 |
| 2016 onwards | 4,682 | 4,611 | 12,453,930 | 10,291,729 |
| 148,450 | 138,665 | 26,351,763 | 20,903,866 | |
| Interests | (9,784) | - | (5,447,895) | - |
| 138,666 | 138,665 | 20,903,868 | 20,903,866 | |
| Short-term liability (note 25) | - | (70,728) | - | (3,594,987) |
| 138,666 | 67,937 | 20,903,868 | 17,308,879 |
The movements in provisions and in accumulated impairment losses in the years ended at 31 December 2013 and 2012 were as follows:
| OPENING BALANCE (Restated - note 1) |
INCREASES | DECREASES | UTILISATIONS AND TRANSFERS |
DISCONTINUED OPERATIONS (NOTE 3.e) |
CLOSING BALANCE |
|
|---|---|---|---|---|---|---|
| 2013 | ||||||
| Accumulated impairment losses on accounts receivables (notes 13 and 14) |
82,895,444 | 18,801,662 | (5,504,235) | (19,030,746) | (73,162,600) | 3,999,525 |
| Accumulated impairment losses on inventories (note 12) |
4,377,789 | 466,664 | (1,995,000) | (520,824) | (2,303,629) | 25,000 |
| Provisions for other liabilities and charges | 43,673,340 | 4,257,934 | (5,753,550) | (3,868,767) | (35,247,971) | 3,060,986 |
| 130,946,573 | 23,526,260 | (13,252,785) | (23,420,337) | (110,714,200) | 7,085,511 | |
| 2012 (restated) | ||||||
| Accumulated impairment losses on accounts receivables (notes 13 and 14) |
78,502,541 | 20,217,279 | (33,981) | (15,790,395) | - | 82,895,444 |
| Accumulated impairment losses on inventories (note 12) |
12,801,233 | 286,548 | - | (8,709,992) | - | 4,377,789 |
| Provisions for other liabilities and charges | 48,563,051 | 2,416,109 | (8,964,477) | 1,658,657 | - | 43,673,340 |
The increase of Provisions and accumulated impairment losses amounting to Euro 23,526,260, includes an amount of Euro 20,307,476 related with discontinued operations and an amount of Euro3,218,784 of continued operations. The increase of 'Provisions for other liabilities and charges' includes the amount of Euro 946,897 (2012: Euro 632,751) recorded in the profit and loss statement, under the caption 'Income taxation' (note 33), the amount of Euro 275,000 related to the dismantling of sites, as foreseen in IAS 16 – Fixed Assets (note 1.c), the amount of Euro 243,932 recorded in the profit and loss statement in 'Other financial expenses' concerning the update of previous provision to dismantling of sites, and the amount of Euro 44,245 (2012: Euro 48,044) recorded in the profit and loss statement, under the caption 'Gains and losses in associated companies and companies jointly controlled' related to the application of the equity method of SIRS (note 32). Therefore, the total amount recorded in the profit and loss statement corresponding to the increase in the heading 'Provisions and impairment losses', corresponds to Euro 1,708,710.
The decrease of Provisions and accumulated impairment losses amounting to Euro 13,252,785, includes an amount of Euro 11,454,683 related with discontinued operations and an amount of Euro 1,798,102 of continued operations.The decrease in 'Provisions for other liabilities and charges' includes the amount of Euro 1,222,647 registered under the caption 'Income Tax' in Profit and Loss Statement (note 33). Thus, under the caption 'Other operating income' in Profit and Loss statement, was recorded a decrease amounted to Euro 575,455 (note 29).
Therefore, the net amount of provisions and impairment losses of discontinued operations amounts to Euro 8,852,793 (note 37).
The reinforcement and the decrease on 'Accumulated Impairment losses on Inventories' are recorded, on the profit and loss statement, under the caption 'Cost of Sales' (note 1.i)
The heading 'Utilisations' refers, essentially, to the utilisation of provisions registered against entries in customers current accounts and inventories of the subsidiary Optimus – Comunicações S.A., fully subject to impairment losses already recognised in the profit and loss statement.
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Several contingencies | 1,781,800 | 4,338,072 |
| Legal processes in progress | 199,151 | 2,969,849 |
| Dismantling | 242,073 | 13,983,949 |
| Indemnities | 240,038 | 877,890 |
| Other responsibilities | 597,925 | 21,503,580 |
| 3,060,986 | 43,673,340 |
At 31 December 2013 and 2012, the breakdown of the provisions for other liabilities and charges is as follows:
At 31 December 2013 , the value of provisions for the dismantling is recorded at its present value, accordingly with the dates of its utilization (in accordance with IAS 37 – 'Provisions, Contigent Liabilities and Contigent Assets'). The deviation includes the effect of the derecognition of the provisions associated to discontinued operations (note 3.e).
The heading 'Several contingencies' relates to contingent liabilities arising from transactions carried out in previous years and for which an outflow of funds is probable.
In relation to the provisions recorded for legal processes in progress and others, given the uncertainty of such proceedings, the Board of Directors is unable to estimate, with reliability, the moment when such provisions will be used and therefore no financial actualisation was carried out.
The heading 'Other responsibilities' corresponds to the value of costs charged to the current period or previous years, for which it is not possible to estimate reliably the time of occurrence of the expense (note 1.r), in the amount of circa Euro 441 thousand (circa 19 million in 2012). The variation is due to the derecognition of provisions related to Optimus Comunicações S.A, Be Artis and Be Towering (note 3.e).
On August 2013, the provisions related to the telecommunications segment were derecognized, following the merger between Optimus SGPS and Zon and were recorded in 'Discontinued operations (note 3.e)', on the column above.
At 31 December 2013 and 2012, the caption 'Other non-current liabilities' is as follows:
| 2013 | 2012 | |
|---|---|---|
| Spectrum for 4th Generation | - | 21,602,124 |
| Information Society | - | 13,944,247 |
| Medium Term Incentive Plan (note 39) | 307,870 | 262,047 |
| Others | 969,434 | 1,923,362 |
| 1,277,304 | 37,731,780 |
At 31 December 2012, the heading 'Spectrum for 4th Generation' refers to the present value of the amount to be paid in the next years resulting from the allocation, to the then subsidiary Optimus, of the frequencies necessary for the development of services form 4th Generation (note 6) and the heading 'Information Society' relates to the Medium and long -term portion, not yet realized, of the estimate for the Company's commitments under the 'Iniciativas E' programme (notes 6, 14 and 27). During the year ended at 31 December 2013, these amounts were desrecognized following the merger between Optimus SGPS and Zon.
The heading 'Others' include the amount of Euro 959,922 (Euro 1,919,016 in 31 December 2012) related to the medium and long term portion to be paid under the acquisition of Connectiv (note 7).
At 31 December 2013 and 2012, this caption had the following composition and maturity plans:
| TOTAL | TILL 90 DAYS | FROM 90 TO 180 DAYS | MORE THAN 180 DAYS |
|
|---|---|---|---|---|
| 2013 | ||||
| Suppliers – current account | 17,159,275 | 17,159,275 | - | - |
| Intangible and tangible assets suppliers | 1,281,412 | 1,281,412 | - | - |
| Suppliers – invoices pending approval | 3,327,592 | 3,327,592 | - | - |
| 21,768,279 | 21,768,279 | - | - | |
| 2012 (restated - Note 1) | ||||
| Suppliers – current account | 132,031,968 | 102,118,360 | - | 29,913,608 |
| Intangible and tangible assets suppliers | 34,185,038 | 33,185,038 | - | 1,000,000 |
| Suppliers – invoices pending approval | 2,538,668 | 2,538,668 | - | - |
| 168,755,674 | 137,842,066 | - | 30,913,608 |
At 31 December 2012, the caption 'Suppliers – current account' with more than 180 days maturity is related to the dispute between the then subsidiary Optimus – Comunicações, S.A. and, essentially, the operator TMN – Telecomunicações Móveis Nacionais, S.A., in relation to the vagueness of interconnection tariffs of 2001.
At 31 December 2013 and 2012, this caption included balances payable to suppliers resulting from the Group's operations and the acquisition of intangible and tangible assets. The Board of Directors believes that the difference between the fair value of these balances and its book value is not significant.
At 31 December 2013, this caption includes the amount of Euro 70,728 (2012: Euro 3,594,987) related to the short term portion of lease contracts (note 21).
At 31 December 2013 and 2012, this caption was made up as follows:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| State and other public entities | 4,285,787 | 10,550,192 |
| Other creditors | 6,153,540 | 2,142,209 |
| Securitisation of receivables | - | 19,952,518 |
| 10,439,327 | 32,644,919 |
At 31 December 2013, the caption 'Other creditors' includes an amount of circa Euro 6 million referred to the amount to be paid to Optimus SA, Be Artis and Be Towering in relation to the termination of MTIP contract (note 34).
The liability to other creditors matures as follows:
| TOTAL | TILL 90 DAYS | FROM 90 TO 180 DAYS |
MORE THAN 180 DAYS |
|
|---|---|---|---|---|
| 2013 | ||||
| Other creditors | 6,153,540 | 6,153,540 | – | – |
| 2012 (restated - note 1) | ||||
| Other creditors | 2,142,209 | 2,142,209 | – | – |
The liability to other creditors does not incorporate any interest. The Board of Directors believes that the difference between the fair value of these balances and its book value is not significant.
At 31 December 2013 and 2012, the caption 'State and other public entities' related essentially to taxes payable (Value Added Tax, Corporate Income Tax, Social Security contributions and withholdings of Personal Income Tax) from the following subsidiaries:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Sonaecom | 1,306,526 | 101,116 |
| Digitmarket | 798,710 | 481,762 |
| WeDo | 661,317 | 425,246 |
| WeDo Brasil | 404,056 | 1,348,121 |
| Público | 389,492 | 408,483 |
| Mainroad | 309,035 | 435,829 |
| Saphety | 125,185 | 168,525 |
| Sonaecom SP | 86,568 | - |
| Optimus | - | 3,452,751 |
| Be Artis | - | 3,121,787 |
| Be Towering | - | 222,972 |
| Others | 204,898 | 383,600 |
| 4,285,787 | 10,550,192 |
On 30 December 2008, the subsidiary Optimus – Comunicações, S.A., carried out a securitisation operation of future receivables amounting to Euro 100 million (Euro 98,569,400, net of initial costs) following which it ceded future credits to be generated under a portfolio of existing 'Corporate' customer contracts, under the regime established in the Decreto-Lei nº 453/99 (Decree-Law), of 5 November (note 11). This operation was coordinated by Deutsche Bank, the future credits having been assigned to TAGUS – Sociedade de Titularização de Créditos, S.A. (TAGUS), which, for this purpose, issued securitised bonds designated 'Magma No. 1 Securitisation Notes', that received from the CMVM (National Securities Market Commission) the legally required alphanumeric code: 200812TGSSONSXXN0031. Future receivables in the necessary amounts required for TAGUS to perform the quarter interest and principal instalment payments due to bondholders, as well as all the other payments due to the other creditors of this transaction, shall be allocated to Optimus - Comunicações, S.A. throughout calendar years 2009/2013, up to a maximum of Euro 213,840,362. The transaction did not determine any change in the accounting treatment of the underlying receivables or in the relationship established with the customers. At 31 December 2013, these amounts were desrecognized following the merger between Optimus SGPS and Zon and the consequent desrecognition of the assets and liabilities of the telecommunications segment (note 3.e).
At 31 December 2013 and 2012, this caption was made up as follows:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Costs: | ||
| Personnel costs | 12,145,020 | 25,807,661 |
| Advertising and promotion | 474,495 | 5,360,216 |
| Medium Term Incentive Plans (note 39) | 284,788 | 272,410 |
| Rappel discounts (annual quantity discounts) | 68,810 | 1,164,820 |
| Tangible and intangible assets | 16,273 | 10,940,733 |
| Invoices to be issued by operators | - | 30,053,910 |
| Commissions | - | 3,003,415 |
| Information Society | - | 640,159 |
| Other costs | 3,516,557 | 4,217,180 |
| Other external suppliers and services | 3,002,565 | 18,301,225 |
| 19,508,508 | 99,761,729 | |
| Deferred income: | ||
| Customer advance payments (note 15) | 7,576,081 | 25,045,532 |
| Other deferred income | 622,871 | 2,613,752 |
| 8,198,952 | 27,659,284 | |
| 27,707,460 | 127,421,013 |
At 31 December 2012, the heading 'Tangible and intangible assets' includes Euro 6 million related to the amount payable in the short term, resulting from the allocation, to the then subsidiary Optimus, of the frequencies necessary for the development of services from 4th Generation (note 6). At 31 December 2012, the heading 'Information Society' in the amount of Euro 640,159 relates to the short term portion, not yet realised, of the estimate Company's commitments under the 'Iniciativas E' programme (notes 6, 14 and 23). Still at 31 December 2012, the heading 'Customer advance payments' is associated, mainly, with the recharges of mobile phones and the acquisition of prepaid minutes which were not yet used, by the customers of the then subsidiary Optimus – Comunicações, S.A..
At 31 December 2013, these amounts were desrecognized following the merger between Optimus SGPS and Zon (note 3.e).
At 31 December 2013 and 2012, the caption 'Sales and services rendered' was made up as follows:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Information Systems | 99,780,494 | 84,946,543 |
| Multimedia | 17,073,099 | 19,387,413 |
| Holding Activities | 121,159 | 9,917 |
| 116,974,752 | 104,343,873 |
At 31 December 2013 and 2012, the caption 'Other operating revenues' was made up as follows:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Supplementary income | 717,215 | 639,249 |
| Reversal of provisions (note 22) | 575,455 | 33,981 |
| Others | 2,182,453 | 1,340,775 |
| 3,475,123 | 2,014,005 | |
At 31 December 2013, the caption 'Others' include mainly an amount of Euro 1 million referred to amortisation reversion (note 6).
'External supplies and services' for the years ended at 31 December 2013 and 2012 had the following composition:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Subcontracts | 22,167,907 | 22,491,208 |
| Rents | 5,648,220 | 6,213,795 |
| Travelling costs | 4,692,382 | 3,856,213 |
| Specialised works | 4,086,094 | 1,947,649 |
| Advertising and promotion | 3,212,996 | 2,804,441 |
| Fees | 1,234,019 | 1,386,398 |
| Communications | 767,996 | 552,378 |
| Energy | 641,079 | 223,931 |
| Commissions | 393,871 | 1,073,148 |
| Maintenance and repairs | 311,861 | 588,967 |
| Others | 1,318,007 | 1,291,307 |
| 44,474,432 | 42,429,435 |
The commitments assumed by the Group at 31 December 2013 and 2012 related to operational leases are as follows:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Minimum payments of operational leases: | ||
| 2013 | - | 2,720,394 |
| 2014 | 3,509,263 | 1,723,995 |
| 2015 | 2,958,484 | 1,119,436 |
| 2016 | 2,342,694 | 501,918 |
| 2017 onwards | 3,006,741 | 223,440 |
| Renewable by periods of one year | 920,113 | 1,458,427 |
| 12,737,295 | 7,747,610 |
During the year ended at 31 December 2013, an amount of Euro 4,802,731 was recorded in the heading 'External supplies and services' related with operational leasing rents, recorded in 'Rents'.
At 31 December 2013 and 2012, the caption 'Other operating costs' was made up as follows:
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Taxes | 136,723 | 133,897 |
| Others | 146,334 | 152,185 |
| 283,057 | 286,082 |
Net financial results for the years ended at 31 december 2013 and 2012 were made up as follows ((costs) / gains):
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Financial results in associated companies and companies jointly controlled | ||
| Gains and losses in associated companies and companies jointly controlled (note 8) | (490,365) | 32,858 |
| (490,365) | 32,858 | |
| Gains and losses on financial assets at fair value through profit or loss | ||
| Gains on financial assets at fair value through profit or loss (note 9) | 46,636,719 | - |
| 46,636,719 | - | |
| Financial expenses: | ||
| Interest expenses: | (10,512,011) | (13,710,405) |
| Bank loans | (9,900,712) | (13,290,647) |
| Leasing | (5,851) | (3,399) |
| Other interests | (605,448) | (416,359) |
| Foreign exchange losses | (851,055) | (2,123,416) |
| Other financial expenses | (635,694) | (676,927) |
| (11,998,760) | (16,510,748) | |
| Financial income: | ||
| Interest income | 7,423,125 | 1,318,279 |
| Foreign exchange gains | 537,553 | 1,197,681 |
| Others financial gains | 16,482 | 44,905 |
| 7,977,160 | 2,560,865 |
During the years ended at 31 December 2013 and 2012, the caption 'Financial income: Interest income' includes, mainly, interests earned on treasury applications. At 31 December 2013 includes also the amount of Euro 4,674,111 received from Unitel, following the disposal of the shareholder loans to be received from Zopt to this entity (note 3.e).
Income taxes recognised during the years ended at 31 December 2013 and 2012 were made up as follows ((costs) / gains):
| 2013 | 2012 (restated - note 1) |
|
|---|---|---|
| Current tax | (3,353,668) | (2,949,987) |
| Tax provision net of reduction (note 22) | 275,750 | (632,751) |
| Deferred tax assets (note 11) | 795,415 | (30,786) |
| Deferred tax liabilities (note 11) | 189 | 3,606,259 |
| (3,873,144) | (7,265) |
During the years ended at 31 December 2013 and 2012, the balances and transactions maintained with related parties were mainly associated with the normal operational activity of the Group and to the concession and obtainment of loans.
The most significant balances and transactions with related parties, which are listed in the appendix to this report, during the years ended at 31 December 2012 and 2013 were as follows:
| BALANCES AT 31 DECEMBER 2013 | ||||
|---|---|---|---|---|
| Accounts receivable (notes 13 and 14) |
Accounts payable (notes 24 and 26) |
Treasury applications (note 16) |
Other assets / (liabilities) |
|
| Holding company | ||||
| Sonae SGPS | 49,924 | – | – | (31,198) |
| Other related companies | ||||
| Artis | 1,939,686 | 2,963,167 | – | (391,071) |
| Modelo Continente Hipermercados, S.A. | 325,466 | 61,513 | – | (292,299) |
| Optimus | 1,264,110 | 3,681,010 | – | (51,959) |
| Raso Viagens | 20,039 | 322,234 | – | (8,227) |
| SC-Sociedade de Consultadoria | 351,089 | – | – | (173,685) |
| Sierra Portugal | 553,453 | 3,811 | – | 295,038 |
| Sonae Indústria PCDM | 142,558 | – | – | – |
| Sonae Investments BV | – | – | – | – |
| Sonaecenter II | 1,649,702 | 106,217 | – | (697,310) |
| Worten | 33,210 | (867) | – | – |
| Zon Optimus | 10,203,626 | – | – | (1,943,340) |
| 16,532,863 | 7,137,085 | – | (3,294,051) |
| Accounts receivable (notes 13 and 14) |
Accounts payable (notes 24 and 26) |
Treasury applications (note 16) |
Other assets / (liabilities) |
|
|---|---|---|---|---|
| Holding company | ||||
| Sonae SGPS | 14,290 | 47,256 | – | 3,026 |
| Other related companies | ||||
| Modelo Continente Hipermercados, S.A. | 936,530 | 437,381 | – | 43,538 |
| Raso Viagens | 58,025 | 207,980 | – | 30,131 |
| SC-Sociedade de Consultadoria | 157,358 | (396) | – | (169,905) |
| Sierra Portugal | 1,172,738 | 123,435 | – | 181,310 |
| Sonae Indústria PCDM | 388,471 | – | – | 28,155 |
| Sonae Investments BV | – | – | 16,810,000 | 2,029 |
| Sonaecenter II | 1,529,445 | 32,050 | – | (360,514) |
| Worten | 3,228,368 | 571,551 | – | (1,074,423) |
| France Telecom | 1,906,520 | 3,645,753 | – | (3,728,782) |
| 9,391,744 | 5,065,010 | 16,810,000 | (5,045,435) |
| TRANSACTIONS AT 31 DECEMBER 2013 | ||||
|---|---|---|---|---|
| Sales and services rendered (note 28) |
Supplies and services received (note 30) |
Interest and similar income / (expense) (note 32) |
Supplementary income (note 29) |
|
| Holding company | ||||
| Sonae SGPS | 212 | 48,600 | 685,345 | – |
| Subsidiaries | ||||
| Infosystems | 129,948 | 165,012 | – | (266,424) |
| Unipress | 196,192 | 582,202 | – | 57,000 |
| Other related companies | ||||
| Be Artis | 3,728,001 | 290,298 | – | 28,800 |
| MDS | 595,298 | 1,122 | – | – |
| Modelo Continente Hipermercados, S.A. | 835,657 | 347,542 | – | 144,948 |
| Optimus | 1,089,183 | 1,035,463 | – | 40,185 |
| Raso Viagens | 136,223 | 1,368,354 | – | 10,151 |
| SC-Sociedade de Consultadoria | 1,332,782 | – | – | – |
| Sierra Portugal | 5,370,033 | 16,294 | – | – |
| Sonae Indústria PCDM | 1,056,895 | – | – | – |
| Sonae Investments BV | – | – | 6,606 | – |
| Sonaecenter II | 8,266,354 | 685,977 | – | – |
| Zon Optimus | – | (526,753) | 17,520,021 | – |
| 22,606,831 | 3,849,101 | 18,211,972 | 281,084 |
| TRANSACTIONS AT 31 DECEMBER 2012 (restated) | |||||
|---|---|---|---|---|---|
| Sales and services rendered (note 28) |
Supplies and services received (note 30) |
Interest and similar income / (expense) (note 32) |
Supplementary income (note 29) |
||
| Holding company | |||||
| Sonae SGPS | 20,932 | 52,756 | 274,803 | – | |
| Subsidiaries | |||||
| Infosystems | – | 426,609 | – | – | |
| Unipress | 72,847 | 683,506 | – | – | |
| Other related companies | |||||
| MDS | 659,430 | 118,131 | – | – | |
| Modelo Continente Hipermercados, S.A. | 4,238,875 | 1,228,275 | – | 334,191 | |
| Raso Viagens | 434,283 | 1,970,933 | – | – | |
| SC-Sociedade de Consultadoria | 1,335,587 | (274) | – | 413 | |
| Sierra Portugal | 6,835,654 | 733,080 | – | (49) | |
| Sonae Indústria PCDM | 33 | (5,150) | – | – | |
| Sonae Investments BV | – | – | 819,392 | – | |
| Sonaecenter II | 9,200,803 | 686,001 | – | – | |
| 22,798,444 | 5,893,867 | 1,094,195 | 334,555 |
During 2012, the Group signed an agreement with Sonae SGPS, under which Sonae compromise to transfer to employees and board members of Sonaecom, Sonaecom shares, at the price of 1.184 euros, until 2016, as requested by Sonaecom and under the MTIP of Sonaecom. Under this contract, Sonaecom paid to Sonae SGPS, SA the amount of Euro 3,291,520. During the year ended at 31 December 2013, Sonaecom partially anticipated the maturity of the contract, receiving the amount of Euro 4,444,207.
The transactions between Group companies were eliminated in consolidation, and therefore are not disclosed in this note. All the above transactions were made at market prices.
Accounts receivable and payable to related companies will be settled in cash and are not covered by guarantees. During the years ended at 31 December 2013 and 2012, no impairment losses referring to account receivables from related parties were recognised. A complete list of the Sonaecom Group's related parties is presented in the appendix to this report.
Guarantees provided to third parties at 31 December 2013 and 2012 were as follows:
| COMPANY | BENEFICIARY | DESCRIPTION | 2013 | 2012 |
|---|---|---|---|---|
| Sonaecom e Público | Direção de Contribuições e Impostos (Portuguese tax authorities) |
VAT Reimbursements | 5,955,731 | 5,955,731 |
| WeDo | Espiríto Santo Bank | Bank loan (note 20) | 5,534,407 | 5,784,826 |
| Optimus, Sontária, Sonaecom e Público | Direção de Contribuições e Impostos (Portuguese tax authorities) |
IRC, IS, IVA, RF – Tax assessment | 2,714,853 | 8,481,387 |
| We Do e WeDo Egipto | Digi Tecommunications; Emirates Telecom. Corp.; Group Etisalat; Scotia Leasing Panama; Pak Telecom Mobile |
Completion of work to be done | 1,101,201 | 1,153,110 |
| We Do, Saphety e Digitmarket | IAPMEI | 'HERMES' project and 'Vlue4cuopons' project - QREN |
392,707 | 417,797 |
| Optimus | ICP - ANACOM | Acquisition of Spectrum for 4th generation | - | 30,000,000 |
| Optimus | Câmara Municipal de Barcelos, Chaves, Coimbra, Elvas, Lisboa, Mealhada, Oei ras e Sintra (Barcelos, Chaves, Coimbra, Elvas, Lisboa, Mealhada, Oeiras and Sintra Municipalities) |
Completion of work to be done | - | 87,476 |
| Several | Others | 336,175 | 1,259,767 | |
| 16,035,074 | 53,140,094 |
The deviation occurred between both years in guarantees provided to third parties is related with the amounts of the telecommunications segment, that are not in the final balance at 31 December 2013 following the merger between Optimus SGPS and Zon (note 3.e).
In addition to these guarantees were set up sureties for the current fiscal processes. The Sonae SGPS consisted of Sonaecom SGPS surety to the amount of Euro 2,844,270 and Sonaecom SGPS consisted of Optimus surety for the amount of Euro 10,529,619.
At 31 December 2013, the Board of Directors of the Group believes that the decision of the court proceedings and ongoing tax assessments in progress will not have significant impacts on the consolidated financial statements.
Following the classification of the Telecomunications segment as an discontinued operation (note 3.e), were identified for the years ended at 31 December 2013 and 2012 the following business segments:
These segments were indentified taking into consideration the following criteria/conditions: the fact of being group units that develop activities where we can separately identify revenues and expenses, for which financial information is separately developed and their operating results are regulary reviewed by management and over which decisions are made. For example, decisions about allocation of resources, for having similar products/services and also taking into consideration the quantitative threshold (in accordance with IFRS7).
The segment 'Holding activities' includes the operations of the Group companies that have as their main activity the management of shareholdings.
Excluding the ones mentioned above, the remaining activities of the Group have been classified as unallocated.
Inter-segment transactions during the years ended at 31 December 2013 and 2012 were eliminated in the consolidation process. All these transactions were made at market prices.
Inter-segment transfers or transactions were entered under the normal commercial terms and conditions that would also be available to unrelated third parties and were mainly related to interest on treasury applications and management fees.
During the year ended at 31 December 2013, the segment of telecommunications was classified as a discontinued operation, as a result of a merger, by the incorporation of Optimus SGPS in Zon (note 3.e). As set forth by IFRS 5, changes were made in the consolidated profit and loss statements for the year ended at 31 December 2012, in order to disclose a single amount in profit and loss statements related to net income/(loss) of discontinued operations (note 37).
Overall information by business segment at 31 December 2013 and 2012, prepared in accordance with the same accounting policies and measurement criteria adopted in the preparation of the consolidated financial statements, can be summarised as follows:
| TELECOMMUNICATIONS | MULTIMEDIA | INFORMATION SYSTEMS | HOLDING ACTIVITIES | SUBTOTAL | ELIMINATIONS | TOTAL | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 2013 |
(restated - Dec 2012 note 1) |
December 2013 |
(restated - Dec 2012 note 1) |
December 2013 |
(restated - Dec 2012 note 1) |
December 2013 |
(restated - Dec 2012 note 1) |
December 2013 |
(restated - note 1) Dec 2012 |
December 2013 |
(restated - dec 2012 note 1) |
December 2013 |
December (restated - 2012 note 1) |
|
| Revenues: | ||||||||||||||
| Sales and services rendered | - | - | 18,764,151 | 20,935,753 | 109,572,472 | 103,824,565 | 2,627,835 | 3,492,234 | 130,964,458 | 128,252,552 | (13,989,706) | (23,908,679) | 116,974,752 | 104,343,873 |
| Reversal of provisions | - | - | 264,495 | 15,623 | 310,254 | 33,981 | 706 | - | 575,455 | 49,604 | - | - | 575,455 | 49,604 |
| Other operating revenues | - | - | 502,453 | 363,727 | 2,433,525 | 1,438,517 | 113,177 | 31,204 | 3,049,155 | 1,833,448 | (149,487) | 130,953 | 2,899,668 | 1,964,401 |
| Total revenues | - | - | 19,531,099 | 21,315,103 | 112,316,251 | 105,297,063 | 2,741,718 | 3,523,438 | 134,589,068 | 130,135,604 | (14,139,193) | (23,777,726) | 120,449,875 | 106,357,878 |
| Depreciation and amortisation | - | - | (917,499) | (1,123,819) | (5,106,050) | (5,413,406) | (65,561) | (68,403) | (6,089,110) | (6,605,628) | (552,682) | (7,537,862) | (6,641,792) | (14,143,490) |
| Provisions and impairment losses | - | - | - | (125,209) | (1,611,941) | (1,116,162) | (96,769) | (15,388) | (1,708,710) | (1,256,759) | - | - | (1,708,710) | (1,256,759) |
| Net operating income / (loss) for the segment |
- | - | (2,193,158) | (8,252,987) | 9,254,014 | 6,635,503 | (1,881,454) | (1,009,256) | 5,179,402 | (2,626,740) | (5,908,785) | (16,622,749) | (729,383) | (19,249,489) |
| Interest income | - | - | 29,877 | 54,700 | 447,735 | 169,225 | 24,475,792 | 14,880,982 | 24,953,404 | 15,104,907 | (17,530,279) | (13,786,628) | 7,423,125 | 1,318,279 |
| Interest expenses | - | - | (458,690) | (429,913) | (1,131,548) | (1,111,693) | (10,397,251) | (13,717,752) | (11,987,489) | (15,259,358) | 1,475,478 | 1,548,952 | (10,512,012) | (13,710,406) |
| assets at fair value through profit Gains and losses on financial or loss |
- | - | - | - | - | - | 46,636,719 | - | 46,636,719 | - | - | - | 46,636,719 | - |
| Gains and losses in associated companies |
- | - | - | - | - | - (167,099,143) | (363,149) | (167,099,143) | (363,149) | 166,608,778 | 396,007 | (490,365) | 32,858 | |
| Other financial results | - | - | (127,680) | 3,865 | (500,004) | (1,087,127) | 19,609,992 | 113,605,995 | 18,982,308 | 112,522,733 | (19,915,021) | (114,080,489) | (932,713) | (1,557,756) |
| Income taxation | - | - | 634,284 | 2,166,025 | (3,007,102) | (2,820,487) | (1,508,562) | 81,892 | (3,881,380) | (572,570) | 8,236 | 565,305 | (3,873,144) | (7,265) |
| Consolidated net income/(loss) discontinued operations for the year excluding |
- | - | (2,115,367) | (6,458,310) | 5,062,627 | 1,785,421 | (90,163,907) | 113,478,711 | (87,166,147) | 108,805,822 | 124,688,374 | (141,979,601) | 37,522,227 | (33,173,779) |
| Consolidated net income/(loss) for the year of discontinued operations |
66,244,220 | 85,673,820 | - | - | - | - | - | - | 66,244,220 | 85,673,820 | - | 22,932,008 | 66,244,220 | 108,605,828 |
| Attributable to: | ||||||||||||||
| Shareholders of parent company Non-controlling interests |
66,244,220 - |
85,673,820 | (2,115,367) | (6,458,310) | 5,130,163 (67,536) |
1,778,682 6,739 |
(90,113,407) | 113,478,711 | (87,098,611) (67,536) |
108,799,083 6,739 |
(4,496) 190,937,090 |
5,933 (33,379,706) |
103,838,479 (72,032) |
75,419,377 12,672 |
| Assets: | - | - | - | - | - | |||||||||
| Tangible and intangible assets and goodwill |
- | 1,514,851,098 | 3,987,720 | 3,957,923 | 78,022,279 | 76,653,543 | 59,802 | 305,814 | 82,069,801 | 80,917,280 | (31,458,027) | 1,397,553,278 | 50,611,774 | 1,478,470,558 |
| Inventories | - | 13,034,702 | 441,970 | 615,150 | 150,670 | 201,885 | - | - | 592,640 | 817,035 | (39,115) | 12,985,114 | 553,525 | 13,802,149 |
| Financial investments | - | - | 112,954 | 209,829 | 878,981 | 1,504,296 | 645,721,486 1,048,336,476 | 646,713,421 1,050,050,601 | 63,836,312 (1,048,885,196) | 710,549,733 | 1,165,405 | |||
| Other non-current assets | - | 97,647,755 | 3,570 | 3,570 | 5,528,461 | 5,892,325 | 178,906,506 | 530,961,790 | 184,438,537 | 536,857,685 | (178,316,217) | (433,300,244) | 6,122,320 | 103,557,441 |
| Other current assets of the segment |
- | 231,930,799 | 7,260,077 | 8,116,215 | 53,757,378 | 53,329,425 | 409,899,824 | 136,461,502 | 470,917,279 | 197,907,142 | (214,146,831) | 103,969,422 | 256,770,448 | 301,876,564 |
| Liabilities: | ||||||||||||||
| Liabilities of the segment | - | 810,003,305 | 15,777,829 | 16,428,857 | 72,566,030 | 76,285,566 | 37,284,768 | 379,422,086 | 125,628,627 | 472,136,509 | (35,338,009) | 343,492,607 | 90,290,618 | 815,629,116 |
| CAPEX | - | 130,088,691 | 974,574 | 956,495 | 7,266,233 | 14,935,082 | 15,285,975 | 21,765,914 | 23,526,782 | 37,657,491 | (15,237,180) | (21,861,923) | 8,289,602 | 15,795,568 |
| MULTIMEDIA | INFORMATION SYSTEMS | HOLDING ACTIVITIES | |
|---|---|---|---|
| 2013 | |||
| Telecommunications | 46,858 | 9,754,292 | 2,077,959 |
| Multimedia | - | 81,878 | 140,814 |
| Information Systems | 294 | - | 287,903 |
| Holding Activities | 2,400 | 5,687 | - |
| External trade debtors | 18,714,599 | 99,730,615 | 121,159 |
| 18,764,151 | 109,572,472 | 2,627,835 | |
| 2012 (restated - note 1) | |||
| Telecommunications | - | 18,779,380 | 3,038,639 |
| Multimedia | - | 104,654 | 145,875 |
| Information Systems | 15,257 | - | 297,803 |
| Holding Activities | 4,800 | 2,366 | - |
| External trade debtors | 20,915,696 | 84,938,165 | 9,917 |
| 20,935,753 | 103,824,565 | 3,492,234 |
During the years ended at 31 December 2013 and 2012, the inter-segments sales and services were as follows:
During the years ended at 31 December 2013 and 2012, sales and services rendered of the several segments were obtained predominantly in the Portuguese market, this market represents more than 90% of revenue for the segments of Multimedia and Activities Holding.
During the year ended at 31 December 2013, also for the Information Systems segment the Portuguese market is dominant, accounting for 54.1% of revenue (55% in 2012) followed by the Brazilian and American markets, representing 7.4% and 6.1% of revenue (7.4% and 8.3% in 2012), respectively.
The financial statements of Zon Optimus at 31 December 2013 and 2012 incorporated in the consolidated financial statements of Sonaecom through ZOPT by the equity method (Notes 3.e and 8), can be summarized as follows:
| (Amounts expressed in thousands of euro) | DECEMBER 2013 | DECEMBER 2012 (restated) |
|---|---|---|
| Assets | ||
| Tangible assets | 1,096,823 | 618,238 |
| Intangible assets | 1,111,107 | 323,621 |
| Deferred tax assets | 165,416 | 52,193 |
| Other non-current assets | 61,143 | 80,438 |
| Non-current assets | 2,434,489 | 1,074,490 |
| Trade debtors | 276,630 | 119,147 |
| Cash and cash equivalents | 74,380 | 273,179 |
| Other current assets | 103,831 | 83,768 |
| Current assets | 454,841 | 476,094 |
| Total assets | 2,889,330 | 1,550,584 |
| Liabilities | ||
| Medium and long-term loans – net of short-term portion | 928,239 | 711,994 |
| Provisions for other liabilities and charges | 92,429 | 29,951 |
| Other non-current liabilities | 46,221 | 14,924 |
| Non-current liabilities | 1,066,889 | 756,869 |
| Short-term loans and other loans | 213,431 | 295,328 |
| Trade creditors | 296,823 | 158,133 |
| Other current liabilities | 251,974 | 120,846 |
| Current liabilities | 762,228 | 574,307 |
| Total liabilities | 1,829,117 | 1,331,175 |
| Shareholders' funds excluding non-controlling interests | 1,050,598 | 210,013 |
| Non-controlling interests | 9,615 | 9,396 |
| Total Shareholders' funds | 1,060,213 | 219,409 |
| Total Shareholders' funds and liabilities | 2,889,330 | 1,550,584 |
| (Amounts expressed in thousands of euro) | DECEMBER 2013 | DECEMBER 2012 (restated) |
|---|---|---|
| Total revenue | 990,259 | 787,133 |
| Costs and losses | ||
| Direct costs and External supplies and services | (413,817) | (325,822) |
| Depreciation and amortisation | (243,070) | (204,119) |
| Other operating costs | (258,744) | (156,481) |
| (915,631) | (686,422) | |
| Financial results | (46,936) | (41,044) |
| Income taxation | (16,433) | (19,303) |
| Consolidated net income/(loss) for the year | 11,259 | 40,363 |
| Consolidated net income/(loss) for the year attributed to non-controlling interests | 449 | 869 |
| Attributed to shareholders of parent company | 10,810 | 39,494 |
The net income (loss) for the year of discontinued operations are detailed as follows:
| NET INCOME/(LOSS) FOR THE YEAR OF DISCONTINUED OPERATIONS | 27 AUGUST 2013 | 31 DECEMBER 2012 |
|---|---|---|
| Sales | 18,822,654 | 32,785,358 |
| Services rendered | 440,084,032 | 686,747,563 |
| Other operating revenues | 6,045,835 | 7,455,913 |
| 464,952,521 | 726,988,834 | |
| Cost of sales | (21,479,154) | (42,773,825) |
| External supplies and services | (229,074,114) | (350,484,270) |
| Staff expenses | (30,726,186) | (47,881,618) |
| Depreciation and amortisation | (93,347,815) | (138,799,420) |
| Provisions and impairment losses | (8,852,793) | (20,695,835) |
| Other operating costs | (9,723,657) | (14,580,133) |
| (393,203,719) | (615,215,101) | |
| Other financial expenses | (2,092,284) | (4,173,624) |
| Other financial income | 2,697,674 | 4,108,199 |
| Current income / (loss) | 72,354,192 | 111,708,308 |
| Income taxation | 2,839,693 | (3,102,480) |
| 75,193,885 | 108,605,828 | |
| Gain/(Loss) resulting from the disposal (note 3.e) | (8,949,665) | - |
| Net income/(loss) for the year of discontinued operations | 66,244,220 | 108,605,828 |
The net income/(loss) from discontinued operations in column of 27 August 2013 consists on net income generated by companies associated with the telecommunications segment until the date of merger of Optimus SGPS with Zon (note 3.e) in the amount of EUR 75,193,885 and loss calculated with the operation in the amount of Euro 8,949,665.
Earnings per share, basic and diluted, are calculated by dividing the consolidated net income attributable to the Group (Euro 103,838,479 in 2013 and Euro 75,419,377 in 2012) by the average number of shares outstanding during the years ended at 31 December 2013 and 2012, net of own shares (360,941,333 in 2013 and 359,390,746 in 2012).
In June 2000, Sonaecom Group created a discretionary Medium Term Incentive Plan, for more senior employees, based on Sonaecom options and shares and Sonae-SGPS, S.A. shares. The vesting occurs three years after the award of each plan, assuming that the employees are still employed in the Group, during that period.
The Sonaecom plans outstanding at 31 December 2013 can be summarised as follows:
| VESTING PERIOD | 31 DECEMBER 2013 | ||||
|---|---|---|---|---|---|
| Share price at award date* |
Award date | Vesting date | Aggregate number of |
Number of shares |
|
| Sonaecom shares | |||||
| 2009 Plan | 1.685 | 10-mar-10 | 08-mar-13** | - | - |
| 2010 Plan | 1.399 | 10-mar-11 | 10-mar-14 | 44 | 477,778 |
| 2011 Plan | 1.256 | 09-mar-12 | 10-mar-15 | 45 | 540,805 |
| 2012 Plan | 1.505 | 08-mar-13 | 10-mar-16 | 46 | 406,903 |
| Sonae SGPS shares | |||||
| 2009 Plan | 0.761 | 10-mar-10 | 08-mar-13 | - | - |
| 2010 Plan | 0.811 | 10-mar-11 | 10-mar-14 | 2 | 214,640 |
| 2011 Plan | 0.401 | 09-mar-12 | 10-mar-15 | 2 | 419,985 |
| 2012 Plan | 0.701 | 08-mar-13 | 10-mar-16 | 2 | 163,966 |
* Average share price in the month prior to the award date for Sonaecom shares and the lower of the average share price for the month prior to the Annual General Meeting and the share price on the day after the Annual General Meeting, for Sonae SGPS shares.
** Plan partially vested in advance, in 27 December 2012.
| SONAECOM SHARES | SONAECOM SHARES | |||
|---|---|---|---|---|
| Aggregate number of participations |
Number of shares | Aggregate number of participations |
Number of shares | |
| Outstanding at 31 December 2012: | ||||
| Unvested | 731 | 6,249,578 | 18 | 1,488,252 |
| Total | 731 | 6,249,578 | 18 | 1,488,252 |
| Movements in the year: | ||||
| Awarded | 346 | 2,335,126 | 7 | 359,443 |
| Vested | (4) | (247,423) | (4) | (342,242) |
| Companies excluded from consolidation | (946) | (6,898,655) | (12) | (410,509) |
| Cancelled / elapsed / corrected / transfers (1) | 8 | (13,140) | (3) | (296,353) |
| Outstanding at 31 December 2013: | ||||
| Unvested | 135 | 1,425,486 | 6 | 798,591 |
| Total | 135 | 1,425,486 | 6 | 798,591 |
During the year ended at 31 December 2013, the movements that occurred in the plans can be summarised as follows:
(1) The adjustments are made for dividends paid and for share capital changes and others adjustments, namely, resulting from a change in the vesting of the MTIP, which may now be made through the purchase of shares with discount.
For Sonaecom's share plans of 2010 and 2012, the responsibility is calculated taking into consideration the share price at award date of each plan. For 2011 Sonaecom shares plan, the Company signed with Sonae-SGPS, S.A. a contract that agrees to the transfer of Sonaecom SGPS shares for employees and board members of the Group as requested of Sonaecom and under the MTIP of Sonaecom, and the liabilities are calculated based on the price fixed in the contract. The responsibility for the three share plans was recorded under the heading 'Medium Term Incentive Plans Reserve'. For the Sonae SGPS share plans, the Group entered into hedging contracts with external entities and the liabilities are calculated based on the prices agreed in those contracts . The detail of the aforementioned hedging contracts is as follows:
| SONAE SGPS SHARES | SONAECOM SHARES | TOTAL | |||
|---|---|---|---|---|---|
| 2010 Plan | 2011 Plan | 2012 Plan | 2011 Plan | ||
| Notional value | 257,574 | 323,727 | 268,451 | 492,439 | 1,342,190 |
| Maturity | mar-14 | mar-15 | mar-16 | dez-16 | |
| Level of inputs in the hierarchy of fair value |
Level 2 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, | ||||
| Valuation method | Current replacement cost | ||||
| Fair value* | 174,734 | 490,711 | 125,071 | 634,672 | 1,425,188 |
* Used the share price of 31 December 2013 in the determination of the fair value.
Share plan costs are recognised in the accounts over the year between the award and the vesting date of those shares. The costs recognised in previous years and in the year ended at 31 December 2013, were as follows:
| SONAECOM SHARES | SONAE SGPS SHARES | ZON OPTIMUS SGPS SHARES |
TOTAL | |
|---|---|---|---|---|
| Costs recognised in previous years | 31,655,399 | 4,213,815 | 129,532 | 35,998,746 |
| Costs recognised in the year | 2,833,805 | 201,963 | 149,987 | 3,185,755 |
| Companies excluded from consolidation | (4,886,747) | (104,976) | - | (4,991,723) |
| Costs of plans vested in previous years | (28,024,748) | (3,788,762) | - | (31,813,510) |
| Costs of plans vested in the year | (493,653) | (258,747) | - | (752,400) |
| Total cost of the plans | 1,084,056 | 263,293 | 279,519 | 1,626,868 |
| Responsability of plans | 1,718,728 | 1,053,809 | 279,519 | 3,052,056 |
| Fair value of hedging contracts | (634,672) | (790,516) | - | (1,425,188) |
| Recorded in 'Cash ans cash equivalents' (1) | - | - | (43,048) | (43,048) |
| Recorded in 'Other current liabilities' (note 27) | 2,846 | 126,218 | 155,724 | 284,788 |
| Recorded in 'Other non-current liabilities' (note 23) | 3,952 | 137,075 | 166,843 | 307,870 |
| Recorded in reserves | 1,077,258 | - | - | 1,077,258 |
(1) Sonaecom partially vested in advance the hedging contract with Sonae SGPS, recieving an amount equal to the market value of Sonaecom shares.
In 27August 2013, part of the Sonaecom and Sonae SGPS plans outstanding were converted to Zon Optimus plans. The conversion of the Sonaecom plans was made according to the merger ratio, but the conversion of Sonae SGPS plans was made according to the fair value of the shares. This decision was duly approved by the Board Nominations and Remunerations Committee. The cost of Zon Optimus plans was recognized until 30 September 2013, date on which Zon Optimus started to take responsibility for them. The responsibility of these plans was calculated based on share price of 30 September 2013 and was recorded under the headings of 'Other current liabilities' and 'Other non-current liabilities'.
During 2013 and 2012, the remunerations paid to Directors and other members of key management in functions at the years ended 31 December 2013 and 2012 (19 managers in 2013 and 2012) were as follows:
| 2013 | 2012 | |
|---|---|---|
| Short-term employee benefits* | 1,716,252 | 3,194,563 |
| Share-based payments* | 462.820 | 825,843 |
| 2,170,305 | 4,020,406 | |
* In 2013, remuneration for key management personal transferred to ZON OPTIMUS has not been considered following the merger between Optimus SGPS and Zon.
The short-term employee benefits, which include the salary and performance bonus, were calculated on an accruals basis. The share-based payments for 2013 and 2012 correspond to the value of the Medium Term Incentive Plan and will be awarded in 2014, in respect of performance during 2013 (and the Medium Term Incentive Plan awarded in 2013 in respect of performance during 2012, for the 2012 amounts), whose shares, or the cash equivalent, will be delivered in March 2017 and March 2016, respectively. Full details on the Group remuneration policy are disclosed in the Corporate Governance Report.
In 2013 and 2012, the Group paid, in respect of fees, to the Statutory Auditor of the Group, Deloitte, and its network of companies, the following amounts:
| 2013 | 2012 | |
|---|---|---|
| Statutory audit | 110,974 | 171,699 |
| Other guarantee and reliability services | 10,000 | 34,000 |
| Tax Advice | 14,747 | 47,785 |
| Other consulting | 1,250 | - |
| Total | 136,971 | 253,484 |
The reduction on Fees of Statutory Auditor is related with the desconsideration of telecommunication companies following the merger between Optimus SGPS and Zon (note 3.e).
During the years ended at 31 December 2013 and 2012, the companies included in the consolidation employed an average number of 912 and 877, respectively (excluding the companies included in discontinued operations). At 31 December 2013, the number of employees was 924.
On 29 October 2013, Sonaecom has announced to make a voluntary tender offer for the acquisition of a maximum of 88,479,803 shares representing 24.16% of its own share capital.This transaction takes place after the merger of Optimus SGPS, S.A. and Zon Multimédia, SGPS, S.A., of which resulted Zon Optimus SGPS, S.A., in which Sonaecom, as a previous Optimus shareholder, became thereinafter the direct holder of 37,489,324 shares representing 7.28% of the share capital and voting rights of Zon Optimus and the indirect joint holder of 50.01% of the share capital and voting rights in Zon Optimus, through the 50% equity holding in Zopt, SGPS, S.A..
Sonaecom has the intention to accordingly give the option to its shareholders to sell, in equal standing conditions, their Sonaecom shares for consideration of the directly held 37,489,324 Zon Optimus shares, which are not necessary to the pursuit of Sonaecom's business purposes, thereby enabling direct exposure of Sonaecom shareholders to Zon Optimus, the reference asset of Sonaecom portfolio.
Sonaecom offers an overall price equivalent to Euro 2.45 per Sonaecom share, to be composed of Zon Optimus shares and, where applicable, a remaining cash amount, which represents a premium, per Sonaecom share, of circa: 10% over Sonaecom share closing price at 28 October 2013 and over the average weighted closing price of the last 30 days; 24% by reference to the last 90 days average weighted closing price of Sonaecom share; and 17% in relation to Sonaecom share average target price of Euro 2.10. For determining the Sonaecom/Zon Optimus share trade ratio, it was taken into consideration Zon Optimus share average weighed closing price of the last 5 trading days, which was that of Euro 5.08 per Zon Optimus share.
On 23 and 24 January 2014, under terms previously authorized by the Portuguese Securities Market Commission, CMVM, Sonae – SGPS, S.A. (Sonae) acquired over the counter 1,454,134 Sonaecom shares from Sonaecom directors and related parties.
The consideration of this acquisition was determined and settled on 20 February 2014, the date of calculation of the results of the tender offer, by the same amount paid to the shareholders who accepted the offer. Following this transaction, Sonae became the direct holder of 78,133,508 shares and the indirect holder of 194,063,119 shares, giving Sonae a total participation of 272,196,627 Sonaecom shares.
On 5 February 2014, Sonaecom made public the decision to launch a general and voluntary tender offer for the acquisition of shares representing the share capital of Sonaecom.
The offer was general and voluntary, with the offerer obliged to acquire all the shares that were the object of the offer and were, until the end of the respective period, subject to valid acceptance by the recipients.
The period of the offer, during which sales orders were received, ran for two weeks, beginning on 6 February and ending on 19 February 2014.
On 20 February 2014, the results of the offer were released. The level of acceptance reached 62%, corresponding to 54,906,831 Sonaecom shares. During the year 2014 Sonaecom will thus reduce its share capital in circa EUR 136 million. Euronext announced Sonaecom exclusion from the PSI-20 from 24 February 2014.
The physical and financial settlement of the offer occurred on 25 February 2014, being the consideration of the offer composed by 26,476,792 ZON OPTIMUS shares and 19,631 euros in cash.
Following the offer, Sonaecom became the holder of 11,012,532 ZON OPTIMUS shares, corresponding to 2.14% of the company's share capital.
On 28 February 2014, Goldman Sachs Inc. informed Sonaecom about the reduction of its qualifying holding on 25 February 2014 from 2.12% to 0.79% of its share capital, corresponding to 2,881,353 shares and voting rights.
Sonae-SGPS, S.A. informed Sonaecom on the acquisition, from 24 february to 7 march 2014, of shares representing the share capital and voting rights of Sonaecom. After the completion of this transaction, Sonae is the direct holder of 79,097,818 shares of Sonaecom, and the 194.063.119 voting rights corresponding to the shares held by its subsidiary Sonae Investiments, B.V. will continue to be attributable to it.
These consolidated financial statements were approved by the Board of Directors on 10 March 2014.
These financial statements are a translation of financial statements originally issued in Portuguese in accordance with International Financial Reporting Standards (IAS / IFRS) as adopted by the European Union and the format and disclosures required by those Standards, some of which may not conform to or be required by generally accepted accounting principles in other countries. In the event of discrepancies, the Portuguese language version prevails.
Ana Cristina Dinis da Silva Fanha Vicente Soares Franck Emmanuel Dangeard Ângelo Gabriel Ribeirinho dos Santos Paupério Gervais Gilles Pellissier António Bernardo Aranha da Gama Lobo Xavier Jean-François René Pontal António de Sampaio e Mello Maria Cláudia Teixeira de Azevedo David Charles Denholm Hobley Miguel Nuno Santos Almeida David Graham Shenton Bain Pedro Rafael de Sousa Nunes Pedro Duarte Paulo Teixeira de Azevedo Rui José Silva Goncalves Paiva
Álvaro Carmona e Costa Portela Christine Cross Álvaro Cuervo Garcia José Manuel Neves Adelino Belmiro de Azevedo Michel Marie Bon Bernd Hubert Joachim Bothe
3DO Holding GmbH BA Capital, SGPS, SA 3shoppings – Holding,SGPS, S.A. BB Food Service, S.A. 8ª Avenida Centro Comercial, SA Be Artis-C.C.G.R.C., S.A. ADD Avaliações Engenharia de Avaliações e Perícias Ltda Be Towering-Gestão Torres Telecomunicações Adlands B.V. Beralands BV Aegean Park, S.A. Bertimóvel – Sociedade Imobiliária, S.A. Agepan Eiweiler Management GmbH BHW Beeskow Holzwerkstoffe Agepan Flooring Products, S.A.RL Big Picture 2 Films, S.A. Agloma Investimentos, Sgps, S.A. Bloco Q – Sociedade Imobiliária, S.A. Águas Furtadas Sociedade Agrícola, SA Bloco W – Sociedade Imobiliária, S.A. Airone – Shopping Center, Srl Boavista Shopping Centre BV ALBCC Albufeirashopping C.Comercial SA BOM MOMENTO – Comércio Retalhista, SA ALEXA Administration GmbH Caixanet – Telecomunicações e Telemática, S.A. ALEXA Asset GmbH & Co KG Canal 20 TV, S.A. ALEXA Holding GmbH Canasta – Empreendimentos Imobiliários, S.A. ALEXA Shopping Centre GmbH Casa Agrícola de Ambrães, S.A. Algarveshopping – Centro Comercial, S.A. Casa da Ribeira – Hotelaria e Turismo, S.A. Alpêssego – Soc. Agrícola, S.A Cascaishopping – Centro Comercial, S.A. Andar – Sociedade Imobiliária, S.A. Cascaishopping Holding I, SGPS, S.A. Apor - Agência para a Modernização do Porto CCCB Caldas da Rainha - Centro Comercial,SA Aqualuz – Turismo e Lazer, Lda Centro Colombo – Centro Comercial, S.A. Arat inmebles, S.A. Centro Residencial da Maia,Urban., S.A. ARP Alverca Retail Park,SA Centro Vasco da Gama – Centro Comercial, S.A. Arrábidashopping – Centro Comercial, S.A. Change, SGPS, S.A. Aserraderos de Cuellar, S.A. Chão Verde – Soc.Gestora Imobiliária, S.A. Atlantic Ferries – Tráf.Loc,Flu.e Marít, S.A. Cinclus Imobiliária, S.A. Avenida M – 40 B.V. Citorres – Sociedade Imobiliária, S.A.
Avenida M – 40, S.A. Coimbrashopping – Centro Comercial, S.A.
Azulino Imobiliária, S.A. Colombo Towers Holding, BV BA Business Angels, SGPS, SA Companhia de Pesca e Comércio de Angola (Cosal), SARL (a) Contacto Concessões, SGPS, S.A. Gaiashopping II – Centro Comercial, S.A. Contibomba – Comérc.Distr.Combustiveis, S.A. GHP Gmbh Contimobe – Imobil.Castelo Paiva, S.A. Gli Orsi Shopping Centre 1 Srl Continente Hipermercados, S.A. Glunz AG Contry Club da Maia-Imobiliaria, S.A. Glunz Service GmbH Cooper Gay Swett & Crawford Lt Glunz UK Holdings Ltd Craiova Mall BV Glunz Uka Gmbh Cronosaúde – Gestão Hospitalar, S.A. GMET, ACE Cumulativa – Sociedade Imobiliária, S.A. Golf Time – Golfe e Invest. Turísticos, S.A. Darbo S.A.S Grafilme - Sociedade Impressora de Legendas, Lda. (a) Deutsche Industrieholz GmbH Guimarãeshopping – Centro Comercial, S.A. Discovery Sports, SA Harvey Dos Iberica, S.L. Distodo - Distribuição e Logística, Lda. ("Distodo") Herco Consultoria de Riscos e Corretora de Seguros Ltda Dortmund Tower GmbH HighDome PCC Limited Dos Mares – Shopping Centre B.V. Iberian Assets, S.A. Dos Mares – Shopping Centre, S.A. Igimo – Sociedade Imobiliária, S.A. Dreamia - Serviços de Televisão, S.A. Iginha – Sociedade Imobiliária, S.A. Dreamia Holding B.V. Imoareia – Invest. Turísticos, SGPS, S.A. Ecociclo – Energia e Ambiente, S.A. Imobiliária da Cacela, S.A. Ecociclo II Imoclub – Serviços Imobilários, S.A. Efanor Investimentos, SGPS, S.A. Imoconti – Soc.Imobiliária, S.A. Efanor Serviços de Apoio à Gestão, S.A. Imodivor – Sociedade Imobiliária, S.A. El Rosal Shopping, S.A. Imoestrutura – Soc.Imobiliária, S.A. Emfísico Boavista Imoferro – Soc.Imobiliária, S.A. Empracine - Empresa Promotora de Atividades Cinematográficas, Lda. Imohotel – Emp.Turist.Imobiliários, S.A. Empreend.Imob.Quinta da Azenha, S.A. Imomuro – Sociedade Imobiliária, S.A. Equador & Mendes, Lda Imopenínsula – Sociedade Imobiliária, S.A. Espimaia – Sociedade Imobiliária, S.A. Imoplamac Gestão de Imóveis, S.A. Estação Viana – Centro Comercial, S.A. Imoponte – Soc.Imobiliaria, S.A. Euroresinas – Indústrias Quimicas, S.A. Imoresort – Sociedade Imobiliária, S.A. Farmácia Selecção, S.A. Imoresultado – Soc.Imobiliaria, S.A. Fashion Division Canárias, SL Imosedas – Imobiliária e Seviços, S.A. Fashion Division, S.A. Imosistema – Sociedade Imobiliária, S.A. Filmes Mundáfrica, SARL (a) Imosonae II FINSTAR - Sociedade de Investimentos e Participações, S.A. Impaper Europe GmbH & Co. KG Fozimo – Sociedade Imobiliária, S.A. Implantação – Imobiliária, S.A. Fozmassimo – Sociedade Imobiliária, S.A. Infofield – Informática, S.A. Freccia Rossa – Shopping Centre S.r.l. Infratroia, EM Frieengineering International Ltda Inparsa – Gestão Galeria Comercial, S.A. Fundo de Invest. Imobiliário Imosede Inparvi SGPS, S.A. Fundo I.I. Parque Dom Pedro Shop.Center Integrum - Energia, SA
Fundo Invest.Imob.Shopp. Parque D.Pedro Integrum Colombo Energia, S.A. Gaiashopping I – Centro Comercial, S.A. Integrum Martim Longo - Energia, S.A. Integrum Vale do Tejo – Energia, SA Modalfa – Comércio e Serviços, S.A. Interlog – SGPS, S.A. MODALLOOP – Vestuário e Calçado, S.A. Invesaude - Gestão Hospitalar S.A. Modelo – Dist.de Mat. de Construção, S.A. Ioannina Development of Shopping Centres, SA Modelo Continente Hipermercados, S.A. Isoroy SAS Modelo Continente Intenational Trade, SA La Farga – Shopping Center, SL Modelo Hiper Imobiliária, S.A. Laminate Park GmbH Co. KG Modelo.com – Vendas p/Correspond., S.A. Land Retail B.V. Movelpartes – Comp.para Ind.Mobiliária, S.A. Larim Corretora de Resseguros Ltda Movimento Viagens – Viag. e Turismo U.Lda Larissa Develop. Of Shopping Centers, S.A. MSTAR, SA Lazam – MDS Corretora e Administradora de Seguros, S.A. Mundo Vip – Operadores Turisticos, S.A. LCC LeiriaShopping Centro Comercial SA Munster Arkaden, BV Le Terrazze - Shopping Centre 1 Srl Norscut – Concessionária de Scut Interior Norte, S.A. Libra Serviços, Lda. Norteshopping – Centro Comercial, S.A. Lidergraf – Artes Gráficas, Lda. Norteshopping Retail and Leisure Centre, BV Loop5 Shopping Centre GmbH Nova Equador Internacional,Ag.Viag.T, Ld Loureshopping – Centro Comercial, S.A. Nova Equador P.C.O. e Eventos Lusitânia - Companhia de Seguros, S.A ("Lusitânia Seguros") Operscut – Operação e Manutenção de Auto-estradas, S.A. Lusitânia Vida - Companhia de Seguros, S.A ("Lusitânia Vida") Optimus-Comunicações SA Lusomundo - Sociedade de investimentos imobiliários SGPS, SA OSB Deustchland Gmbh Lusomundo España, SL PantheonPlaza BV Lusomundo Imobiliária 2, S.A. Paracentro – Gest.de Galerias Com., S.A. Lusomundo Moçambique, Lda. Pareuro, BV Luz del Tajo – Centro Comercial S.A. Park Avenue Develop. of Shop. Centers S.A. Luz del Tajo B.V. Parque Atlântico Shopping – C.C., S.A. Madeirashopping – Centro Comercial, S.A. Parque D. Pedro 1 B.V. Maiashopping – Centro Comercial, S.A. Parque D. Pedro 2 B.V. Maiequipa – Gestão Florestal, S.A. Parque de Famalicão – Empr. Imob., S.A. Marcas do Mundo – Viag. e Turismo Unip, Lda Parque Principado SL Marcas MC, ZRT Pátio Boavista Shopping Ltda. Marina de Tróia S.A. Pátio Campinas Shopping Ltda Marinamagic – Expl.Cent.Lúdicos Marít, Lda Pátio Goiânia Shopping Ltda Marmagno – Expl.Hoteleira Imob., S.A. Pátio Londrina Empreend. e Particip. Ltda Martimope – Sociedade Imobiliária, S.A. Pátio Penha Shopping Ltda. Marvero – Expl.Hoteleira Imob., S.A. Pátio São Bernardo Shopping Ltda MDS Affinity - Sociedade de Mediação, Lda Pátio Sertório Shopping Ltda MDS Africa SGPS, S.A. Pátio Uberlândia Shopping Ltda MDS Consultores, S.A. PER-MAR- Soc. De Construção, SA MDS Corretor de Seguros, S.A. Pharmaconcept – Actividades em Saúde, S.A. MDS Malta Holding Limited PHARMACONTINENTE – Saúde e Higiene, S.A. MDS SGPS, SA PJP – Equipamento de Refrigeração, Lda MDSAUTO - Mediação de Seguros, SA Plaza Éboli B.V. Megantic BV Plaza Éboli – Centro Comercial S.A.
MJLF – Empreendimentos Imobiliários, S.A. Plaza Mayor Holding, SGPS, SA Mlearning - Mds Knowledge Centre, Unip, Lda Plaza Mayor Parque de Ócio BV Plaza Mayor Parque de Ocio, SA Puravida – Viagens e Turismo, S.A. Plaza Mayor Shopping BV Racionaliz. y Manufact.Florestales, S.A. Plaza Mayor Shopping, SA RASO - Viagens e Turismo, S.A. Ploi Mall BV RASO, SGPS, S.A. Plysorol, BV Reval-PM Marketing and Consultant, Inc Poliface North America Rio Sul – Centro Comercial, S.A. PORTCC - Portimãoshopping Centro Comercial, SA River Plaza Mall, Srl Porturbe – Edificios e Urbanizações, S.A. River Plaza, BV Praedium – Serviços, S.A. Rochester Real Estate, Limited Praedium II – Imobiliária, S.A. RSI Corretora de Seguros Ltda Praedium SGPS, S.A. S.C. Microcom Doi Srl Predicomercial – Promoção Imobiliária, S.A. Saúde Atlântica – Gestão Hospitalar, S.A. Prédios Privados Imobiliária, S.A. SC – Consultadoria, S.A. Predisedas – Predial das Sedas, S.A. SC – Eng. e promoção imobiliária,SGPS, S.A. Pridelease Investments, Ltd SC Aegean B.V. Proj. Sierra Germany 4 (four) – Sh.C.GmbH SC Assets SGPS, S.A. Proj.Sierra Germany 2 (two) – Sh.C.GmbH SC Finance BV Proj.Sierra Italy 1 – Shop.Centre Srl SC Mediterraneum Cosmos B.V. Proj.Sierra Italy 3 – Shop. Centre Srl SC, SGPS, SA Proj.Sierra Italy 5 – Dev. Of Sh.C.Srl SCS Beheer, BV Project SC 1 BV SDSR - Sports Division 2, S.A. Project SC 2 BV Selfrio,SGPS, S.A. Project Sierra 2 B.V. Selifa – Empreendimentos Imobiliários, S.A. Project Sierra 6 BV Sempre à Mão – Sociedade Imobiliária, S.A. Project Sierra 8 BV Serra Shopping – Centro Comercial, S.A. Project Sierra 9 BV Sesagest – Proj.Gestão Imobiliária, S.A. Project Sierra Brazil 1 B.V. Sete e Meio – Invest. Consultadoria, S.A. Project Sierra Charagionis 1 S.A. Sete e Meio Herdades – Inv. Agr. e Tur., S.A. Project Sierra Four, SA Shopping Centre Parque Principado B.V. Project Sierra Germany Shop. Center 1 BV Shopping Penha B.V. Project Sierra Germany Shop. Center 2 BV Siaf – Soc.Iniciat.Aprov.Florestais - Energia, S.A. Project Sierra Spain 1 B.V. SIAL Participações Ltda Project Sierra Spain 2 – Centro Comer. S.A. Sierra Asia Limited Project Sierra Spain 2 B.V. Sierra Asset Management – Gest. Activos, S.A. Project Sierra Spain 3 – Centro Comer. S.A. Sierra Berlin Holding BV Project Sierra Spain 3 B.V. Sierra Central S.A.S Project Sierra Spain 6 B.V. Sierra Charagionis Develop.Sh. Centre S.A. Project Sierra Spain 7 B.V. Sierra Charagionis Propert.Management S.A. Project Sierra Three Srl Sierra Corporate Services Holland, BV Project Sierra Two Srl Sierra Development Greece, S.A. Promessa Sociedade Imobiliária, S.A. Sierra Developments Germany GmbH Prosa – Produtos e serviços agrícolas, S.A. Sierra Developments Holding B.V.
Project Sierra 7 BV Sempre a Postos – Produtos Alimentares e Utilidades, Lda
| Sierra Developments Italy S.r.l. | Sonae Capital Brasil, Lda |
|---|---|
| Sierra Developments Romania, Srl | Sonae Capital,SGPS, S.A. |
| Sierra Developments Spain – Prom.C.Com.SL | Sonae Center II S.A. |
| Sierra Developments, SGPS, S.A. | Sonae Center Serviços, S.A. |
| Sierra Enplanta Ltda | Sonae Ind., Prod. e Com.Deriv.Madeira, S.A. |
| Sierra European R.R.E. Assets Hold. B.V. | Sonae Indústria – SGPS, S.A. |
| Sierra GP Limited | Sonae Industria de Revestimentos, S.A. |
| Sierra Investimentos Brasil Ltda | Sonae Indústria Manag. Serv, SA |
| Sierra Investments (Holland) 1 B.V. | Sonae Investimentos, SGPS, SA |
| Sierra Investments (Holland) 2 B.V. | Sonae Novobord (PTY) Ltd |
| Sierra Investments Holding B.V. | Sonae RE, S.A. |
| Sierra Investments SGPS, S.A. | Sonae Retalho Espana – Servicios Gen., S.A. |
| Sierra Italy Holding B.V. | Sonae SGPS, S.A. |
| Sierra Management Germany GmbH | Sonae Sierra Brasil S.A. |
| Sierra Management Italy S.r.l. | Sonae Sierra Brazil B.V. |
| Sierra Management Romania, Srl | Sonae Sierra, SGPS, S.A. |
| Sierra Management Spain – Gestión C.Com.S.A. | Sonae Tafibra Benelux, BV |
| Sierra Management, SGPS, S.A. | Sonae Turismo – SGPS, S.A. |
| Sierra Portugal, S.A. | Sonae UK, Ltd. |
| Sierra Project Nürnberg B.V. | Sonaegest – Soc.Gest.Fundos Investimentos |
| Sierra Real Estate Greece B.V. | SONAEMC - Modelo Continente, SGPS, S.A. |
| Sierra Services Holland 2 B.V | Sondis Imobiliária, S.A. |
| Sierra Zenata Project B.V. | SONTÁRIA- Empreend. Imobil., SA |
| SII – Soberana Invest. Imobiliários, S.A. | Sontel BV |
| SISTAVAC, S.A. | Sontur BV |
| SKK – Central de Distr., S.A. | Sonvecap BV |
| SKK SRL | Sopair, S.A. |
| SKKFOR – Ser. For. e Desen. de Recursos | Sotáqua – Soc. de Empreendimentos Turist |
| Sociedade de Construções do Chile, S.A. | Spanboard Products, Ltd |
| Société de Tranchage Isoroy S.A.S. | SPF – Sierra Portugal Real Estate, Sarl |
| Socijofra – Sociedade Imobiliária, S.A. | Spinarq - Engenharia, Energia e Ambiente, SA |
| Sociloures – Soc.Imobiliária, S.A. | Spinveste – Gestão Imobiliária SGII, S.A. |
| Soconstrução BV | Spinveste – Promoção Imobiliária, S.A. |
| Sodesa, S.A. | Sport Retalho España – Servicios Gen., S.A. |
| Soflorin, BV | Sport TV Portugal, S.A. |
| Soira – Soc.Imobiliária de Ramalde, S.A. | Sport Zone – Comércio Art.Desporto, S.A. |
| Solinca - Eventos e Catering, SA | Sport Zone – Turquia |
| Solinca - Health and Fitness, SA | Sport Zone Canárias, SL |
| Solinca – Investimentos Turísticos, S.A. | Sport Zone España-Com.Art.de Deporte,SA |
| Solinfitness – Club Malaga, S.L. | Spred, SGPS, SA |
| Solingen Shopping Center GmbH | Stinnes Holz GmbH |
| SOLSWIM-Gestão e Expl.Equip.Aquáticos,SA | Tableros Tradema, S.L. |
| Soltroia – Imob.de Urb.Turismo de Tróia, S.A. | Tafiber,Tableros de Fibras Ibéricas, SL |
| Somit Imobiliária | Tafibra Polska Sp.z.o.o. |
| SONAE - Specialized Retail, SGPS, SA | Tafibra South Africa |
SONAE/EFANOR/ZON GROUP COMPANIES (continued) Tafibra Suisse, SA Vastgoed Sun – Sociedade Imobiliária, S.A. Tafisa – Tableros de Fibras, S.A. Via Catarina – Centro Comercial, S.A. Tafisa Canadá Societé en Commandite Viajens y Turismo de Geotur España, S.L. Tafisa France, S.A. Vistas do Freixo, SA Tafisa UK, Ltd Vuelta Omega, S.L. Taiber,Tableros Aglomerados Ibéricos, SL Weiterstadt Shopping BV Tarkett Agepan Laminate Flooring SCS World Trade Center Porto, S.A. Tecmasa Reciclados de Andalucia, SL Worten – Equipamento para o Lar, S.A. Teliz Holding B.V. Worten Canárias, SL Têxtil do Marco, S.A. Worten España, S.A. TLANTIC B.V. ZIPPY - Comércio e Distribuição, SA Tlantic Portugal – Sist. de Informação, S.A. ZIPPY - Comercio y Distribución, S.A. Tlantic Sistemas de Informação Ltdª Zippy Turquia Tool Gmbh ZON Audiovisuais, SGPS S.A. Torre Ocidente Imobiliária, S.A. ZON Cinemas, SGPS S.A. Torre São Gabriel – Imobiliária, S.A. ZON Conteúdos - Actividade de Televisão e de Produção de Conteúdos, S.A. TP – Sociedade Térmica, S.A. ZON FINANCE B.V. Troia Market, S.A. ZON II - Serviços de Televisão S.A. (a) Tróia Natura, S.A. ZON III - Comunicações electrónicas S.A. (a) Troiaresort – Investimentos Turísticos, S.A. ZON Lusomundo Audiovisuais, S.A. Troiaverde – Expl.Hoteleira Imob., S.A. ZON Lusomundo Cinemas , S.A. Tulipamar – Expl.Hoteleira Imob., S.A. ZON Lusomundo TV, Lda. Turismo da Samba (Tusal), SARL (a) ZON Multimédia - Serviços de Telecomunicações e Multimédia, SGPS, S.A. Unishopping Administradora Ltda. ZON Televisão por Cabo, SGPS, S.A. Unishopping Consultoria Imob. Ltda. ZON TV Cabo Açoreana, S.A. Upstar Comunicações S.A. ZON TV Cabo Madeirense, S.A. Urbisedas – Imobiliária das Sedas, S.A. ZON TV Cabo Portugal, S.A. Valecenter Srl ZOPT, SGPS, S.A. Valor N, S.A. Zubiarte Inversiones Inmobiliarias, S.A. Vastgoed One – Sociedade Imobiliária, S.A. ZYEVOLUTION-Invest.Desenv.,SA.
For the years ended at 31 December 2013 and 2012
| (Amounts expressed in euro) | NOTES | DECEMBER 2013 | DECEMBER 2012 |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Tangible assets | 1.a, 1.f and 2 | 52,710 | 296,504 |
| Intangible assets | 1.b and 3 | 7,092 | 9,310 |
| Investments in Group companies | 1.c and 5 | 66,580,286 | 1,072,848,096 |
| Investments in joint ventures | 1.d and 6 | 597,666,944 | 25,000 |
| Other non-current assets | 1.d, 1.n, 4, 8 and 25 | 175,735,246 | 521,421,792 |
| Total non-current assets | 840,042,278 | 1,594,600,702 | |
| Current assets | |||
| Financial assets at fair value through profit or loss | 1.e, 4 and 7 | 202,442,350 | - |
| Other current debtors | 1.e, 1.g, 4, 10 and 25 | 19,763,330 | 10,115,242 |
| Other current assets | 1.e, 1.n, 4, 11 and 25 | 515,229 | 3,687,639 |
| Cash and cash equivalents | 1.e, 1.h, 4, 12 and 25 | 185,918,581 | 103,717,414 |
| Total current assets | 408,639,490 | 117,520,295 | |
| Total assets | 1,248,681,768 | 1,712,120,997 | |
| Shareholder' funds and liabilities | |||
| Shareholders' funds | |||
| Share capital | 13 | 366,246,868 | 366,246,868 |
| Own shares | 1.q and 14 | (8,441,804) | (6,299,699) |
| Reserves | 1.p | 928,723,768 | 870,193,067 |
| Net income / (loss) for the year | (90,569,383) | 103,229,835 | |
| Total Shareholders' funds | 1,195,959,449 | 1,333,370,071 | |
| Liabilities | |||
| Non-current liabilities | |||
| Medium and long-term loans – net of short-term portion | 1.i, 1.j, 4, 15.a and 25 | 20,003,496 | 190,239,630 |
| Provisions for other liabilities and charges | 1.l, 1.o and 16 | 332,469 | 74,959 |
| Other non-current liabilities | 1.n, 1.t, 4 and 17 | 370,948 | 174,176 |
| Total non-current liabilities | 20,706,913 | 190,488,765 | |
| Current liabilities | |||
| Short-term loans and other loans | 1.h, 1.i, 1.j, 4, 15.b and 25 |
21,660,813 | 186,419,026 |
| Other creditors | 4, 18 and 25 | 7,308,273 | 828,261 |
| Other current liabilities | 1.n, 1.t, 4, 19 and 25 | 3,046,320 | 1,014,874 |
| Total current liabilities | 32,015,406 | 188,262,161 | |
| Total Shareholders' funds and liabilities | 1,248,681,768 | 1,712,120,997 |
The notes are an integral part of the financial statements at 31 December 2013 and 2012.
Ricardo André Fraga Costa
Duarte Paulo Teixeira de Azevedo Ângelo Gabriel Ribeirinho Paupério António Bernardo Aranha da Gama Lobo Xavier Frank Emmanuel Dangeard
Miguel Nuno Santos Almeida António Sampaio e Mello David Charles Denholm Hobley Gervais Gilles Pellissier
For the years and quarters ended at 31 December 2013 and 2012
| (Amounts expressed in euro) | NOTES | DECEMBER 2013 | SEPTEMBER TO DECEMBER 2013 (not audited) |
DECEMBER 2012 | SEPTEMBER TO DECEMBER 2012 (not audited) |
|---|---|---|---|---|---|
| Services rendered | 20 and 25 | 2,627,835 | 155,898 | 3,492,234 | 606,905 |
| Other operating revenues | 21 and 25 | 113,879 | 30,301 | 319 | - |
| 2,741,714 | 186,199 | 3,492,553 | 606,905 | ||
| External supplies and services | 1.f, 22 and 25 | (2,142,911) | (467,398) | (2,044,286) | (613,122) |
| Staff expenses | 1.t, 28 and 30 | (2,307,890) | (467,002) | (2,248,401) | (503,192) |
| Depreciation and amortisation | 1.a, 1.b, 2 and 3 | (65,561) | (13,346) | (68,403) | (17,227) |
| Provisions and impairment losses | 1.l and 16 | (90,138) | 2,416 | (15,387) | - |
| Other operating costs | (39,962) | (9,905) | (56,689) | (21,255) | |
| (4,646,462) | (955,235) | (4,433,166) | (1,154,796) | ||
| Gains and losses on Group companies | 5 and 23 | (147,101,781) | (2,858,138) | 103,388,419 | 10,270,291 |
| Gains and losses on financial assets at fair value through profit or loss |
5, 7 and 23 | 46,636,719 | 37,489,326 | - | - |
| Other financial expenses | 1.c, 1.i, 1.j, 1.r, 1.s, 15 and 23 | (11,211,267) | (508,249) | (14,238,054) | (3,578,832) |
| Other financial income | 1.r, 8, 11 and 23 | 24,502,045 | 1,297,759 | 14,938,191 | 6,519,301 |
| Current income / (loss) | (89,079,032) | 34,651,662 | 103,147,943 | 12,662,869 | |
| Income taxation | 1.m, 9 and 24 | (1,490,351) | (181,033) | 81,892 | (551,686) |
| Net income / (loss) for the year | (90,569,383) | 34,470,629 | 103,229,835 | 12,111,183 | |
| Earnings per share | 27 | ||||
| Including discontinued operations: | |||||
| Basic | (0.25) | 0.10 | 0.29 | 0.03 | |
| Diluted | (0.25) | 0.10 | 0.29 | 0.03 | |
| Excluding discontinued operations: | |||||
| Basic | (0.25) | 0.10 | 0.29 | 0.03 | |
| Diluted | (0.25) | 0.10 | 0.29 | 0.03 |
The notes are an integral part of the financial statements at 31 December 2013 and 2012.
Ricardo André Fraga Costa
Duarte Paulo Teixeira de Azevedo Ângelo Gabriel Ribeirinho Paupério António Bernardo Aranha da Gama Lobo Xavier Frank Emmanuel Dangeard
Miguel Nuno Santos Almeida António Sampaio e Mello David Charles Denholm Hobley Gervais Gilles Pellissier
For the years and quarters ended at 31 December 2013 and 2012
| (Amounts expressed in euro) | NOTES | DECEMBER 2013 | SEPTEMBER TO DECEMBER 2013 (not audited) |
DECEMBER 2012 | SEPTEMBER TO DECEMBER 2012 (not audited) |
|---|---|---|---|---|---|
| Net income / (loss) for the year | (90,569,383) | 34,470,629 | 103,229,835 | 12,111,183 | |
| Components of other comprehensive income, net of tax | - | - | - | - | |
| Comprehensive income for the year | (90,569,383) | 34,470,629 | 103,229,835 | 12,111,183 | |
The notes are an integral part of the financial statements at 31 December 2013 and 2012.
Ricardo André Fraga Costa
Duarte Paulo Teixeira de Azevedo Ângelo Gabriel Ribeirinho Paupério António Bernardo Aranha da Gama Lobo Xavier Frank Emmanuel Dangeard
Miguel Nuno Santos Almeida António Sampaio e Mello David Charles Denholm Hobley Gervais Gilles Pellissier
Movements in Shareholders' funds For the years ended at 31 December 2013 and 2012
| Reserves | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (Amounts expressed in Euro) | SHARE CAPITAL |
OWN SHARES (note 14) |
SHARE PREMIUM |
LEGAL RESERVES |
MEDIUM TERM INCENTIVE PLANS RESERVES (note 28) |
OWN SHARES RESERVES |
OTHER RESERVES |
TOTAL RESERVES |
NET INCOME / (LOSS) |
TOTAL |
| 2013 | ||||||||||
| Balance at 31 December 2012 | 366,246,868 | (6,299,699) | 775,290,377 | 7,991,192 | 650,156 | 6,299,699 | 79,961,643 | 870,193,067 | 103,229,835 | 1,333,370,071 |
| Appropriation of result of 2012 | ||||||||||
| Transfer to legal reserves and other reserves |
- | - | - | 5,161,492 | - | - | 98,068,343 | 103,229,835 | (103,229,835) | - |
| Dividends distribution | - | - | - | - | - | - | (43,281,102) | (43,281,102) | - | (43,281,102) |
| Comprehensive income for the year ended at 31 December 2013 |
- | - | - | - | - | - | - | - | (90,569,383) | (90,569,383) |
| the Medium Term Incentive Plans Delivery of own shares under |
- | 354,213 | - | - | (406,268) | (354,213) | 425,568 | (334,913) | - | 19,300 |
| Sale of own shares to subsidiaries under the Short Term Incentive Plans |
- | 3,724 | - | - | - | (3,724) | 4,723 | 999 | - | 4,723 |
| Effect of the recognition of the Medium Term Incentive Plans |
- | - | - | - | 230,074 | - | - | 230,074 | - | 230,074 |
| Early termination of the derivate on own shares (notes 25 and 28) |
- | - | - | - | - | - | (1,314,192) | (1,314,192) | - | (1,314,192) |
| Acquisition of own shares | - | (2,500,042) | - | - | - | 2,500,042 | (2,500,042) | - | - | (2,500,042) |
| Balance at 31 December 2013 | 366,246,868 | (8,441,804) | 775,290,377 | 13,152,684 | 473,962 | 8,441,804 | 131,364,941 | 928,723,768 | (90,569,383) | 1,195,959,449 |
The notes are an integral part of the financial statements at 31 December 2013 and 2012.
Ricardo André Fraga Costa
| Duarte Paulo Teixeira de Azevedo | Miguel Nuno Santos Almeida |
|---|---|
| Ângelo Gabriel Ribeirinho Paupério | António Sampaio e Mello |
| António Bernardo Aranha da Gama Lobo Xavier | David Charles Denholm Hobley |
| Frank Emmanuel Dangeard | Gervais Gilles Pellissier |
Jean-François René Pontal Maria Cláudia Teixeira de Azevedo
06_OUR PERFORMANCE 199
| For the years ended at 31 December 2013 and 2012 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| RESERVES | ||||||||||
| (Amounts expressed in Euro) | SHARE CAPITAL |
OWN SHARES (note 14) |
SHARE PREMIUM |
LEGAL RESERVES |
MEDIUM TERM INCENTIVE PLANS RESERVES (note 28) |
OWN SHARES RESERVES |
OTHER RESERVES |
TOTAL RESERVES |
NET INCOME / (LOSS) |
TOTAL |
| 2012 | ||||||||||
| Balance at 31 December 2011 | 366,246,868 | (13,594,518) | 775,290,377 | 7,991,192 | 742,525 | 13,594,518 | 106,476,978 | 904,095,590 | (7,960,682) | 1,248,787,258 |
| Appropriation of result of 2011 | ||||||||||
| Transfer to other reserves | - | - | - | - | - | - | (7,960,682) | (7,960,682) | 7,960,682 | - |
| Dividends distribution | - | - | - | - | - | - | (25,172,240) | (25,172,240) | (25,172,240) | |
| Comprehensive income for the year ended at 31 December 2012 |
- | - | - | - | - | - | - | - | 103,229,835 | 103,229,835 |
| the Medium Term Incentive Plans Delivery of own shares under |
- | 438,791 | - | - | (497,588) | (438,791) | 380,690 | (555,689) | - | (116,898) |
| Sale of own shares to subsidiaries under the Medium Term Incentive Plans |
- | 9,031,343 | - | - | - | (9,031,343) | 8,688,712 | (342,631) | - | 8,688,712 |
| Delivery of own shares under the loan in shares to subsidiaries |
- | 1,962,514 | - | - | - | (1,962,514) | 1,962,514 | - | - | 1,962,514 |
| Reimbursement of own shares under the loan in shares to subsidiaries |
- | (1,962,514) | - | - | - | 1,962,514 | (1,962,514) | - | - | (1,962,514) |
| Effect of the recognition of the Medium Term Incentive Plans |
- | - | - | - | 405,219 | - | - | 405,219 | - | 405,219 |
| Derivate on own shares | - | - | - | - | - | - | (276,500) | (276,500) | - | (276,500) |
| Acquisition of own shares | - | (2,175,315) | - | - | - | 2,175,315 | (2,175,315) | - | - | (2,175,315) |
| Balance at 31 December 2012 | 366,246,868 | (6,299,699) | 775,290,377 | 7,991,192 | 650,156 | 6,299,699 | 79,961,643 | 870,193,067 | 103,229,835 | 1,333,370,071 |
| The notes are an integral part of the financial statements at 31 December 2013 and 2012. |
Ricardo André Fraga Costa
| Duarte Paulo Teixeira de Azevedo |
|---|
| Ângelo Gabriel Ribeirinho Paupério |
| António Bernardo Aranha da Gama Lobo Xavier |
| Frank Emmanuel Dangeard |
Miguel Nuno Santos Almeida António Sampaio e Mello David Charles Denholm Hobley Gervais Gilles Pellissier
For the years ended at 31 December 2013 and 2012
| (Amounts expresses in euro) | DECEMBER 2013 | DECEMBER 2012 | ||
|---|---|---|---|---|
| Operating activities | ||||
| Payments to employees | (1,625,097) | (2,145,722) | ||
| Cash flows from operating activities | (1,625,097) | (2,145,722) | ||
| Payments / receipts relating to income taxes, net | (1,147,572) | (1,854,525) | ||
| Other payments / receipts relating to operating activities, net | 337,933 | 7,133,247 | ||
| Cash flows from operating activities (1) | (2,434,736) | 3,133,000 | ||
| Investing activities | ||||
| Receipts from: | ||||
| Investments | 15,260,284 | 486,805,537 | ||
| Tangible assets | 41 | 267 | ||
| Interest and similar income | 22,984,316 | 12,125,271 | ||
| Loans granted | 428,385,000 | - | ||
| Dividends | 24,700,000 | 491,329,641 | 129,476,277 | 628,407,352 |
| Payments for: | ||||
| Investments | (16,940,284) | (175,415,602) | ||
| Tangible assets | (25,691) | (2,445) | ||
| Intangible assets | - | (6,408) | ||
| Loans granted | - | (16,965,975) | (291,414,000) | (466,838,455) |
| Cash flows from investing activities (2) | 474,363,666 | 161,568,897 | ||
| Financing activities | ||||
| Receipts from: | ||||
| Loans obtained | 15,356,000 | 15,356,000 | 50,000,000 | 50,000,000 |
| Payments for: | ||||
| Interest and similar expenses | (10,276,050) | (14,360,631) | ||
| Acquisition of own shares | (2,500,042) | (2,175,315) | ||
| Loans obtained | (349,026,569) | (130,566,000) | ||
| Dividends | (43,281,102) | (405,083,763) | (25,172,240) | (172,274,186) |
| Cash flows from financing activities (3) | (389,727,763) | (122,274,186) | ||
| Net cash flows (4)=(1)+(2)+(3) | 82,201,167 | 42,427,711 | ||
| Cash and cash equivalents at the beginning of the year | 103,717,414 | 61,289,703 | ||
| Cash and cash equivalents at year end | 185,918,581 | 103,717,414 |
The notes are an integral part of the financial statements at 31 December 2013 and 2012.
Ricardo André Fraga Costa
Duarte Paulo Teixeira de Azevedo Ângelo Gabriel Ribeirinho Paupério António Bernardo Aranha da Gama Lobo Xavier Frank Emmanuel Dangeard
Miguel Nuno Santos Almeida António Sampaio e Mello David Charles Denholm Hobley Gervais Gilles Pellissier
For the years ended at 31 December 2013 and 2012
| DECEMBER 2013 | DECEMBER 2012 | |
|---|---|---|
| 1. Acquisition or sale of subsidiaries or other businesses | ||
| a) Other business activities | ||
| Reimburse of supplementary capital from PCJ - Público, Comunicação e Jornalismo, S.A. | 7,624,773 | 3,243,735 |
| Reimburse of supplementary capital from Público- Comunicação Social, S.A. | 6,489,365 | 3,501,771 |
| Reimburse of supplementary capital from Miauger - Organização e Gestão de Leilões Electrónicos, S.A. | 1,146,146 | - |
| Sale of the share capital of Be Artis to Optimus SGPS | - | 455,735,851 |
| Sale of the share capital of Sontária to Optimus SGPS | - | 9,380,876 |
| Reimburse of supplementary capital from Be Artis - Concepção, Construção e Gestão de Redes de Comunicações, S.A. |
- | 14,943,304 |
| 15,260,284 | 486,805,537 | |
| b) Other business activities | ||
| Share capital increase of PCJ - Público, Comunicação e Jornalismo, S.A. | 7,624,774 | - |
| Share capital increase of Público - Comunicação Social, S.A. | 6,489,365 | - |
| Cash outflow to coverage losses Miauger - Organização e Gestão de Leilões Electrónicos, S.A. | 1,146,145 | - |
| Cash outflow to coverage losses Be Artis- Concepção, Construção e Gestão de Redes de Comunicações, S.A. |
- | 14,943,304 |
| Cash outflow to coverage losses PCJ - Público, Comunicação e Jornalismo, S.A. | - | 3,243,735 |
| Cash outflow to coverage losses Público - Comunicação Social, S.A. | - | 3,501,771 |
| Supplementary capital to Optimus, SGPS, S.A. | - | 106,000,000 |
| Supplementary capital to Sonaecom Sistemas de Informação, SGPS, S.A. | - | 39,951,792 |
| Supplementary capital to Público - Comunicação Social, S.A. | 850,000 | 7,500,000 |
| Supplementary capital to Miauger - Organização e Gestão de Leilões Electrónicos, S.A. | 830,000 | 200,000 |
| Establishment of Sonaecom - Serviços Partilhados, S.A. | - | 50,000 |
| Establishment of ZOPT, SGPS, S.A. | - | 25,000 |
| 16,940,284 | 175,415,602 | |
| c) Dividends received | ||
| Optimus, SGPS, S.A. | 24,700,000 | 29,684,926 |
| Optimus - Comunicações, S.A. | - | 68,175,378 |
| Sonae Com Sistemas de Informação, SGPS, S.A. | - | 31,032,500 |
| Sontária - Empreendimentos Imobiliários, S.A. | - | 583,473 |
| 24,700,000 | 129,476,277 |
The notes are an integral part of the financial statements at 31 December 2013 and 2012.
| DECEMBER 2013 | DECEMBER 2012 | |
|---|---|---|
| 2. Details of cash and cash equivalents | ||
| Cash in hand | 811 | 1,280 |
| Cash at bank | 26,252,770 | 31,134 |
| Treasury applications | 159,665,000 | 103,685,000 |
| Cash and cash equivalents | 185,918,581 | 103,717,414 |
| Cash assets | 185,918,581 | 103,717,414 |
| 3. Description of non-monetary financing activities | ||
| a) Bank credit obtained and not used | 16,000,000 | 69,000,000 |
| b) Purchase of company through the issue of shares | Not applicable | Not applicable |
| c) Conversion of loans into shares | Not applicable | Not applicable |
The notes are an integral part of the financial statements at 31 December 2013 and 2012.
Ricardo André Fraga Costa
Duarte Paulo Teixeira de Azevedo Ângelo Gabriel Ribeirinho Paupério António Bernardo Aranha da Gama Lobo Xavier Frank Emmanuel Dangeard
Miguel Nuno Santos Almeida António Sampaio e Mello David Charles Denholm Hobley Gervais Gilles Pellissier
SONAECOM, SGPS, S.A., (hereinafter referred to as 'the Company' or 'Sonaecom') was established on 6 June 1988, under the name Sonae – Tecnologias de Informação, S.A. and has its head office at Lugar de Espido, Via Norte, Maia – Portugal.
Pargeste, SGPS, S.A.'s subsidiaries in the communications and information technology area were transferred to the Company through a demerger-merger process, executed by public deed dated 30 September 1997.
On 3 November 1999, the Company's share capital was increased, its Articles of Association were modified and its name was changed to Sonae.com, SGPS, S.A.. Since then the Company's corporate object has been the management of investments in other companies. Also on 3 November 1999, the Company's share capital was re-denominated to euro, being represented by one hundred and fifty million shares with a nominal value of 1 Euro each.
On 1 June 2000, the Company carried out a Combined Share Offer, involving the following:
In addition to the Combined Share Offer, the Company's share capital was increased under the terms explained below. The new shares were fully subscribed for and paid up by Sonae-, SGPS, S.A. (a Shareholder of Sonaecom, hereinafter referred to as 'Sonae'). The capital increase was subscribed for and paid up on the date the price of the Combined Share Offer was determined, and paid up in cash, 31,000,000 new ordinary shares of 1 Euro each being issued. The subscription price for the new shares was the same as that fixed for the sale of shares in the aforementioned Combined Share Offer, which was Euro 10.
In addition, Sonae sold, in that year, 4,721,739 Sonaecom shares under an option granted to the banks leading the Institutional Offer for Sale and 1,507,865 shares to Sonae Group managers and to the former owners of the companies acquired by Sonaecom.
By decision of the Shareholders' General Meeting held on 17 June 2002, Sonaecom's share capital was increased from Euro 181,000,000 to Euro 226,250,000 by public subscription reserved for the existing Shareholders, 45,250,000 new shares of 1 Euro each having been fully subscribed for and paid up at the price of Euro 2.25 per share.
On 30 April 2003, the company's name was changed by public deed to Sonaecom, SGPS, S.A..
By decision of the Shareholders' General Meeting held on 12 September 2005, Sonaecom's share capital was increased by Euro 70,276,868, from Euro 226,250,000 to Euro 296,526,868, by the issuance of 70,276,868 new shares of 1 Euro each and with a share premium of Euro 242,455,195, fully subscribed by France Telecom. The corresponding public deed was executed on 15 November 2005.
By decision of the Shareholders' General Meeting held on 18 September 2006, Sonaecom's share capital was increased by Euro 69,720,000, to Euro 366,246,868, by the issuance of 69,720,000 new shares of 1 Euro each and with a share premium of Euro 275,657,217, subscribed by 093X – Telecomunicações Celulares, S.A. (EDP) and Parpública – Participações Públicas, SGPS, S.A. (Parpública). The corresponding public deed was executed on 18 October 2006.
By decision of the Shareholders General Meeting held on 16 April 2008, bearer shares were converted into registered shares.
The financial statements are presented in euro, rounded at unit.
The accompanying financial statements have been prepared on a going concern basis, based on the Company's accounting records in accordance with International Financial Reporting Standards(IFRS).
The adoption of the International Financial Reporting Standards (IFRS) as adopted by the European Union occurred for the first time in 2007 and as defined by IFRS 1 – 'First time adoption of International Financial Reporting Standards', 1 January 2006 was the date of transition from generally accepted accounting principles in Portugal to those standards.
For Sonaecom, there are no differences between IFRS as adopted by European Union and IFRS published by the International Accounting Standards Board, with the exception of the start dates of the adoption of the standards indicated below.
The following standards, interpretations, amendments and revisions have been approved (endorsed) by the European Union and have mandatory application to financial years beginning on or after 1 January 2013 and were first adopted in the year ended at 31 December 2013:
| STANDARD / INTERPRETATION | EFFECTIVE DATE (Annual periods beginning on or after) |
|---|---|
| IFRS 13 (Fair Value Measurement) |
1-Jan-13 |
| It will improve consistency and reduce complexity by providing, for the first time, a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. |
|
| IAS 12 - Amendments (Deferred tax: Recovery of Underlying Assets) |
1-Jan-12 (*) |
| The amendment introduces, in the case of investment properties measured using the fair value model, the presumption that recovery of the carrying amount will normally be through sale, in order to determine their tax impact. As a result of the amendments, SIC 21 - 'Income Taxes—Recovery |
properties carried at fair value. The amendments also incorporate into IAS 12 the remaining guidance previously contained in SIC-21, which is accordingly withdrawn. IAS 19 - Amendments 1-Jan-13
of Revalued Non-Depreciable Assets' would no longer apply to investment
| (Employee Benefits) | |||
|---|---|---|---|
The amendments make important improvements by eliminating an option to defer the recognition of gains and losses, known as the 'corridor method', improving comparability and faithfulness of presentation, streamlining the presentation of changes in assets and liabilities arising from defined benefit plans and enhancing the disclosure requirements for defined benefit plans.
| IAS 1 - Amendments | 1-Jul-12 |
|---|---|
| (Presentation of Items of Other | |
| Comprehensive Income) |
The amendments to IAS 1 require companies preparing financial statements in accordance with IFRSs to group together items within OCI.
| IFRS 7 - Admendments | 1-Jan-13 |
|---|---|
| (Disclosures od Financial Instruments) |
The amendments require additional disclosures regarding financial instruments, particularly, information about those subject to compensation agreements and similars.
| STANDARD / INTERPRETATION (continue) |
EFFECTIVE DATE (Annual periods beginning on or after) |
|---|---|
| IFRIC 20 (Stripping Costs in the Production Phase of a Surface Mine) |
1-Jan-13 |
| The Interpretation clarifies when production stripping should lead to the rec |
ognition of an asset and how that asset should be measured, both initially and in subsequent periods.
| IFRS 1 - Amendments | 1-Jan-13 |
|---|---|
| (Government Loans) |
The amendments referred to the Government Loans addresses how a firsttime adopters would account for a government loan with a below-market rate of interest when transitioning to IFRS and proposes to permit prospective application of IAS 20 requirements.
| Improvements to IFRS | 1-Jan-13 |
|---|---|
| (2009-2011) |
The IASB finalise its annual improvements publication corresponding to the 2009-2011 cycle including six amendments to five IFRSs. The annual improvements process provides a mechanism for non urgent but necessary amendments to International Financial Reporting Standards (IFRSs) to be grouped together and issued in one package.
| STANDARD / INTERPRETATION (continue) |
EFFECTIVE DATE (Annual periods beginning on or after) |
|---|---|
| Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) |
1-Jan-13 |
| The amendments clarify the transition guidance in IFRS 10 Consolidated Financial Statements and also provide additional transition relief in IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities, limiting the requirement to provide adjusted comparative information to only the preceding comparative period. Furthermore, for disclosures related to unconsolidated structured entities, the amendments will remove the |
(*) In accordance with the Regulation which approves the amendment to IAS 12, an entity shall use this standard no later than periods beginning on or after January 1, 2013. The early adoption is however permitted.
requirement to present comparative information for periods before IFRS 12
is first applied.
The application of these standards and interpretations had no material effect on the financial statements of the Company.
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 only in future financial years:
| STANDARD / INTERPRETATION | EFFECTIVE DATE (Annual periods beginning on or after) |
|---|---|
| IFRS 10 (Consolidated Financial Statements) |
1-Jan-13(**) |
Builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess.
| IFRS 11 | 1-Jan-13(**) |
|---|---|
| (Companies jointly controlled) |
Provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form (as is currently the case). The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in jointly controlled entities.
| STANDARD / INTERPRETATION | EFFECTIVE DATE (Annual periods beginning on or after) |
|---|---|
| IFRS 12 (Disclosures of Interests in Other Entities) |
1-Jan-13(**) |
| New and comprehensive standard on disclosure requirements for all forms |
of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles.
1-Jan-13(**)
| IAS 27 | |
|---|---|
| (Separate Financial Statements) |
Consolidation requirements previously forming part of IAS 27 have been revised and are now contained in IFRS 10 Consolidated Financial Statements.
| STANDARD / INTERPRETATION | EFFECTIVE DATE (Annual periods beginning on or after) |
|---|---|
| IAS 28 (Investments in Associates and Joint Ventures) |
1-Jan-13(**) |
| The objective of IAS 28 (as amended in 2011) is to prescribe the accounting for investments in associates and to set out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. |
|
| Amendments to IFRS 10, IFRS 12 and IAS 27 (Investment Entities); |
1-Jan-14 |
| The amendments apply to a particular class of business that qualify as investment entities. The admendments provide an exception to the consoli dation requirements in IFRS 10. |
|
| IAS 32- Admendments (Offsetting Financial Assets and Financial Liabilities) |
1-Jan-14 |
| IAS 32 is amended to refer to the disclosure requirements in respect of offsetting arrangements. |
|
| Amendments to IAS 36 (Recoverable amount disclosures for Non-Financial Assets) |
1-Jan-14 |
| The amendments introduce additional disclosures and clarify the disclo sures required when an asset is impaired and the recoverable amount of assets was based on Fair Value Less Cost of Disposal. |
|
| Amendments to IAS 39 (Novation of Derivatives and Continuation of Hedge Accounting) |
1-Jan-14 |
| The objective of the proposed amendments is to provide an exception to the requirement for the discontinuation of hedge accounting in IAS 39 and IFRS 9 in circumstances when a hedging instrument is required to be novated as a result of laws or regulations. |
|
| (**) In accordance with the EU Regulation which approves the adoption of IFRS 10, 11 and 12 and the amendments to IAS 27 and IAS 28, an entity shall adopt these standards in the periods beginning on or after January 1, 2014. The early adoption is however |
These standards, although endorsed by the European Union, were not adopted by the Company for the year ended at 31 December 2013, since their application is not yet mandatory.
permitted.
The application of these standards and interpretations, as applicable to the Company will have no material effect on future statements of the Company.
The following standards, interpretations, amendments and revisions have not yet been approved (endorsed) by the European Union, at the date of approval of these financial statements:
| STANDARD / INTERPRETATION | EFFECTIVE DATE (Annual periods beginning on or after) |
|---|---|
| IFRS 9 (Financial Instruments) and subsequent amendments |
1-Jan-15 |
| This standard is the first step in the project to replace IAS 39, and it introduces new requirements for classifying and measuring financial assets. Subsequent amendments refer to amendments to IFRS 9 and IFRS 7: Mandatory Effective Date and Transition Disclosures issued on 16 December 2011; Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39 issued on 19 November 2013) . |
|
| IAS 19 - Amendments (Defined Benefit Plans: Employee Contributions) |
1-Jul-14 |
| The objective of the amendments is to simplify the accounting for contributions that are independent of the number of years of employee service. |
|
| Annual Improvements to IFRSs 2010–2012 Cycle |
1-Jul-14 |
| Annual Improvements to IFRSs 2010–2012 Cycle is a collection of amendments to IFRSs in response to eight issues addressed during the 2010–2012 cycle for annual improvements to IFRSs. |
|
| Annual Improvements to IFRSs 2011–2013 Cycle |
1-Jul-14 |
| Annual Improvements to IFRSs 2011–2013 Cycle is a collection of amendments to IFRSs in response to four issues addressed during the 2011–2013 cycle for annual improvements to IFRSs. |
|
| IFRIC 21 Levies (Levies Charged by Public Authorities on Entities that Operate in a Specific Market) |
1-Jan-14 |
| This interpretation clarifies on when a liability to pay a levy imposed by a government (does not include income taxes - see IAS 12 Income taxes) should be recognised by an entity. IFRIC 21 identifies that the obligating event that gives rise to a liability is the activity that triggers the payment of the levy in accordance with the relevant legislation. |
These standards have not yet been approved ('endorsed') by the European Union and, as such, were not adopted by the Company for the year ended at 31 December 2013. Their application is not yet mandatory.
It is predicted that the application of these standards and interpretations, as applicable to the Company will have no material effect on future financial statements of the Company.
The accounting policies and measurement criteria adopted by the Company at 31 December 2013 are comparable with those used in the preparation of the individual financial statements at 31 December 2012.
The main accounting policies used in the preparation of the accompanying financial statements are as follows:
Tangible assets are recorded at their acquisition cost less accumulated depreciation and less estimated accumulated impairment losses.
Depreciations are calculated on a straight-line monthly basis as from the date the assets are available for use in the necessary conditions to operate as intended by the management, by a corresponding charge to the profit and loss statement caption 'Depreciation and amortisation'.
Impairment losses detected in the realisation value of tangible assets are recorded in the period in which they arise, by a corresponding charge to the caption 'Depreciation and amortisation' of the profit and loss statement.
The annual depreciation rates used correspond to the estimated useful life of the assets, which are as follows:
| YEARS OF USEFUL LIFE | |
|---|---|
| Buildings and others constructions – improvements in buildings owned by third parties |
4-20 |
| Plant and machinery | 5-6 |
| Fixtures and fittings | 3-8 |
| Vehicles | 4 |
Current maintenance and repair costs of tangible assets are recorded as costs in the period in which they occur. Improvements of significant amount, which increase the estimated useful life of the assets, are capitalised and depreciated in accordance with the estimated useful life of the corresponding assets.
Intangible assets are recorded at their acquisition cost less accumulated amortisation and less estimated accumulated impairment losses. Intangible assets are only recognised, if it is likely that they will bring future economic benefits to the Company, if the Company controls them and if their cost can be reliably measured.
Intangible assets correspond, essentially, to software and industrial property.
Amortisations are calculated on a straight-line monthly basis, over the estimated useful life of the assets (three to six years) as from the month in which the corresponding expenses are incurred.
Amortisation for the period is recorded in the profit and loss statement under the caption 'Depreciation and amortisation'.
Investments in companies in which the Company has direct or indirect voting rights at Shareholders' General Meetings in excess of 50% or in which it has control over the financial and operating policies are recorded under the caption 'Investments in Group companies', at their acquisition cost, in accordance with IAS 27, as Sonaecom presents, separately, consolidated financial statements in accordance with IAS / IFRS.
Loans and supplementary capital granted to affiliated companies with maturities, estimated or defined contractually, greater than one year, are recorded, at their nominal value, under the caption 'Other non-current assets'.
Investments and loans granted to Group companies are evaluated whenever an event or change of circumstances indicates that the recorded amount may not be recoverable or impairment losses recorded in previous years no longer exist.
Impairment losses estimated for investments and loans granted to Group companies are recorded, in the period that they are estimated, under the caption 'Other financial expenses' in the profit and loss statement.
The expenses incurred with the acquisition of investments in Group companies are recorded as cost when they are incurred.
Investments in Joint Ventures (companies in which the Company has, direct or indirect, 50% of the voting rights in the Shareholders' General Meeting of or in which it has the control over the financial and operating policies), are recorded under the caption 'Investments in joint ventures', at acquisition cost in accordance with IAS 27, as such, Sonaecom presents, separately, consolidated financial statements in accordance with IAS / IFRS.
Loans and supplementary capital granted to companies jointly controlled , with maturities, estimated or defined contractually, greater than one year, are recorded, at their nominal value, under the caption 'Other non-current assets'.
Investments and loans granted to joint ventures are evaluated whenever an event or change of circumstances indicates that the recorded amount may not be recoverable or impairment losses recorded in previous years no longer exist.
Impairment losses estimated for investments and loans granted to joint ventures are recorded, in the period that they are estimated, under the caption 'Other financial expenses' in the profit and loss statement.
The expenses incurred with the acquisition of investments in joint ventures are recorded as cost when they are incurred.
The Company classifies its financial instruments in the following categories: 'financial assets at fair value through profit or loss', 'loans and receivables', 'held-to-maturity investments', and 'available-for-sale financial assets'. The classification depends on the purpose for which the investments were acquired.
The classification of the investments is determined at the initial recognition and re-evaluated every quarter.
This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if it is acquired principally for the purpose of selling in the short term or if the adoption of this method allows reducing or eliminating an accounting mismatch. Derivatives are also registered as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to mature within 12 months of the balance sheet date.
Loans and receivables are non-derivative financial assets with fixed or variable payments that are not quoted in an active market. These financial investments arise when the Company provides money or services directly to a debtor with no intention of trading the receivable.
Loans and receivables are carried at amortised cost using the effective interest method, deducted from any impairment losses.
Loans and receivables are recorded as current assets, except when its maturity is greater than 12 months from the balance sheet date, a situation in which they are classified as noncurrent assets.
Held-to-maturity investments are non-derivative financial assets with fixed or variable payments and with fixed maturities that the Company's management has the positive intention and ability to hold until their maturity.
Available-for-sale financial assets are non-derivative investments that are either designated in this category or not classified in any of the other above referred categories. They are included in non-current assets unless management intends to dispose them within 12 months of the balance sheet date.
Purchases and sales of investments are recognised on tradedate – the date on which the Company commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. The 'Financial assets at fair value through profit or loss' are initially recognised at fair value and the transaction costs are recorded in the income statement. Investments are derecognised when the rights to receive cash flows from the investments have expired or transferred, and consequently all substantial risks and rewards of their ownership have been transferred.
'Available-for-sale financial assets' and 'Financial assets at fair value through profit or loss' are subsequently carried at fair value.
'Loans and receivables' and 'Held-to-maturity investments' are carried at amortised cost using the effective interest method.
Realised and unrealised gains and losses arising from changes in the fair value of financial assets classified at fair value through profit or loss are recognised in the income statement.
Realised and unrealised gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are recognised in equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the profit and loss statement as gains or losses from investment securities.
The fair value of quoted investments is based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Company establishes fair value by using valuation techniques. These include the use of recent arm's length transactions, reference to similar instruments, discounted cash flow analysis, and option pricing models refined to reflect the issuer's specific circumstances. If none of these valuation techniques can be used, the Company values these investments at acquisition cost net of any identified impairment losses. The fair value of listed investments is determined based on the closing Euronext share price at the balance sheet date.
The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In case of equity securities classified as available-for-sale, a significant decline (above 25%) or prolonged decline (during two consecutive quarters) in the fair value of the security below its cost is considered in determining whether the securities are impaired. If such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment losses on that financial asset previously recognised in the profit or loss statement – is removed from equity and recognised in the profit and loss statement. Impairment losses recognised in the profit and loss statement on equity securities are not reversed through the profit and loss statement.
Lease contracts are classified as financial leases, if, in substance, all risks and rewards associated with the detention of the leased asset are transferred by the lease contract or as operational leases, if, in substance, there is no transfer of risks and rewards associated with the detention of the leased assets.
The lease contracts are classified as financial or operational in accordance with the substance and not with the form of the respective contracts.
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 corresponding 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, interest included in lease payments and depreciation of the tangible assets are recognised as expenses in the profit and loss statement for the period to which they relate.
Assets under long-term rental contracts are recorded in accordance with the operational lease method. In accordance with this method, the rents paid are recognised as an expense, over the rental period.
Other current debtors are recorded at their net realisable value, and do not include interest, because the financial updated effect is not significant.
These financial investments arise when the Company provides money or services directly to a debtor with no intention of trading the receivable.
The amount relating to this caption is presented net of any impairment losses, which are recorded in the profit and loss statement under the caption 'Provisions and impairment losses'. Future reversals of impairment losses are recorded in the profit and loss statement under the caption 'Provisions and impairment losses'.
Amounts included under the caption 'Cash and cash equivalents' correspond to amounts held in cash and term bank deposits and other treasury applications where the risk of any change in value is insignificant.
The cash flow statement has been prepared in accordance with IAS 7 –'Statement of Cash Flow', using the direct method. The Company classifies, under the caption 'Cash and cash equivalents', investments that mature in less than three months, for which the risk of change in value is insignificant. The caption 'Cash and cash equivalents' in the cash flow statement also includes bank overdrafts, which are reflected in the balance sheet caption 'Short-term loans and other loans'.
The cash flow statement is classified by operating, financing and investing activities. Operating activities include payments to personnel and other captions relating to operating activities.
Cash flows from investing activities include the acquisition and sale of investments in associated and subsidiary companies and receipts and payments resulting from the purchase and sale of tangible assets.
Cash flows from financing activities include payments and receipts relating to loans obtained and finance lease contracts.
All amounts included under this caption are likely to be realised in the short term and there are no amounts given or pledged as guarantee.
Loans are recorded as liabilities by the 'amortised cost'. Any expenses incurred in setting up loans are recorded as a deduction to the nominal debt and recognised during the period of the financing, based on the effective interest rate method. The interests incurred but not yet due are added to the loans caption until their payment.
Financial expenses relating to loans obtained are generally recognised as expenses at the time they are incurred. 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.
The Company only uses derivatives in the management of its financial risks to hedge against such risks. The Company does not use derivatives for trading purposes.
The cash flow hedges used by the Company are related to:
In cases where the hedge instrument is not effective, the amounts that arise from the adjustments to fair value are recorded directly in the profit and loss statement.
At 31 of December 2013 and 2012, the Company did not have any derivative, beyond those mentioned in note 1.t).
Provisions are recognised when, and only when, the Company has a present obligation (either legal or implicit) resulting from a past event, the resolution of which is likely to involve the disbursement of funds by an amount that can be reasonably estimated.
Provisions are reviewed at the balance sheet date and adjusted to reflect the best estimate at that date.
Provisions for restructurings are only registered if the Company has a detailed plan and if that plan has already been communicated to the parties involved.
Contingent liabilities are not recognised in the financial statements but are disclosed in the notes, except if the possibility of a cash outflow affecting future economic benefits is remote.
Contingent assets are not recognised in the financial statements but are disclosed in the notes when future economic benefits are likely to occur.
'Income tax' expense represents the sum of the tax currently payable and deferred tax. Income tax is recognised in accordance with IAS 12 – 'Income Tax'.
Sonaecom has adopted, since 1 January 2008, the special regime for the taxation of groups of companies, under which, the provision for income tax is determined on the basis of the estimated taxable income of all the companies covered by that regime, in accordance with such rules. The special regime for the taxation of groups of companies covers all subsidiaries on which the group holds at least 90% of their share capital, with its headquarters located in Portugal and subject to Corporate Income Tax (IRC).
Deferred taxes are calculated using the liability method and reflect the timing differences between the amount of assets and liabilities for accounting purposes and the respective amounts for tax purposes.
Deferred tax assets are only recognised when there is reasonable expectation that sufficient taxable profits shall arise in the future to allow such deferred tax assets to be used. At the end of each period, the recorded and unrecorded deferred tax assets are revised and they are reduced whenever their realisation ceases to be probable, or increased if future taxable profits are likely enabling the recovery of such assets (note 9).
Deferred taxes are calculated with the tax rate that is expected to be in effect at the time the asset or liability is realized, based on the rates that have been enacted or substantially enacted at the balance sheet date.
Whenever deferred taxes derive from assets or liabilities directly registered in Shareholders' funds, its recording is also made under the Shareholders' funds caption. In all other situations, deferred taxes are always registered in the profit and loss statement.
Expenses and income are recorded in the period to which they relate, regardless of their date of payment or receipt. Estimated amounts are used when actual amounts are not known.
The captions 'Other non-current assets', 'Other current assets', 'Other non-current liabilities' and 'Other current liabilities' include expenses and income relating to the current period, where payment and receipt will occur in future periods, as well as payments and receipts in the current period but which relate to future periods. The latter shall be included by the corresponding amount in the results of the periods to which they relate to.
The costs attributable to current period and whose expenses will only occur in future periods are estimated and recorded under the caption 'Other current liabilities' and 'Other noncurrent liabilities', when it is possible to estimate reliably the amount and the timing of occurrence of the expense. If there is uncertainty regarding both the date of disbursement of funds, and the amount of the obligation, the value is classified as Provisions (note 1.l)).
Non-current financial assets and liabilities are recorded at fair value and, in each period, the financial actualisation of the fair value is recorded in the profit and loss statement under the captions 'Other financial expenses' and 'Other financial income'.
Dividends are recognised when the Shareholders' rights to receive such amounts are appropriately established and communicated.
Assets and liabilities due in more than one year from the date of the balance sheet are classified, respectively, as non-current assets and non-current liabilities.
In addition, considering their nature, the deferred taxes and the provisions for other liabilities and charges, are classified as non-current assets and liabilities (notes 9 and 16).
Portuguese commercial legislation requires that at least 5% of the 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 case of liquidation of the Company, but may be used to absorb losses, after all the other reserves are exhausted, or to increase the share capital.
The share premiums relate to premiums generated in the issuance of capital or in capital increases. According to Portuguese law, share premiums follow the same requirements of 'Legal reserves', ie, they are not distributable, except in case of liquidation, but they can be used to absorb losses, after all the other reserves are exhausted or to increase share capital.
According to IFRS 2 – 'Share based payment', the responsibility related with the equity settled plans is registered, as a credit, under the caption of Medium Term Incentive Plan Reserves, which are not distributable and which cannot be used to absorb losses.
Hedging reserve reflects the changes in fair value of 'cash flow' hedges derivatives that are considered effective (note 1.k) and it is non-distributable nor can it be used to absorb losses.
The own shares reserve reflects the acquisition value of the own shares and follows the same requirements of legal reserves.
Additionally, the increments resulting from the application of fair value through equity components, including its implementation through the net results, shall be distributed only when the elements that gave rise to them are sold, liquidated or exercised when they finish their use, in the case of tangible or intangible assets.
Therefore, at 31 December 2013, Sonaecom, SGPS, S.A., didn't have free reserves distributable.
Own shares are recorded as a deduction of Shareholders' funds. Gains or losses related to the sale of own shares are recorded under the caption 'Other reserves'.
All assets and liabilities expressed in foreign currency were translated into Euro using the exchange rates in force at the balance sheet.
Favourable and unfavourable foreign exchange differences resulting from changes in the rates in force at transaction date and those in force at the date of collection, payment or at the balance sheet date are recorded as income and expenses in the profit and loss statement of the period, in financial results.
The following rates were used for the translation into Euro:
| 2013 | 2012 | |||
|---|---|---|---|---|
| 31 December | Average | 31 December | Average | |
| Pounds Sterling | 1.1995 | 1.1780 | 1.2253 | 1.2337 |
| Swiss franc | 0.8146 | 0.8125 | 0.8284 | 0.8297 |
| Swedish krona | 0.1129 | 0.1156 | 0.1165 | 0.1149 |
| American Dollar | 0.7251 | 0.7533 | 0.7579 | 0.7787 |
Impairment tests are performed at the date of each balance sheet and whenever an event or change of circumstances indicates that the recorded amount of an asset may not be recoverable.
Whenever the book value of an asset is greater than the amount recoverable, an impairment loss is recognised and recorded in the profit and loss statement under the caption 'Depreciation and amortisation' in the case of fixed assets, under the caption 'Other financial expenses' in the case of financial investments or under the caption 'Provisions and impairment losses', in relation to the other assets. The amount recoverable is the greater of the net selling price and the value of use. Net selling price is the amount obtained upon the sale of an asset in a transaction within the capability of the parties involved, less the costs directly related to the sale. The value of use is the present amount of the estimated future cash flows expected to result from the continued use of the asset and of its sale at the end of its useful life. The recoverable amount is estimated for each asset individually or, if this is not possible, for the cash-generating unit to which the asset belongs.
For financial investments in Group companies, the recoverable amount, calculated in terms of value in use, is determined based on last business plans duly approved by the Board of Directors of the Company.
For financial investments in joint ventures, the recoverable amount is determinated taking into account with several information as business plans approved by the Board of Directors and the average ratings of external reviewers (researches).
Evidence of the existence of impairment in accounts receivables appears when:
The accounting treatment of Medium Term Incentive Plans is based on IFRS 2 – 'Share-based Payments'.
Under IFRS 2, when the settlement of plans established by the Company involves the delivery of Sonaecom's own shares, the estimated responsibility is recorded, as a credit entry, under the caption 'Reserves – Medium Term Incentive Plans', within the caption 'Shareholders' funds' and is charged as an expense under the caption 'Staff expenses' in the profit and loss statement.
The quantification of this responsibility is based on its fair value at the attribution date and is recognised over the vesting period of each plan (from the award date of the plan until its vesting or settlement date). The total responsibility, at any point in time, is calculated based on the proportion of the vesting period that has 'elapsed' up to the respective accounting date.
When the responsibilities associated with any plan are covered by a hedging contract, ie, when those responsibilities are replaced by a fixed amount payable to a third party and when Sonaecom is no longer the party that will deliver the Sonaecom shares, at the settlement date of each plan, the above accounting treatment is subject to the following changes:
For plans settled in cash, the estimated liability is recorded under the balance sheet captions 'Other non-current liabilities' and 'Other current liabilities' by a corresponding entry to the income statement caption 'Staff expenses', for the cost relating to the vesting period that has 'elapsed' up to the respective accounting date. The liability is quantified based on the fair value of the shares as of each balance sheet date.
When the liability is covered by a hedging contract, recognition is made in the same way as described above, but with the liability being quantified based on the contractually fixed amount.
Equity-settled plans to be liquidated through the delivery of shares of the parent company are recorded as if they were settled in cash, which means that the estimated liability is recorded under the balance sheet captions 'Other non-current liabilities' and 'Other current liabilities' by a corresponding entry to the income statement caption 'Staff expenses', for the cost relating to the deferred period elapsed. The liability is quantified based on the fair value of the shares as of each balance sheet date.
For 2011 Sonaecom shares plan, the Company signed with Sonae-SGPS, S.A., a contract that agrees to the transfer of Sonaecom, SGPS, S.A. shares for employees and board members of the Group as requested by Sonaecom and under the MTIP of Sonaecom and fixed the shares' acquisition price. The remaining Sonaecom share plans are covered through the detention of own shares. The impacts associated to the Medium Term Incentive Plans are registered, in the balance sheet, under the caption 'Medium Term Incentive Plans Reserve'. The cost is recognized under the profit and loss statement caption 'Staff expenses'.
Regarding the plans liquidated through the delivery of shares of the parent company, the company entered into hedging contracts with an external entity under which the acquisition price of those shares was fixed. Therefore, the responsibility is recorded based on that fixed price, proportionally to the period of time elapsed since the award date until the date of record, under the captions 'Other non-current liabilities' and 'Other current liabilities'. The cost is recognized on the income statement under the caption 'Staff expenses'.
Events occurring after the date of the balance sheet which provide additional information about conditions prevailing at the time of the balance sheet (adjusting events) are reflected in the financial statements. Events occurring after the balance sheet date that provide information on post-balance sheet conditions (non-adjusting events), when material, are disclosed in the notes to the financial statements.
The most significant accounting estimates reflected in the financial statements of the years ended at 31 December 2013 and 2012 include mainly impairment analysis of assets, particularly financial investments in Group companies.
Estimates used are based on the best information available during the preparation of financial statements and are based on the best knowledge of past and present events. Although future events are not controlled by the Company neither foreseeable, some could occur and have impact on the estimates. Changes to the estimates used by the management that occur after the approval date of these financial statements, will be recognised in net income, in accordance with IAS 8 – 'Accounting Policies, Changes in Accounting Estimates and Errors', using a prospective methodology.
The main estimates and assumptions in relation to future events included in the preparation of financial statements are disclosed in the respective notes.
The Company's activities expose it to a variety of financial risks such as market risk, liquidity risk and credit risk.
These risks arise from the unpredictability of financial markets, which affect the capacity to project cash flows and profits. The Company's financial risk management, subject to a long-term ongoing perspective, seeks to minimise potential adverse effects that derive from that uncertainty, using, every time it is possible and advisable, derivative financial instruments to hedge the exposure to such risks (note 1.k).
The Company is also exposed to equity price risks arising from equity investments, although they are usually maintained for strategic purposes.
Foreign exchange risk management seeks to minimise the volatility of investments and transactions made in foreign currency and contributes to reduce the sensitivity of results to changes in foreign exchange rates.
Whenever possible, the Company uses natural hedges to manage exposure, by offsetting credits granted and credits received expressed in the same currency. When such procedure is not possible, the Company adopts derivative financial hedging instruments (note 1. k).
Considering the reduced values of assets and liabilities in foreign currency, the impact of a change in exchange rate will not have significant impacts on the financial statements.
Sonaecom's total debt is indexed to variable rates, exposing the total cost of debt to a high risk of volatility. The impact of this volatility in the Company results or in its Shareholders´ funds is mitigated by the effect of the following factors: (i) relatively low level of financial leverage; (ii) possibility to use derivative instruments that hedge the interest rate risk, as mentioned below; (iii) possible correlation between the level of market interest rates and economic growth the latter having a positive effect in other lines of the Company's results, and in this way partially offsetting the increase of financial costs ('natural hedge'); and (iv) the existence of stand alone or consolidated liquidity which is also bearing interest at a variable rate.
The Company only uses derivatives or similar transactions to hedge interest rate risks considered significant. Three main principles are followed in all instruments selected and used to hedge interest rate risk:
As all Sonaecom's borrowings (note 15) are at variable rates, interest rate swaps and other derivatives are used to hedge future changes in cash flow relating to interest payments, when it is considered necessary. Interest rate swaps have the financial effect of converting the respective borrowings from floating rates to fixed rates. Under the interest rate swaps, the Company agrees with third parties (banks) to exchange, in pre-determined periods, the difference between the amount of interest calculated at the fixed contract rate and the floating rate at the time of re-fixing, by reference to the respective agreed notional amounts.
The counterparties of the derivative hedging instruments are limited to highly rated financial institutions, being the Company's policy, when contracting such instruments, to give preference to financial institutions that form part of its financing transactions.
In order to select the counterparty for occasional operations, Sonaecom requests proposals and indicative prices from a representative number of banks in order to ensure adequate competitiveness of these operations.
In determining the fair value of hedging operations, the Company uses certain methods, such as option valuation and discounted future cash flow models, using assumptions based on market interest rates prevailing at the balance sheet date. Comparative financial institution quotes for the specific or similar instruments are used as a benchmark for the valuation.
The fair value of the derivatives contracted, that are considered as fair value hedges or the ones that are considered not sufficiently effective for cash flow hedge (in accordance with the provisions established in IAS 39 – 'Financial Instruments'), are recognised under borrowings captions and changes in the fair value of such derivatives are recognised directly in the profit and loss statement for the period. The fair value of derivatives of cash flow hedge, that are considered effective according to IAS 39 – 'Financial Instruments', are recognised under borrowing captions and changes in the fair value are recognised in equity.
Sonaecom's Board of Directors approves the terms and conditions of the financing with significant impact in the Company, based on the analysis of the debt structure, the risks and the different options in the market, particularly as to the type of interest rate (fixed / variable). Under the policy defined above, the Executive Committee is responsible for the decision on the occasional interest rate hedging contracts, through the monitoring of the conditions and alternatives existing in the market.
The existence of liquidity in the Company requires the definition of some policies for an efficient and secure management of the liquidity, allowing us to maximise the profitability and to minimise the opportunity costs related with that liquidity.
The liquidity risk management has a threefold objective: (i) Liquidity, ie, to ensure the permanent access in the most efficient way to obtain sufficient funds to settle current payments in the respective dates of maturity as well as any eventual not forecasted requests for funds, in the deadlines set for this; (ii) Safety, ie, to minimise the probability of default in any reimbursement of application of funds; and (iii) Financial efficiency, ie, to ensure that the Company maximises the value / minimise the opportunity cost of holding excess liquidity in the short term.
The main underlying policies correspond to the variety of instruments allowed, the maximum acceptable level of risk, the maximum amount of exposure by counterparty and the maximum periods for investments.
The existing liquidity should be applied to the alternatives and by the order described below:
(i) Amortisation of short-term debt – after comparing the opportunity cost of amortisation and the opportunity cost related to alternative investments;
The applications in the market are limited to eligible counterparties, with ratings previously established by the Board and limited to certain maximum amounts by counterparty.
The definition of maximum amounts intends to assure that the application of liquidity in excess is made in a prudent way and taking into consideration the best practices in terms of bank relationships.
The maturity of applications should equalise the forecasted payments (or the applications should be easily convertible, in case of asset investments, to allow urgent and not estimated payments), considering a threshold for eventual deviations on the estimates. The threshold depends on the accuracy level of treasury estimates and would be determined by the business. The accuracy of the treasury estimates is an important variable to quantify the amounts and the maturity of the applications in the market.
The maturity of each class of financial liabilities is presented in note 15.
The Company's exposure to credit risk is mainly associated with the accounts receivable related to current operational activities. The credit risk associated to financial operations is mitigated by the fact that the Company only negotiates with entities with high credit quality.
The management of this risk seeks to guarantee that the amounts owing are effectively collected within the periods negotiated without affecting the financial health of the Company.
The amounts included in the financial statements related to other current debtors, net of impairment losses, represent the maximum exposure of the Company to credit risk.
The movement in tangible assets and in the corresponding accumulated depreciation and impairment losses in the years ended at 31 December 2013 and 2012 was as follows:
| 2013 | |||||||
|---|---|---|---|---|---|---|---|
| Buildings and other constructions |
Plant and machinery |
Vehicles | Tools | Fixtures and fittings |
Other tangible assets |
Total | |
| Gross assets | |||||||
| Balance at 31 December 2012 | 722,909 | 46,685 | - | 171 | 333,756 | 104 | 1,103,625 |
| Additions | - | - | 22,060 | - | 3,669 | - | 25,729 |
| Disposals | (373,995) | (2,827) | - | - | (94,707) | - | (471,529) |
| Balance at 31 December 2013 | 348,914 | 43,858 | 22,060 | 171 | 242,718 | 104 | 657,825 |
| Accumulated depreciation and impairment losses | |||||||
| Balance at 31 December 2012 | 486,209 | 40,497 | - | 171 | 280,140 | 104 | 807,121 |
| Depreciation for the year | 38,653 | 5,207 | 2,298 | - | 17,185 | - | 63,343 |
| Disposals | (198,924) | (2,061) | - | - | (64,364) | - | (265,349) |
| Balance at 31 December 2013 | 325,938 | 43,643 | 2,298 | 171 | 232,961 | 104 | 605,115 |
| Net value | 22,976 | 215 | 19,762 | - | 9,757 | - | 52,710 |
| 2012 | |||||||
|---|---|---|---|---|---|---|---|
| Buildings and other constructions |
Plant and machinery |
Vehicles | Tools | Fixtures and fittings |
Other tangible assets |
Total | |
| Gross assets | |||||||
| Balance at 31 December 2011 | 721,165 | 46,325 | - | 171 | 333,757 | 104 | 1,101,522 |
| Additions | 1,744 | 360 | - | - | - | - | 2,104 |
| Disposals | - | - | - | - | (1) | - | (1) |
| Balance at 31 December 2012 | 722,909 | 46,685 | - | 171 | 333,756 | 104 | 1,103,625 |
| Accumulated depreciation and impairment losses | |||||||
| Balance at 31 December 2011 | 444,736 | 33,182 | - | 171 | 262,282 | 104 | 740,475 |
| Depreciation for the year | 41,473 | 7,315 | - | - | 17,859 | - | 66,647 |
| Disposals | - | - | - | - | (1) | - | (1) |
| Balance at 31 December 2012 | 486,209 | 40,497 | - | 171 | 280,140 | 104 | 807,121 |
| Net value | 236,700 | 6,188 | - | - | 53,616 | - | 296,504 |
The movement in intangible assets and in the corresponding accumulated amortisation and impairment losses in the years ended at 31 December 2013 and 2012, was as follows:
| 2013 | ||||
|---|---|---|---|---|
| Brands, patents and other rights |
Software | Intangible assets in progress |
Total | |
| Gross assets | ||||
| Balance at 31 December 2012 | 9,719 | 190,031 | 2,373 | 202,123 |
| Transfers | - | 2,373 | (2,373) | - |
| Balance at 31 December 2013 | 9,719 | 192,404 | - | 202,123 |
| Accumulated amortisation and impairment losses | ||||
| Balance at 31 December 2012 | 9,339 | 183,474 | - | 192,813 |
| Amortisation for the year | 380 | 1,838 | - | 2,218 |
| Balance at 31 December 2013 | 9,719 | 185,312 | - | 195,031 |
| Net value | - | 7,092 | - | 7,092 |
| 2012 | ||||
|---|---|---|---|---|
| Brands, patents and other rights |
Software | Intangible assets in progress |
Total | |
| Gross assets | ||||
| Balance at 31 December 2011 | 9,719 | 183,623 | - | 193,342 |
| Additions | - | 6,408 | 2,373 | 8,781 |
| Balance at 30 December 2012 | 9,719 | 190,031 | 2,373 | 202,123 |
| Accumulated amortisation and impairment losses | ||||
| Balance at 31 December 2011 | 8,316 | 182,741 | - | 191,057 |
| Amortisation for the year | 1,023 | 733 | - | 1,756 |
| Balance at 31 December 2012 | 9,339 | 183,474 | - | 192,813 |
| Net value | 380 | 6,557 | 2,373 | 9,310 |
At 31 December 2013 and 2012, the breakdown of financial instruments was as follows:
| 2013 | ||||||
|---|---|---|---|---|---|---|
| Loans and receivables |
Financial assets at fair value through profit or loss |
Other financial assets |
Subtotal | Others not covered by IFRS 7 |
Total | |
| Non-current assets | ||||||
| Other non-current assets (note 8) | 175,735,246 | - | - | 175,735,246 | - | 175,735,246 |
| 175,735,246 | - | - | 175,735,246 | - | 175,735,246 | |
| Current assets | ||||||
| Financial assets at fair value through profit or loss (note 7) |
- | 202,442,350 | - | 202,442,350 | - | 202,442,350 |
| Other trade debtors (note 10) | 17,119,404 | - | - | 17,119,404 | 2,643,926 | 19,763,330 |
| Other current assets (note 11) | - | - | 379,145 | 379,145 | 136,084 | 515,229 |
| Cash and cash equivalents (note 12) | 185,918,581 | - | - | 185,918,581 | - | 185,918,581 |
| 203,037,985 | 202,442,350 | 379,145 | 405,859,480 | 2,780,010 | 408,639,490 |
| 2012 | ||||||
|---|---|---|---|---|---|---|
| Loans and receivables |
Financial assets at fair value through profit or loss |
Other financial assets |
Subtotal | Others not covered by IFRS 7 |
Total | |
| Non-current assets | ||||||
| Other-non current assets (note 8) | 521,421,792 | - | - | 521,421,792 | - | 521,421,792 |
| 521,421,792 | - | - | 521,421,792 | - | 521,421,792 | |
| Current assets | ||||||
| Other trade debtors (note 10) | 7,593,137 | - | - | 7,593,137 | 2,522,105 | 10,115,242 |
| Other current assets (note 11) | - | - | 3,559,169 | 3,559,169 | 128,470 | 3,687,639 |
| Cash and cash equivalents (note 12) | 103,717,414 | - | - | 103,717,414 | - | 103,717,414 |
| 111,310,551 | - | 3,559,169 | 114,869,720 | 2,650,575 | 117,520,295 |
| 2013 | |||||
|---|---|---|---|---|---|
| Liabilities recorded at amortised cost |
Other financial liabilities |
Subtotal | Others not covered by IFRS 7 |
Total | |
| Non-current liabilities | |||||
| Medium and long-term loans – net of short-term portion (note 15) |
20,003,496 | - | 20,003,496 | - | 20,003,496 |
| Other non-current liabilities (note 17) | - | - | - | 370,948 | 370,948 |
| 20,003,496 | - | 20,003,496 | 370,948 | 20,374,444 | |
| Current liabilities | |||||
| Short-term loans and other loans (note 15) | 21,660,813 | - | 21,660,813 | - | 21,660,813 |
| Other creditors (note 18) | - | 7,199,301 | 7,199,301 | 108,972 | 7,308,273 |
| Other current liabilities (note 19) | - | 2,711,843 | 2,711,843 | 334,477 | 3,046,320 |
| 21,660,813 | 9,911,144 | 31,571,957 | 443,449 | 32,015,406 |
| 2012 | |||||
|---|---|---|---|---|---|
| Liabilities recorded at amortised cost |
Other financial liabilities |
Subtotal | Others not covered by IFRS 7 |
Total | |
| Non-current liabilities | |||||
| Medium and long-term loans – net of short-term portion (note 15) |
190,239,630 | - | 190,239,630 | - | 190,239,630 |
| Other non-current liabilities (note 17) | - | - | - | 174,176 | 174,176 |
| 190,239,630 | - | 190,239,630 | 174,176 | 190,413,806 | |
| Current liabilities | |||||
| Short-term loans and other loans (note 15) | 186,419,026 | - | 186,419,026 | - | 186,419,026 |
| Other creditors (note 18) | - | 727,186 | 727,186 | 101,075 | 828,261 |
| Other current liabilities (note 19) | - | 778,388 | 778,388 | 236,486 | 1,014,874 |
| 186,419,026 | 1,505,574 | 187,924,600 | 337,561 | 188,262,161 |
Considering the nature of the balances, the amounts to be paid and received to / from 'State and other public entities', as well as the specialized costs with share plans were considered outside the scope of IFRS 7. Also, the deferred income and deferred costs under the captions 'Other current assets', 'Other current liabilities' , Other non-current assets' and 'Other non-current liabilities' were considered as non-financial instrument.
The Sonaecom's Board of Directors believes that, the fair value of the breakdown of financial instruments recorded at amortised cost or registered at the present value of the payments does not differ significantly from their book value. This decision is based in the contractual terms of each financial instrument.
At 31 December 2013 and 2012, this caption included the following investments in Group companies:
| COMPANY | 2013 | 2012 |
|---|---|---|
| Sonaetelecom BV | 75,009,902 | 75,009,902 |
| Sonae com – Sistemas de Informação, SGPS, S.A. ('Sonae com SI') | 52,241,587 | 52,241,587 |
| Sonaecom BV | 25,020,000 | 25,020,000 |
| PCJ - Público, Comunicação e Jornalismo, S.A. ('PCJ') | 11,176,547 | 3,551,772 |
| Público - Comunicação Social, S.A. ('Público') | 10,227,595 | 3,738,230 |
| Miauger – Organização e Gestão de Leilões Electrónicos, S.A. ('Miauger') | 5,714,245 | 4,568,100 |
| Sonaecom - Serviços Partilhados, S.A. ('Sonaecom SP')* | 50,000 | 50,000 |
| OPTIMUS, SGPS, S.A. ('Optimus SGPS')** | - | 1,005,866,218 |
| 179,439,876 | 1,170,045,809 | |
| Impairment losses (note 16) | (112,859,590) | (97,197,713) |
| Total investments in Group companies | 66,580,286 | 1,072,848,096 |
* Company established in the exercise 2012.
** This company changed its name from Sonae Telecom, SGPS, S.A., to OPTIMUS, SGPS, S.A., on October 2012
The movements that occurred in investments in this caption during the years ended at 31 December 2013 and 2012 were as follows:
| COMPANY | BALANCE AT 31 DECEMBER 2012 |
ADDITIONS | DISPOSALS | TRANSFERS AND WRITE-OFFS |
BALANCE AT 31 DECEMBER 2013 |
|---|---|---|---|---|---|
| Optimus SGPS | 1,005,866,218 | - | (1,005,866,218) | - | - |
| Sonaetelecom BV | 75,009,902 | - | - | - | 75,009,902 |
| Sonaecom SI | 52,241,587 | - | - | - | 52,241,587 |
| Sonaecom BV | 25,020,000 | - | - | - | 25,020,000 |
| Miauger | 4,568,100 | 1,146,145 | - | - | 5,714,245 |
| Público | 3,738,230 | 6,489,365 | - | - | 10,227,595 |
| PCJ | 3,551,772 | 7,624,775 | - | - | 11,176,547 |
| Sonaecom Sp | 50,000 | - | - | - | 50,000 |
| 1,170,045,809 | 15,260,285 | (1,005,866,218) | - | 179,439,876 | |
| Impairment losses (note 16) | (97,197,713) | (15,661,877) | - | - | (112,859,590) |
| 1,072,848,096 | (401,592) | (1,005,866,218) | - | 66,580,286 |
| COMPANY | BALANCE AT 31 DECEMBER 2011 |
ADDITIONS | DISPOSALS | TRANSFERS AND WRITE-OFFS |
BALANCE AT 31 DECEMBER 2012 |
|---|---|---|---|---|---|
| Optimus SGPS | 107,289,987 | 898,576,231 | - | - | 1,005,866,218 |
| Sonaetelecom BV | 75,009,902 | - | - | - | 75,009,902 |
| Sonae com SI | 52,241,587 | - | - | - | 52,241,587 |
| Sonaecom BV | 25,020,000 | - | - | - | 25,020,000 |
| Miauger | 4,568,100 | - | - | - | 4,568,100 |
| Público | 494,495 | 3,243,735 | - | - | 3,738,230 |
| PCJ | 50,000 | 3,501,772 | - | - | 3,551,772 |
| Sonaecom SP | - | 50,000 | - | - | 50,000 |
| Optimus | 898,576,231 | - | (898,576,231) | - | - |
| Be Artis | 8,230,885 | 14,943,304 | (23,174,189) | - | - |
| Sontária | 6,120,239 | - | (6,120,239) | - | - |
| 1,177,601,426 | 920,315,042 | (927,870,659) | - | 1,170,045,809 | |
| Impairment losses (note 16) | (80,122,497) | (10,681,481) | - | (6,393,735) | (97,197,713) |
| 1,097,478,929 | 909,633,561 | (927,870,659) | (6,393,735) | 1,072,848,096 |
Following the announcement made, on 14 December 2012, between Sonaecom, SGPS, S.A., Kento Holding Limited and Jadeium BV (currently named Unitel International Holdings, BV, collectively referred to as 'Kento/Jadeium'), of having reached an agreement to recommend to the Boards of Zon Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. ('Zon') and Optimus SGPS, SA a merger between the two companies, on 11 January 2013, Sonaecom, SGPS, S.A. ('Sonaecom') carried out a capital increase in kind, transferring 81.807% of its financial participation in Optimus SGPS, S.A. to ZOPT,SGPS, S.A. (vehicle used for this purpose), conditional upon completion of the merger.
Thus, following the above mentioned agreement, on 27 August 2013, and after fulfilling all the remedies required to the operation, the merger was closed. Sonaecom considers this to be the date on which Zopt took control of Zon Optimus. Accordingly, in the same day, it was registered the capital increase in kind with the transference of 81.807% Sonaecom's financial participation in Optimus SGPS, S.A. to ZOPT,SGPS, S.A ('Zopt') (note 6). As a consequence, Sonaecom held a 50% stake in Zopt, as well as shareholder loans to be received from Zopt amounting to Euro 230 million (note 8), which would later be converted on supplementary capital and reduced to Euro 115 million (notes 8 and 23). Additionally, the remaining stake of 18.193% in Optimus SGPS, was converted into a minority stake of 7.28% in Zon Optimus (note 7).
Resulting from a 'Shareholders Agreement' between the parties involved in the merger, Sonacom and Kento/Jadeium Group agreed not to acquire any shares of Zon Optimus, with the exception of the shares acquired by Sonaecom as a result of the operation.
For this reason, the 'Shareholders Agreement' also foresees that after 2 years from the date of the formal closing of the merger, and for a period of three months, the Group Kento / Jadeium may exercise a call option over half of the shares of Zon Optimus that Sonaecom holds at the date of the exercise of call option, at a price equal to the weighted average price of the previous month.
After the share capital increase of Zopt and the closing of the merger between Optimus SGPS and Zon, Sonaecom derecognised an investment in Optimus SGPS amounting to Euro 1,006 million and the supplementary capital amounting to Euro 144.6 million (note 8). Sonaecom has also recognized an investment in Zopt amounting to Euro 598 million 11 (note 6), loans to be received from Zopt amounting Euro 230 million and an investment registered at fair value through Zon Optimus shares (the conversion of 20,921,650 Optimus SGPS shares, representing 18.193% of the share capital, to 37,489,324 Zon Optimus shares, representing 7.28% of the share capital), at the market price of 27 August 2013 (date of the closing of the merger), amounting to Euro 156 million (note 7).
Thus, as a result of the derecognition of the financial investment in Optimus SGPS, the recognition of the investments in Zopt and Zon Optimus, and the loans to be received from Zopt, it was registered a capital loss of 167 million euros (note 23).
In the year ended at 31 December 2013, the amounts of Euro 7,624,775 and Euro 6,489,365 under the caption 'Additions' in PCJ and Público, respectively, relates to increases of share capital and the amount of Euro 1,146,145 in Miauger relates to an increase of capital to cover losses.
Considering that this increase has been offset by an equal decrease in 'Other non-current assets' (note 8), the net exposure to these investments did not change in the year ended at 31 December 2013.
In the years ended at 31 December 2012, Sonaecom sold the entire share capital of its subsidiaries Be Artis and Sontária to Optimus SGPS, a company fully owned by Sonaecom at that date. The participations were sold for the amount of Euro 456 million and Euro 9 million respectively, including share capital, loans and supplementary capital (note 8), generating a loss of circa Euro 363 thousand (note 23).
1 The Zopt participation of 598 million euros (598 = ((2.850 X 50,01% )-230)X 50%) results from the valuation of Zon Optimus, amounting to 2,850 million euros. This corresponds to the sum of the valuation of the capital increase in Zopt by Zon and Optimus in 1,500 million euros and 1,000 million euros, respectivetly (the valuation was made by the entities involved in the capital increase and the merger project) and the minimum synergies estimated, disclosed in the merger project in the amount of 350 million euros, deducted from loans totaling 230 million euros (level 3 of inputs in the hierarchy of fair value). It was decided that Zon market price at the date of the closing of the merger didn't reflected the fair value of Zon Optimus (the argument for not using the Zon share price at the date of the close of the merger, as abovementioned, is proven by the positive evolution of Zon Optimus share price since the date of the merger until the date of this document (2,782 million euros versus 2,141, price at 27 August 2013, merger date). For this reason, the market capitalization of Zon was not considered as a reference for valuing the Zopt investment. The valuation of Zon and Optimus was based on internally and analysts' projections, regarding the main economic indicators, including operating results and investment. For this purpose, was used a weighted average cost of capital of 9.5% and growth rate of 3%.
In the year ended at 31 December 2012, the amounts of Euro 14,943,304, Euro 3,243,735 and Euro 3,501,772 under the caption 'Additions' in Be Artis, Público and PCJ, respectively, relates to an increase of capital to cover losses. The amount of Euro 50,000 under the caption 'Additions' at Sonaecom SP, relates to the constitution of Sonaecom Serviços Partilhados, S.A., wholly owned by Sonaecom.
The variation in 'Impairment losses', in the years ended at 31 December 2013, result from the increase made in the amount of Euro 823,138 (note 16) and the disposals of Euro 14,838,739 offset by the increased to the caption 'Other non-current assets' (note 8 and 16). In the year ended at 31 December 2012, the variation in 'Impairment losses' result, mainly, from the increased of Euro 10.681.481 (note 16) and from the transfer of Euro 6,393,735 to the caption 'Other non-current assets' (note 8).
In December 2012, the additions and disposals occurred in Optimus SGPS and Optimus, respectively, are referred to Optimus SGPS capital increase. This capital increase was fully subscribed by Sonaecom, through contributions in kind, specifically the delivery of 64.14% of the share capital of Optimus – Comunicações, S.A. Following this transaction, Optimus SGPS (wholly owned by Sonaecom at that date) holds the entire capital of Optimus – Comunicações, S.A. .
The Company presents separate consolidated financial statements at 31 December 2013, in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, which presents total consolidated assets of Euro 1,227,050,150 total consolidated liabilities of Euro 90,290,618, consolidated operational revenues of Euro 120,449,875 and consolidated Shareholders' funds of Euro 1,136,759,532 including a consolidated net profit (attributable to the Shareholders of the parent company – Sonaecom, SGPS, S.A.) for the year ended at 31 December 2013 of Euro 103,838,479.
| 2013 | 2012 | ||||||
|---|---|---|---|---|---|---|---|
| Company | Head office | % holding | Shareholders' funds |
Net profit / (loss) |
% holding | Shareholders' funds |
Net profit / (loss) |
| ZOPT (a) (note 6) | Matosinhos | 50% | 1,249,937,792 | (292,208) | 50% | 50,000 | - |
| Sonae com SI | Maia | 100% | 86,001,299 | 1,449,651 | 100% | 84,556,648 | 35,642,169 |
| Sonaecom BV | Amsterdam | 100% | 14,961,401 | 381,558 | 100% | 14,579,843 | (84,077) |
| PCJ | Maia | 100% | 1,239,445 | (674,010) | 100% | 1,913,455 | (7,624,773) |
| Sonaetelecom BV | Amsterdam | 100% | 1,617,430 | 1,557 | 100% | 1,615,873 | 3,246 |
| Miauger | Maia | 100% | 221,974 | (826,880) | 100% | 218,854 | (8,512) |
| Sonaecom SP | Maia | 100% | 83,316 | 33,280 | 100% | 50,035 | 35 |
| Público | Maia | 100% | 169,234 | (2,063,171) | 100% | 1,392,405 | (6,489,365) |
| Optimus SGPS | Maia | - | - | - | 100% | 977,500,092 | 40,948,331 |
At 31 December 2013 and 2012, the main financial information regarding the subsidiaries and joint ventures directly owned by the company is, as follows (values in accordance with IFRS):
(a) Company established in December 2012
The evaluation of the existence of impairment losses for the main investments in the Group companies in joint ventures is made by taking into account the cash-generating units, based on most up-to-date business plans duly approved by their Board of Directors, which are made on an annual basis unless there is evidence of impairment and prepared according to projected cash flows for periods of five years. In the area of information systems, the assumptions used are essentially based on the various businesses of the Group and the growth of the several geographic areas where the Group operates. The discount rates used were based on the estimated weighted average cost of capital, which depends on the business segment of each subsidiary, and are as indicated in the table below. In perpetuity, is considered a growth rate of circa 3% in the area of information systems. In situations where the measurement of the existence, or not, of impairment is made based on the net selling price, values of similar transactions and other proposals made are used. Regarding the area of telecommunications (Zopt), the assessment of whether or not the impairment is determinated taking into account with several information as business plans approved by the Board of Directors and the average ratings of external reviewers (researches).
| INFORMATION SYSTEMS | MULTIMEDIA | TELECOMMUNICATIONS | |
|---|---|---|---|
| Assumptions | |||
| Basis of recoverable amount | Value in use | Value in use | Value in use |
| Discount rate | 13.0% | 12.0% | 9.0% |
| Growth rate in perpetuity | 3.0% | 0.0% | 2.0% |
At 31 December 2013 e 2012, this caption included the following investments in joint ventures:
| COMPANY | 2013 | 2012 |
|---|---|---|
| ZOPT, SGPS, S.A. ('ZOPT') * | 597,666,944 | 25,000 |
*Company established in December 2012
The movements that occurred in this caption during the years ended at 31 December 2013 and 2012 were as follows:
| COMPANY | BALANCE AT 31 DECEMBER 2012 |
ADDITIONS (note 5) |
DISPOSALS | TRANSFERS AND WRITE-OFFS |
BALANCE AT 31 DECEMBER 2013 |
|---|---|---|---|---|---|
| ZOPT | 25,000 | 597,641,944 | - | - | 597,666,944 |
In August 2013, Sonaecom Group began to hold Zon Optimus shares recorded at fair value through profit or loss, as a result of the merger between Optimus SGPS and Zon (note 5), since it is the initial classification of an asset held for a sale purpose in a shorttime (note 32). In accordance with the 'Shareholders Agreement', these shares neither concedes any additional vote right or affect the shared control situation with Zon Optimus.
The movements occurred in this caption during the year ended at 31 December 2013, were as follows:
| 2013 | |||||
|---|---|---|---|---|---|
| Financial assets at fair value through profit or loss | OPENING BALANCE |
INCREASES | DECREASES | FAIR VALUE ADJUSTMENTS |
CLOSING BALANCE |
| Zon Optimus | - | 155,805,631 | - | 46,636,719 | 202,442,350 |
The fair value adjustments are recorded under the caption 'Gains and losses on Group companies' in Profit and Loss Statement (note 23).
The evaluation of fair value of the investment is detail as follows:
| 2013 | |
|---|---|
| Shares (7.28%) | 37,489,324 |
| Level of inputs in the hierarchy of fair value | Level 1 |
| Valuation method | Quoted price on the stock exchange |
| Quoted price* | 5.4 |
| Fair value | 202,442,350 |
* Used the share price of 31 December 2013 in the determination of the fair value.
This investment was classified as a current asset, following the launching by Sonaecom, of the partial and voluntary offer for the acquisition of own shares (note 32).
At 31 December 2013 and 2012, this caption was made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Financial assets | ||
| Medium and long-term loans granted: | ||
| Sonae com SI | 15,655,000 | 15,815,000 |
| PCJ | 4,610,000 | 4,690,000 |
| Público | 1,780,000 | - |
| Optimus SGPS | - | 312,850,000 |
| Sonaecom BV | - | 2,075,000 |
| 22,045,000 | 335,430,000 | |
| Supplementary capital: | ||
| Zopt | 115,000,000 | - |
| Sonae com SI | 39,951,792 | 39,951,792 |
| Público | 2,182,405 | 7,821,770 |
| PCJ | 1,863,455 | 9,488,228 |
| Miauger | 988,853 | 1,305,000 |
| Optimus SGPS | - | 144,630,000 |
| 159,986,505 | 203,196,790 | |
| 182,031,505 | 538,626,790 | |
| Accumulated impairment losses (note 16) | (6,296,259) | (17,204,998) |
| 175,735,246 | 521,421,792 |
During the years ended at 31 December 2013 and 2012, the movements that occurred in 'Medium and long-term loans granted' to Group companies and joint ventures were as follows:
| 2013 | |||||
|---|---|---|---|---|---|
| Company | Opening balance | Increases | Decreases | Transfers | Closing balance |
| Sonae com SI | 15,815,000 | 3,705,000 | (3,865,000) | - | 15,655,000 |
| PCJ | 4,690,000 | - | (80,000) | - | 4,610,000 |
| Público | - | 1,780,000 | - | - | 1,780,000 |
| Sonaecom BV | 2,075,000 | - | (2,075,000) | - | - |
| Optimus SGPS | 312,850,000 | - | (312,850,000) | - | - |
| Zopt | - | 230,000,000 | (115,000,000) | (115,000,000) | - |
| 335,430,000 | 235,485,000 | (433,870,000) | (115,000,000) | 22,045,000 |
| 2012 | |||||
|---|---|---|---|---|---|
| Company | Opening balance | Increases | Decreases | Transfers | Closing balance |
| Optimus SGPS | - | 312,850,000 | - | 312,850,000 | |
| Sonae com SI | 19,700,000 | 11,950,000 | (15,835,000) | - | 15,815,000 |
| PCJ | 5,160,000 | - | (470,000) | - | 4,690,000 |
| Sonaecom BV | 21,785,000 | 1,115,000 | (20,825,000) | - | 2,075,000 |
| Be Artis | 179,734,000 | 2,245,000 | (181,979,000) | - | - |
| Sontária | 2,676,637 | 584,000 | (3,260,637) | - | - |
| Sonaetelecom BV | 200,000 | - | (200,000) | - | - |
| Optimus | - | 22,850,000 | (22,850,000) | - | - |
| 229,255,637 | 351,594,000 | (245,419,637) | - | 335,430,000 |
| 2013 | |||||
|---|---|---|---|---|---|
| Company | Opening balance | Increases | Decreases | Transfers | Closing balance |
| ZOPT | - | - | - | 115,000,000 | 115,000,000 |
| Sonae com SI | 39,951,792 | - | - | - | 39,951,792 |
| Público | 7,821,770 | 850,000 | (6,489,365) | - | 2,182,405 |
| PCJ | 9,488,228 | - | (7,624,773) | - | 1,863,455 |
| Miauger | 1,305,000 | 830,000 | (1,146,147) | - | 988,853 |
| Optimus SGPS | 144,630,000 | - | (144,630,000) | - | - |
| 203,196,790 | 1,680,000 | (159,890,285) | 115,000,000 | 159,986,505 | |
| 2012 | |||||
| Company | Opening balance | Increases | Decreases | Transfers | Closing balance |
| Optimus SGPS | 38,630,000 | 106,000,000 | - | - | 144,630,000 |
| Sonae com SI | - | 39,951,792 | - | - | 39,951,792 |
| PCJ | 12,990,000 | - | (3,501,772) | - | 9,488,228 |
| Público | 3,565,505 | 7,500,000 | (3,243,735) | - | 7,821,770 |
| Miauger | 1,105,000 | 200,000 | - | - | 1,305,000 |
| Be Artis | 265,889,115 | - | (265,889,115) | - | - |
| 322,179,620 | 153,651,792 | (272,634,622) | - | 203,196,790 |
In the year ended at 31 December 2012, the decreases of the loans in Be Artis and in Sontária, in the amount 182 million and Euro 3.3 million, are related to the sale of these companies to Optimus SGPS, as described in note 5. The sale also includes Euro 251 million of supplementary capital in Be Artis. Besides this movement, the decrease of supplementary capital in an amount of Euro 266 million, includes a repayment of Euro 15 million to Sonaecom.
The movement under the caption 'Accumulated impairment losses' results from the increase in the amount of Euro 14,838,739 (Euro 6,393,735 in 2012) offset for the equal decrease to the caption 'Investments in Group companies' (note 5), as well as increase made in the year amounting to Euro 3,930,000 (Euro 15,043,228 in 2012) (note 16).
In the year ended at 31 December 2013, the increase in medium and long-term loans granted to Zopt of Euro 230 million and the decrease in supplementary capital, occurred in Optimus SGPS amounting to Euro 144.6 million, result of the operation explain above in note 5. The decrease of Euro 115 million in medium and long-term loans granted to Zopt, result of the disposal of 50% of these loans to Unitel (note 5 and 25). The transfers arise from the capital increase made in Zopt through the conversion of loans amounted Euro 115 million to supplementary capital. The decrease of Euro 313 million in medium and long-term loans granted to Optimus SGPS correspond to the liquidation of the entire loan.
During the years ended at 31 December 2013 and 2012, the loans granted to Group companies and joint ventures earned interest at market rates with an average interest rate of 5.62% and 4.94%, respectively. Supplementary capital is non-interest bearing. Loans granted to Group companies and Supplementary capital, do not have a defined maturity, therefore no information about the aging of these loans is presented.
The evaluation of the existence of impairment losses for the loans made to Group companies was based on the most up-to-date business plans duly approved by the Group's Board of Directors, which include projected cash flows for periods of five years. The discount rates used and the perpetuity growth considered are presented in the previous note (note 5).
At 31 December 2013 and 2012 the value of deferred tax assets not recorded where it is not expected that sufficient taxable profits will be generated in the future to cover those losses, have the following detail:
| 2013 | 2012 | |
|---|---|---|
| Tax losses | - | 54,563,604 |
| Provisions not acceptable for tax purposes, impairment losses and others | 120,480,657 | 115,556,999 |
| CFEI | 4,563 | - |
| Total | 120,485,220 | 170,120,603 |
| Deferred tax assets | 29,522,324 | 44,263,507 |
At 31 December 2013 and 2012, the deferred tax assets relating to tax losses carried forward have the following origin dates:
| YEAR OF ORIGIN | 2013 | 2012 |
|---|---|---|
| 2007 | - | 13,640,901 |
| - | 13,640,901 | |
For the year ended at 31 December 2013 the rate used to calculate the deferred tax assets/liabilities was of 23% relating to tax losses carried forward, and of 24.5% for remaining deferred tax assets and liabilities, as a consequence of the IRC rate change from 25% to 23% from 2014 onwards. For the year ended at 31 December 2012, the rate used to calculate the deferred tax assets/liabilities was of 25% relating to tax losses carried forward, and of 26.5% for remaining deferred tax assets and liabilities. Tax benefits, related to deductions from taxable income, are considered at 100%, and in some cases, their full acceptance is dependent on the approval of the authorities that concede such tax benefits.
It wasn't considered the state surcharge, as it was understood to be unlikely the taxation of temporary differences during the estimated period when the referred rate will be applicable.
The reconciliation between the earnings before tax and the tax recorded for the years ended at 31 December 2013 and 2012 is as follows:
| 2013 | 2012 | |
|---|---|---|
| Earnings before tax | (89,079,032) | 103,147,943 |
| Income tax rate (25%) | 22,269,758 | (25,786,986) |
| Correction of the tax of the previous year and other related taxes | (593,204) | (3,335) |
| Tax provision (notes 16 and 24) | (168,062) | (4,561) |
| Movements in provisions not accepted for tax purposes | (1,238,475) | (6,431,177) |
| Adjustments to the taxable income | (23,947,623) | 32,307,951 |
| Use of losses carried forward, which deferred taxes were not recorded | 2,187,255 | - |
| Income taxation recorded in the year (note 24) | (1,490,351) | 81,892 |
The tax rate used to reconcile the tax expense and the accounting profit was 25% because it is the standard rate of the corporate income tax in Portugal in 2013 and 2012.
The adjustments to the taxable income in 2013 relates, mainly, to losses and gains in financial investments and dividends received (note 23), which do not contribute to the calculation of the taxable profit for the year.
Portuguese Tax Authorities can review the income tax returns of the Company for a period of four years (five years for Social Security), except when tax losses have been generated, tax benefits have been granted or when any review, claim or impugnation is in progress, in which circumstances, the periods are extended or suspended. Consequently, tax returns of each year, since the year 2010 (inclusive) are still subject to such review. The Board of Directors believes that any correction that may arise as a result of such review would not produce a significant impact in the accompanying financial statements.
Supported by the Company's lawyers and tax consultants, the Board of Directors believes that there are no liabilities not provisioned in the financial statements, associated to probable tax contingencies that should have been recorded or disclosed in the accompanying financial statements, at 31 December 2013.
At 31 December 2013 and 2012, this caption was made up as follows:
| 2013 | 2012 | |
|---|---|---|
| State and other public entities | 2,643,926 | 2,522,105 |
| Trade debtors | 17,119,404 | 7,593,137 |
| 19,763,330 | 10,115,242 |
At 31 December 2013 and 2012, the caption 'Other current debtors' included amounts to be received from Group companies related to interests receivable from subsidiaries on Shareholders' loans, interest on treasury applications and services rendered (notes 23 and 25). At 31 December 2013, the caption 'Other debtors' include an amount referred to the fact to chosen of Sonaecom SGPS, SA to benefit from the scheme of Outstanding Debts Settlement of Tax and Social Security, and carried out a payment totalling of circa Euro 5 million related essentially to VAT. The Board of Directors believes that these amounts are not due and there are no material liabilities associated that has no provision and that should be disclosed.
The caption 'State and other public entities', at 31 December 2013 and 2012, includes the special advanced payment, retentions and taxes to be recovered.
Other debtors and advances to suppliers by age at 31 December 2013 and 2012 are as follows:
| DUE WITHOUT IMPAIRMENT | DUE AND WITH IMPAIRMENT | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Total | Not due | Until 30 days |
From 30 to 90 days |
More than 90 days |
Until 90 days |
From 90 to 180 days |
From 180 to 360 days |
More than 360 days |
|
| 2013 | |||||||||
| Trade debtors | 17,119,404 | 1,296,375 | 4,685,020 | 3,212,670 | 7,925,339 | - | - | - | - |
| 2012 | |||||||||
| Trade debtors | 7,593,137 | 5,957,340 | 1,536,458 | 51,073 | 48,266 | - | - | - |
At the year ended at 31 December 2013, the amounts due without impairment to more than 90 days correspond, mostly, to amounts receiving from Group companies.
The debts of the state and other public entities were not subject detail above, for not being financial assets.
At 31 December 2013 and 2012, this caption was made up as follows:
| 2013 | 2012 |
|---|---|
| 201,875 | 2,922,733 |
| 26,536 | 347,248 |
| 150,734 | 289,189 |
| 379,145 | 3,559,170 |
| 31,601 | 39,219 |
| - | 12,811 |
| 104,483 | 76,439 |
| 136,084 | 128,469 |
| 515,229 | 3,687,639 |
At 31 December 2013 and 2012, the breakdown of cash and cash equivalents was as follows:
| 2013 | 2012 | |
|---|---|---|
| Cash | 811 | 1,280 |
| Bank deposits repayable on demand | 26,252,770 | 31,134 |
| Treasury applications | 159,665,000 | 103,685,000 |
| 185,918,581 | 103,717,414 |
At 31 December 2013 and 2012, the caption 'Treasury applications' had the following breakdown:
| 2013 | 2012 | |
|---|---|---|
| Bank applications | 156,495,000 | 5,000,000 |
| We Do | 1,365,000 | 640,000 |
| Público | 1,345,000 | 365,000 |
| Saphety | 285,000 | - |
| Sonaecom SP | 170,000 | - |
| PCJ | 5,000 | 25,000 |
| Lugares Virtuais | - | 510,000 |
| Optimus SGPS | - | 97,130,000 |
| Mainroad | - | 15,000 |
| 159,665,000 | 103,685,000 |
During the year ended at 31 December 2013, the above mentioned treasury applications bear interests at an average rate of 4.46% (4.78% in 2012).
At 31 December 2013 and 2012, the share capital of Sonaecom was comprised by 366,246,868 ordinary registered shares of 1 Euro each. At those dates, the Shareholder structure was as follows:
| 2013 | 2012 | |||
|---|---|---|---|---|
| Number of shares | % | Number of shares | % | |
| Sontel BV | 194,063,119 | 52.99% | 194,063,119 | 52.99% |
| Shares traded on the Portuguese Stock Exchange ('Free float') |
82,152,012 | 22.43% | 78,681,339 | 21.48% |
| Sonae SGPS | 76,679,374 | 20.94% | 3,430,000 | 0.94% |
| Goldman Sachs* | 7,780,349 | 2.12% | - | - |
| Own shares (note 14) | 5,571,014 | 1.52% | 4,321,038 | 1.18% |
| Efanor Investimentos, SGPS, S.A. | 1,000 | 0.00% | 1,000 | 0.00% |
| Atlas Service Belgium ** | - | - | 73,249,374 | 20.00% |
| Millenium BCP *** | - | - | 12,500,998 | 3.41% |
| 366,246,868 | 100.00% | 366,246,868 | 100.00% |
* On 23 October 2013, Goldman Sachs Group, Inc. informed Sonaecom about the completion of a qualifying holding of 2.12% in Sonaecom, corresponding to 7,780,349 shares and voting rights. ** At 15 February 2013, Sonae and France Télécom ('FT-Orange') have concluded an agreement, which consisted in the assignment of a call and a put option, respectively, of the 20% stake in Sonaecom, held at that date by a subsidiary of FT-Orange. At 9 September 2013, the abovementioned option was exercised by Sonae and FT-Orange respectively.
***The number of shares held by Millenium BCP, according with the information obtained on 15 May 2013, has been included in 'Free Float' because it does not correspond to a qualified participation.
All shares that comprise the share capital of Sonaecom, are authorised, subscribed and paid. All shares have the same rights and each share corresponds to one vote.
During the year ended at 31 December 2013, Sonaecom delivered to its employees 247,423 own shares under its Medium Term Incentive Plans.
Additionally, in 2013, Sonaecom sold to its subsidiaries 2,601 shares (at an average price of Euro 1.816), under the Short Term Incentive Plan of each company.
During the year ended at 31 December 2013, Sonaecom acquired 1,500,000 new shares (at an average price of Euro 1.667), holding at the end of the year 5,571,014 own shares, representative of 1.52% of its share capital, with an average price of Euro 1.515.
| AMOUNT OUTSTANDING | |||||
|---|---|---|---|---|---|
| Issue denomination | Limit | Maturity | Type of reimbursement |
2013 | 2012 |
| 'Obrigações Sonaecom SGPS 2011' | 100,000,000 | Mar-15 | Final | - | 100,000,000 |
| 'Obrigações Sonaecom SGPS 2010' | 40,000,000 | Mar-15 | Final | - | 40,000,000 |
| 'Obrigações Sonaecom SGPS 2012' | 20,000,000 | Jul-15 | Parcel | - | 20,000,000 |
| 'Obrigações Sonaecom SGPS 2013' | 20,000,000 | Jun-16 | Final | 20,000,000 | - |
| Costs associated with financing set-up | - | - | - | (58,271) | (1,586,070) |
| Interests incurred but not yet due | - | - | - | 61,767 | 1,745,020 |
| 20,003,496 | 160,158,950 | ||||
| Commercial paper | 30,000,000 | Jul-15 | - | - | 30,000,000 |
| Costs associated with financing set-up | - | - | - | - | (70,090) |
| Interests incurred but not yet due | - | - | - | - | 150,770 |
| - | 30,080,680 | ||||
| 20,003,496 | 190,239,630 |
| AMOUNT OUTSTANDING | |||||
|---|---|---|---|---|---|
| Issue denomination | Limit | Maturity | Type of reimbursement |
2013 | 2012 |
| Treasury applications | - | - | - | 21,654,000 | 6,298,000 |
| Interests incurred but not yet due | - | - | - | 6,813 | 6,168 |
| 21,660,813 | 6,304,168 | ||||
| 'Obrigações Sonaecom SGPS 2005' | 150,000,000 | Jun-13 | Final | - | 150,000,000 |
| 'Obrigações Sonaecom SGPS 2010' | 30,000,000 | Feb-13 | Final | - | 30,000,000 |
| Costs associated with financing set-up | - | (262,458) | |||
| Interest incurred but not yet due | - | - | - | - | 377,316 |
| - | 180,114,858 | ||||
| 21,660,813 | 186,419,026 |
In June 2005, Sonaecom signed a Bond Loan, privately placed, amounting to Euro 150 million without guarantees and with a maturity of eight years. The bonds bear interest at floating rate, indexed to Euribor and paid semiannually. This issue was organised and mounted by Millennium BCP Investimento. During the year ended at 31 December 2013, Sonaecom settled the entire amount of the bond loan and respective interest expenses.
In February and March 2010, Sonaecom signed two other Bond Loan, both privately placed, in the amount of Euro 30 and 40 million, without guarantees and maturities of 3 and 5 years respectively. Both loans bear interest at floating rate indexed to Euribor, and paid semiannually. The issues were organised and mounted by, respectively, Banco Espirito Santo de Investimento and Caixa - Banco de Investimento. These bond issues were traded on Euronext Lisbon market. At 4 February 2013, the Company settled the bond loan of Euro 30 million. During the year ended at 31 December 2013, following the merger (note 5), the Boan Loan of Euro 40 million was transferred to Zon Optimus.
In September 2011, Sonaecom signed a Bond Loan, privately placed, amounting to Euro 100 million without guarantees and with a maturity of three and half years. The bonds bear interest at floating rate indexed to Euribor and paid semiannually. This issue was organized and mounted by BNP Paribas, ING Belgium SA / NV and WestLB AG. During the year ended at 31 December 2013,
Portigon AG (previously named WestLB AG), transferred an amount of Euro 33.300.000 (corresponding to its entire participation in the loan) to Erste Abwicklungsanstalt ('EAA'), a state entity in German. During the year ended at 31 December 2013, following the merger (note 5), the Boan Loan of Euro 100 million was transferred to Zon Optimus.
In July 2012, Sonaecom signed a Bond Loan, privately placed, amounting to Euro 20 million without guarantees and with the maturity of three years. The bonds bear interest at floating rate, indexed to Euribor and paid semiannually. This issue was organised and mounted by Banco BPI. During the year ended at 31 December 2013, following the merger (note 5), the Boan Loan of Euro 20 million was fully reimbursed and, subsequently, transferred to Zon Optimus the capacity to use this facility, in the form of commercial paper by the same amount.
In May 2013, Sonaecom signed a Boan Loan, privately placed, amounting to Euro 20 million, without guarantees and with a maturity date of three years. The bonds bear interest at floating rate indexed to Euribor and paid semiannually. This issue was organized and mounted by Caixa Económica Montepio Geral.
The loan above is unsecured and the fulfillment of the obligations under this loan is exclusively guaranteed by the underlying activities and the indebted company cash flows generation capacity.
The average interest rate of the bond loans, in the year 2013, was 2.71% (3.01% in 2012).
In July 2007, Sonaecom contracted a Commercial Paper Programme Issuance with a maximum amount of Euro 250 million with subscription grant and maturity of five years, organised by Banco Santander de Negócios Portugal and by Caixa – Banco de Investimento. According to the original terms, this programme was reduced to the amount of Euro 150 million in July 2010. In July 2012 the amount used and the interests were fully reimbursed. The placing underwriting consortium was composed by the following institutions: Banco Santander Totta, Caixa Geral de Depósitos, Banco BPI, Banco Bilbao Vizcaya Argentaria (Portugal), Banco Comercial Português and BNP Paribas (in Portugal).
In June 2010, Sonaecom contracted a Commercial Paper Programme Issuance with maximum amount of Euro 15 million with subscription grant and maturity of three years, organised by Caixa Económica Montepio Geral. In June 2013 an addition was made to the contract that lasted for one year, automatically renewable for equal periods up to a maximum of 5 years. In 31 December 2013, this credit line was not being used.
In July 2012, Sonaecom contracted a Commercial Paper Programme Issuance with maximum amount of Euro 30 million with subscription grant and maturity of tree years, organised by Caixa – Banco de Investimento and Caixa Geral de Depósitos. Additionally, in the same period, Sonaecom contracted a Commercial Paper Programme Issuance with a maximum amount of Euro 25 million with subscription grant and maturity of one year, organised by Banco Santander Totta. During the year ended at 31 December 2013, following the merger (note 5), the two Commercial Paper Programmes were fully reimbursed and, subsequently, transferred to Zon Optimus the capacity to use this facility.
In May 2013, Sonaecom contracted a Commercial Paper Programme Issuance with maximum amount of Euro 30 million with subscription grant and maturity of eighteen months, organised by Banco Espírito Santo de Investimento and Banco Espírito Santo. During the year ended at 31 December 2013, following the merger (note 5), the Commercial Paper Programme of Euro 30 million was fully reimbursed and, subsequently, transferred to Zon Optimus the capacity to use this facility.
In June 2013, Sonaecom contracted a Commercial Paper Programme Issuance with maximum amount of Euro 100 million with subscription grant and maturity of one year, organised by Banco Comercial Português. During the year ended at 31 December 2013, following the merger (note 5), the Commercial Paper Programme of Euro 100 million was fully reimbursed and, subsequently, transferred to Zon Optimus the capacity to use this facility.
The average interest rate of the commercial papers, in the year, was 4.26% (1.52% in 2012).
All the loans above are unsecured and the fulfillment of the obligations under these loans is exclusively guaranteed by the underlying activities and the indebted company cash flows generation capacity.
At 31 December 2013, the main financial constraints (covenants) included in debt contracts are related with the bond issue completed by Sonaecom in May 2013, totaling Euro 20 million, organised by Caixa Económica Montepio Geral and establishing the obligation to ensure that consolidated net debt does not exceed three times the consolidated EBITDA. The penalties applicable in the event of default in these covenants are generally the early payment of the loans obtained.
At 31 December 2013 and at present date, Sonaecom was fully compliant with all the financial constraints above mentioned.
Sonaecom has also short term bank credit lines, in the form of current or overdraft account commitments, in the amount of Euro 1 million. These credit lines have maturities up to one year, automatically renewable, except in case of termination by either party, with some periods of notice.
During the year ended at 31 December 2013, following the merger (note 5), bank credit line of short-term portion amounting Euro 10 million of Banco Popular was transferred to Zon Optimus.
All these loans and bank credit lines bear interest at market rates, indexed to the Euribor for the respective term, and were all contracted in euro.
During the years ended at 31 December 2013 and 2012, the detail of 'Treasury applications' received from subsidiaries was as follows:
| 2013 | 2012 | |
|---|---|---|
| Sonaecom BV | 14,720,000 | - |
| Digitmarket | 4,385,000 | 3,830,000 |
| Sonaetelecom BV | 1,559,000 | 1,579,000 |
| Sonae com SI | 800,000 | - |
| Miauger | 190,000 | 260,000 |
| Saphety | - | 580,000 |
| Sonaecom SP | - | 49,000 |
| 21,654,000 | 6,298,000 |
The treasury applications received from Group companies are payable in less than one year and earn interests at market rates. During the years ended at 31 December 2013 and 2012, the treasury applications earned an average interest rate of 3.08% and 3.42%, respectively.
At 31 December 2013 and 2012, the repayment schedule of medium and long-term loans and of interests (nominal values), for both bonds and commercial paper were as follows (values based on the latest interest rate established for each type of loan):
| WITHIN 12 MONTHS |
BETWEEN 12 AND 24 MONTHS |
BETWEEN 24 AND 36 MONTHS |
BETWEEN 36 AND 48 MONTHS |
BETWEEN 48 AND 60 MONTHS |
|
|---|---|---|---|---|---|
| 2013 | |||||
| Bond loan | |||||
| Reimbursements | - | - | 20,000,000 | - | - |
| Interests | 980,278 | 980,278 | 424,318 | - | - |
| Commercial paper | |||||
| Reimbursements | - | - | - | - | - |
| Interests | - | - | - | - | - |
| 980,278 | 980,278 | 20,424,318 | - | - | |
| 2012 | |||||
| Bond loan | |||||
| Reimbursements | - | - | 160,000,000 | - | - |
| Interests | 5,840,405 | 5,726,552 | 1,398,895 | - | - |
| Commercial paper | |||||
| Reimbursements | - | - | 30,000,000 | - | - |
| Interests | 1,168,913 | 1,168,913 | 678,930 | - | - |
| 7,009,318 | 6,895,465 | 192,077,825 | - | - |
Although the maturity of commercial paper issuance is between one week and six months, the counterparties assumed the placement and the maintenance of those limits for a period of one to three years. As so, such liabilities are recorded in the medium and long term in the year ended at 31 December 2012.
At 31 December 2013 and 2012, the available credit lines of the Company are as follows:
| MATURITY | |||||
|---|---|---|---|---|---|
| Credit | Limit | Amount outstanding |
Amount available |
Until 12 months | More than 12 months |
| 2013 | |||||
| Bond loan | 20,000,000 | 20,000,000 | - | x | |
| Commercial paper | 15,000,000 | - | 15,000,000 | x | |
| Authorised overdrafts | 1,000,000 | - | 1,000,000 | x | |
| 36,000,000 | 20,000,000 | 16,000,000 |
| MATURITY | |||||
|---|---|---|---|---|---|
| Credit | Limit | Amount outstanding |
Amount available |
Until 12 months | More than 12 months |
| 2012 | |||||
| Commercial paper | 30,000,000 | 30,000,000 | - | x | |
| Commercial paper | 25,000,000 | - | 25,000,000 | x | |
| Commercial paper | 15,000,000 | - | 15,000,000 | x | |
| Bond loan | 150,000,000 | 150,000,000 | - | x | |
| Bond loan | 100,000,000 | 100,000,000 | - | x | |
| Bond loan | 40,000,000 | 40,000,000 | - | x | |
| Bond loan | 30,000,000 | 30,000,000 | - | x | |
| Bond loan | 20,000,000 | 20,000,000 | - | x | |
| Overdraft facilities | 16,500,000 | - | 16,500,000 | x | |
| Authorised overdrafts* | 10,000,000 | - | 10,000,000 | x | |
| Authorised overdrafts | 2,500,000 | - | 2,500,000 | x | |
| 439,000,000 | 370,000,000 | 69,000,000 |
* Can also be used in the form of Commercial paper.
At 31 December 2013 and 2012, there are no interest rate hedging instruments.
Based on the debt exposed to variable rates at the end of 2013, and considering the applications and bank balances at the same date, if market interest rates rise (fall), in average, 75bp during the year 2013, the interest paid that year would be decreased (increased ) in an amount of approximately Euro 1,250,000.
The movements in provisions and in accumulated impairment losses in the years ended 31 December 2013 and 2012 were as follows:
| OPENING BALANCE |
INCREASES | REDUCTIONS | TRANSFERS | UTILIZATIONS | CLOSING BALANCE |
|
|---|---|---|---|---|---|---|
| 2013 | ||||||
| Accumulated impairment losses on investments in Group companies (notes 5 and 23) |
97,197,713 | 15,661,877 | - | - | - | 112,859,590 |
| Accumulated impairment losses on other non-current assets (notes 8 and 23) |
17,204,998 | 3,930,000 | (14,838,739) | - | - | 6,296,259 |
| Provisions for other liabilities and charges |
74,959 | 258,216 | (706) | - | - | 332,469 |
| 114,477,670 | 19,850,093 | (14,839,445) | - | - | 119,488,318 | |
| 2012 | ||||||
| Accumulated impairment losses on accounts receivables (note 10) |
1,930 | 15,387 | - | - | (17,317) | - |
| Accumulated impairment losses on investments in Group companies (notes 5 and 23) |
80,122,497 | 10,681,481 | - | 6,393,735 | - | 97,197,713 |
| Accumulated impairment losses on other non-current assets (notes 8 and 23) |
8,555,505 | 15,043,228 | - | (6,393,735) | - | 17,204,998 |
| Provisions for other liabilities and charges |
68,654 | 6,305 | - | - | - | 74,959 |
| 88,748,586 | 25,746,401 | - | - | (17,317) | 114,477,670 |
The increases in provisions and impairment losses are recorded under the caption 'Provisions and impairment losses' in the profit and loss statement with the exception of the impairment losses in investments in Group companies and other non-current assets, which, due to their nature, are recorded as a financial expense under the caption 'Gains and losses on Group companies' (note 23).
At 31 December 2013 and 2012, the increase of 'Provisions for other liabilities and charges' includes the amount of Euro 168,062 and 4,561, respectively, registered in the financial statements, under the caption 'Income taxation', due to its' nature (note 24). Additionally, in 31 December 2013, the increase of 'Provisions for other liabilities and charges' include amounts to cover several contingencies related to probable liabilities resulting from several transactions which cash outflow is probable.
This caption, in the amounts of Euro 370,948 and Euro 174,176, at 31 December 2013 and 2012, respectively, corresponds to the medium and long-term amounts associated with the Medium Term Incentive Plans (note 28).
At 31 December 2013 and 2012, this caption was made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Other creditors (note 25) | 7,199,301 | 727,186 |
| State and other public entities | 108,972 | 101,075 |
| 7,308,273 | 828,261 | |
At 31 December 2013, the caption 'Other creditors' includes an amount of circa Euro 6 million referred to the amount to be paid to Optimus SA, Be Artis and Be Towering in relation to the termination of MTIP contract (note 28).
| TOTAL | UNTIL 90 DAYS | FROM 90 TO 180 DAYS |
MORE THAN 180 DAYS |
|
|---|---|---|---|---|
| 2013 | ||||
| Other creditors | 7,199,301 | 7,199,301 | - | – |
| 7,199,301 | 7,199,301 | – | – | |
| 2012 | ||||
| Other creditors | 727,186 | 727,186 | - | - |
| 727,186 | 727,186 | - | - |
At 31 December 2013 and 2012, this caption was made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Accrued costs | ||
| Staff expenses | 555,627 | 561,065 |
| Medium Term Incentive Plans (note 28) | 334,477 | 225,445 |
| Consultancy | 100,558 | 107,690 |
| Other accrued costs | 2,055,658 | 109,633 |
| 3,046,320 | 1,003,833 | |
| Deferred income | ||
| Other deferred income | - | 11,041 |
| - | 11,041 | |
| 3,046,320 | 1,014,874 |
At 31 December 2013, the heading 'Other accrued costs' include the amount of Euro 1,943,340, related to accrued interests and not yet due of the Boan Loan that was transferred to Zon Optimus (note 15).
At 31 December 2013 and 2012, the caption 'Services rendered' was comprised by the charge of management fees to subsidiaries (note 25).
At 31 December 2013 and 2012, the caption 'Other operating revenues' was made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Supplementary income | 113,105 | - |
| Others | 774 | 319 |
| 113,879 | 319 |
At 31 December 2013, the heading 'Supplementary income' is, mostly, composed of income associated with guarantees that Sonaecom secured on behalf of its subsidiaries.
At 31 December 2013 and 2012, this caption was made up as follows:
| 2013 | 2012 | |
|---|---|---|
| Specialised work | 1,713,604 | 1,721,550 |
| Travel and accommodation | 112,905 | 90,333 |
| Rents | 101,607 | 91,185 |
| Insurance | 49,852 | 51,005 |
| Communications | 39,495 | 38,007 |
| Honorários | 11,139 | 458 |
| Other external supplies and services | 114,309 | 51,748 |
| 2,142,911 | 2,044,286 |
| 2013 | 2012 | |
|---|---|---|
| Minimum payments of operational leases: | ||
| 2013 | - | 21,788 |
| 2014 | 52,997 | 16,692 |
| 2015 | 52,997 | 16,692 |
| 2016 | 43,260 | 6,955 |
| 2017 | 32,723 | - |
| 2018 | 1,255 | - |
| Renewable by periods of one year | - | 129,974 |
| 183,232 | 192,101 |
Net financial results for the years ended 31 December 2013 and 2012 are made up as follows ((costs)/gains):
| 2013 | 2012 | |
|---|---|---|
| Gains and losses on investments in Group companies | ||
| Losses related to Group companies (notes 5, 8 and 16) | (171,801,781) | (26,087,858) |
| Gains related to Group companies | 24,700,000 | 129,476,277 |
| (147,101,781) | 103,388,419 | |
| Gains and losses on financial assets at fair value through profit or loss | ||
| Gains on financial assets at fair value through profit or loss (note 7) | 46,636,719 | - |
| 46,636,719 | - | |
| Other financial expenses | ||
| Interest expenses: | ||
| Bank loans | (4,783,651) | (3,134,196) |
| Other loans | (6,111,696) | (10,601,176) |
| Bank overdrafts and others | - | (66) |
| (10,895,347) | (13,735,438) | |
| Foreign currency exchange losses | - | (1,622) |
| Other financial expenses | (315,920) | (500,994) |
| (315,920) | (502,616) | |
| (11,211,267) | (14,238,054) | |
| Other financial income | ||
| Interest income | 24,501,871 | 14,938,191 |
| Foreign currency exchange gains | 174 | - |
| 24,502,045 | 14,938,191 |
At 31 December 2013, the losses related to Group companies include the increase of the impairment losses in other non-current assets (notes 8 and 16), in the amount of Euro 3,930,000, the increase of the impairment losses in Investments in group companies (notes 5 and 16), in the amount of Euro 823,138 and the loss arising from the merger (note 5), in the amount of Euro 167,048,643.
At 31 December 2013, the gains related to Group companies relates to dividends received from subsidiary Optimus SGPS.
At 31 December 2013, the gains related to financial assets at fair value through profit or loss corresponds to an increase in the fair value of the direct participation held in Zon Optimus (note 7), in the amount of Euro 46,636,719.
At 31 December 2013, the caption 'Interest income' includes the amount of Euro 4,674,111 received from Unitel, following the disposal of the shareholder loans to be received from Zopt to this entity (notes 5 and 8).
At 31 December 2012, the losses related to Group companies include an amount of Euro 363,149 related to the loss of the sale, to Optimus SGPS, of the entire capital of the share capital of Be Artis (note 5), the increase of the impairment losses in other noncurrent assets (notes 8 and 15), in the amount of Euro 15,043,228 and the increase in investments in Group companies (notes 5 and 15) in the amount of Euro 10,681,481.
At 31 December 2012, the gains related to Group companies relates to the dividends received from Optimus (Euro 68,175,378), Optimus SGPS (Euro 29,684,926), Sonae com SI (Euro 31,132,500) and Sontária (Euro 583,473).
Income taxes recognized during the years ended at 31 December 2013 and 2012 were made up as follows ((costs) / gains):
| 2013 | 2012 | |
|---|---|---|
| Current tax | (1,322,289) | 86,453 |
| Tax provision (notes 9 and 15) | (168,062) | (4,561) |
| Closing balance | (1,490,351) | 81,892 |
The most significant balances and transactions with related parties (which are detailed in the appendix) at 31 December 2013 and 2012 were as follows:
| BALANCES AT 31 DECEMBER 2013 | |||||
|---|---|---|---|---|---|
| Accounts receivable (note 10) |
Accounts payable (note 18) |
Treasury applications (note 12) |
Other assets / (liabilities) |
Loans granted / (obtained) (note 8 and 15) |
|
| Parent Company | |||||
| Sonae SGPS | 850 | 49,000 | - | (31,198) | - |
| Subsidiaries | |||||
| Miauger | - | 60,086 | - | - | (190,151) |
| PCJ | 68,078 | (100,277) | 5,000 | 22,617 | 4,610,000 |
| Público | 85,696 | 925,581 | 1,345,000 | 7,560 | 1,780,000 |
| Sonae com SI | 180,605 | 1,401 | - | 70,643 | 14,854,257 |
| Sonaecom BV | 1,910 | 240,841 | - | - | (14,720,000) |
| Sonae Telecom BV | - | 25,335 | - | - | (1,559,000) |
| Sonaecom SP | - | 27,948 | 170,000 | (45,021) | - |
| Others related parties | |||||
| Be Artis | - | 2,860,366 | - | - | - |
| Be Towering | 4,596 | 111,261 | 3,737 | ||
| Digitmarket | 4,784 | 44,434 | - | - | (4,390,919) |
| Lugares Virtuais | - | 210,390 | - | - | - |
| Mainroad | 56,125 | 32,451 | - | 167 | - |
| Optimus | 595,075 | 2,716,307 | 155,410 | ||
| Permar | - | - | - | - | - |
| Saphety | 114,410 | 5,433 | 285,000 | 576 | - |
| SonaecenterII | - | 82,406 | - | (94,260) | - |
| Wedo | 670,392 | (190,068) | 1,365,000 | 1,903 | - |
| Zon Optimus | 10,203,626 | - | - | (1,943,340) | - |
| Others | 92,264 | 14,121 | - | 85,484 | - |
| 12,078,411 | 7,117,016 | 3,170,000 | (1,765,722) | 384,187 |
| BALANCES AT 31 DECEMBER 2012 | |||||
|---|---|---|---|---|---|
| Accounts receivable (note 10) |
Accounts payable (note 18) |
Treasury applications (note 12) |
Other assets / (liabilities) |
Loans granted / (obtained) (note 8 and 15) |
|
| Parent Companies | |||||
| Sonae SGPS | - | 47,256 | - | - | - |
| Subsidiaries | |||||
| Miauger | 16,014 | 493 | - | 255 | (260,032) |
| Optimus SGPS | 2,297,518 | - | 97,130,000 | 2,719,497 | 312,850,000 |
| PCJ | 189,839 | - | 25,000 | 35,316 | 4,690,000 |
| Público | (2,306,582) | - | 365,000 | 14,762 | (467) |
| Sonae com SI | 540 | - | - | 69,319 | 15,815,000 |
| Sonaecom BV | 93,453 | 2,935 | - | 50,823 | 2,075,000 |
| Sonaetelecom BV | - | 12,562 | - | - | (1,579,000) |
| Sonaecom SP | 12 | 288 | - | - | (49,064) |
| Others related parties | |||||
| Be Artis | 442,210 | 2,771 | - | 1,628 | - |
| Be Towering | 358,396 | - | - | - | - |
| Digitmarket | 24,574 | 20,890 | - | (500) | (3,834,938) |
| Lugares Virtuais | (154,066) | 369 | 510,000 | 1,850 | - |
| Mainroad | 534,233 | 4,269 | 15,000 | 1,133 | - |
| Optimus | 5,354,773 | 179,032 | - | 342,629 | - |
| Permar | 2,084 | - | - | - | - |
| Saphety | 93,180 | 7,056 | - | (9,941) | (580,668) |
| Wedo | 589,208 | - | 640,000 | 283,489 | - |
| Others | 611 | 30,940 | - | (96,919) | - |
| 7,535,996 | 308,861 | 98,685,000 | 3,413,341 | 329,125,831 |
| Sales and services rendered (note 20) |
Supplies and services received (note 22) |
Interest and similar income / (expense) (note 23) |
Supplementary income (note 21) |
|
|---|---|---|---|---|
| Parent Company | ||||
| Sonae SGPS | - | 48,600 | 685,345 | - |
| Subsidiaries | ||||
| Miauger | - | - | (4,759) | - |
| PCJ | - | - | 271,236 | - |
| Público | 119,391 | (48,343) | 131,074 | 1 |
| Sonae com SI | 4,626 | - | 692,980 | - |
| Sonaecom BV | - | - | (442,398) | - |
| Sonaecom SP | - | 78,955 | (881) | - |
| Others related parties | ||||
| SonaecencterII | (9,917) | 645,794 | - | |
| Optimus | 2,209,035 | 282,501 | - | 113,104 |
| Be Artis | - | 24,985 | - | - |
| Digitmarket | 40,904 | - | (131,098) | - |
| Lugares Virtuais | 21,423 | 2,400 | 42,884 | - |
| Mainroad | 40,417 | - | 33,129 | - |
| Saphety | 42,846 | (104,291) | 11,357 | - |
| Wedo | 123,754 | 3,410 | 68,147 | - |
| Zon Optimus | - | (526,753) | 17,520,021 | - |
| Others | - | 58,020 | (50,448) | - |
| 2,592,479 | 465,278 | 18,826,589 | 113,105 |
| TRANSACTIONS AT 31 DECEMBER 2012 | ||||
|---|---|---|---|---|
| Sales and services rendered (note 20) |
Supplies and services received (note 22) |
Interest and similar income / (expense) (note 23) |
Supplementary income (note 21) |
|
| Parent Companies | ||||
| Sonae SGPS | (23,800) | 52,756 | 258,537 | - |
| Subsidiaries | ||||
| Miauger | - | - | (2,790) | - |
| Optimus SGPS | - | - | 6,195,738 | - |
| PCJ | - | - | 239,956 | - |
| Público | 123,347 | (3,798) | 136,233 | - |
| Sonae com SI | 3,794 | (14,494) | 621,678 | - |
| Sonaecom BV | - | - | 876,294 | |
| Sonaetelecom BV | - | - | (39,665) | - |
| Sonaecom SP | - | - | (1,058) | |
| Others related parties | ||||
| Optimus | 3,038,639 | 706,905 | 711,990 | |
| Be Artis | - | 23,871 | 5,111,927 | |
| Be Towering | - | (51,487) | 146,179 | |
| Wedo | 127,672 | - | 225,657 | - |
| Others | 222,582 | 383,742 | (12,290) | - |
| 3,492,234 | 1,097,495 | 14,468,386 | - |
During the years ended at 31 December 2013 and 2012, the company recognized the total amount of Euro 24,700,000 and Euro 129,476,277, respectively, related to dividends from its subsidiaries (note 23).
In the year ended at 31 December 2012, besides these transactions, it was sold of the entire share capital of Be Artis and Sontária to Optimus SGPS and it was increased the capital of Optimus SGPS, by contribution in kind, through the delivery of the entire participation in Optimus – Comunicações, S.A. (note 5).
During 2012, the Group signed an agreement with Sonae SGPS, under which Sonae compromise to transfer to employees and board members of Sonaecom, Sonaecom shares, at the price of 1.184 euros, until 2016, as requested by Sonaecom and under the MTIP of Sonaecom. Under this contract, Sonaecom paid to Sonae SGPS, SA the amount of EUR 3,291,520. During the year ended at 31 December 2013, Sonaecom partially anticipated the maturity of the contract, receiving the amount of Euro 4,444,207.
In the year ended at 31 December 2013, following the merger between Zon Multimédia –Serviços de Telecomunicações e Multimédia, SGPS, S.A. and Optimus SPGS, S.A. and the constitution of Zopt, a capital increase was made in Zopt, amounting to Euro 598 million and loans were granted to Zopt, amounting to Euro 230 million. Later, part of these loans (Euro 115 million) were disposed to Unitel (note 5, 8 and 23).
All the above transactions were made at market prices.
Accounts receivable and payable to related companies will be settled in cash and are not covered by guarantees.
A complete list of the Sonaecom Group's related parties is presented in the appendix to this report.
Guarantees provided to third parties at 31 December 2013 and 2012 were as follows:
| BENEFICIARY | DESCRIPTION | 2013 | 2012 |
|---|---|---|---|
| Direção de Contribuições e Impostos (Portuguese tax authorities) | VAT reimbursements | 5,955,731 | 5,955,731 |
| Direção de Contribuições e Impostos (Portuguese tax authorities) | Additional tax assessments (VAT, Stamp and Income tax) | 2,696,853 | 2,162,476 |
| Direção de Contribuições e Impostos (Portuguese tax authorities) | Others | 16,795 | 16,795 |
| 8,669,379 | 8,135,002 | ||
In addition to these guarantees were set up sureties for the current fiscal processes. The Sonae SGPS consisted of Sonaecom SGPS surety to the amount of Euro 2,844,270 and Sonaecom SGPS consisted of Optimus surety for the amount of Euro 10,529,619.
At 31 December 2013 and 2012, the Board of Directors of the Company believes that the decision of the court proceedings and ongoing tax assessments in progress will not have significant impacts on the financial statements.
Earnings per share, basic and diluted, are calculated by dividing the net income of the year (negative Euro 90,569,383 in 2013 and Euro 103,229,835 in 2012) by the average number of shares outstanding during the years ended at 31 December 2013 and 2012, net of own shares (360,941,333 in 2013 and 359,390,746 in 2012).
In June 2000, the Company created a discretionary Medium Term Incentive Plan for more senior employees, based on Sonaecom options and shares and Sonae-SGPS, S.A. shares. The vesting occurs three years after the award of each plan, assuming that the employees are still employed in the Company.
The Sonaecom plans outstanding at 31 December 2013 can be summarized as follows:
| VESTING PERIOD | 31 DECEMBER 2013 | ||||
|---|---|---|---|---|---|
| Share price at award date* |
Award date | Vesting date | Aggregate number of participations |
Number of shares |
|
| Sonaecom shares | |||||
| 2009 Plan | 1.685 | 10-Mar-10 | 08-Mar-13 | - | - |
| 2010 Plan | 1.399 | 10-Mar-11 | 10-Mar-14 | 2 | 206,064 |
| 2011 Plan | 1.256 | 09-Mar-12 | 10-Mar-15 | 2 | 221,505 |
| 2012 Plan | 1.505 | 08-Mar-13 | 10-Mar-16 | 2 | 129,694 |
| Sonae SGPS shares | |||||
| 2009 Plan | 0.761 | 10-Mar-10 | 08-Mar-13 | - | - |
| 2010 Plan | 0.811 | 10-Mar-11 | 10-Mar-14 | 2 | 214,640 |
| 2011 Plan | 0.401 | 09-Mar-12 | 10-Mar-15 | 2 | 419,985 |
| 2012 Plan | 0.701 | 08-Mar-13 | 10-Mar-16 | 2 | 163,966 |
*Average share price in the month prior to the award date, for Sonaecom shares and the lower of the average share price for the month prior to the Annual General Meeting and the share price on the day after the Annual General Meeting, for Sonae SGPS shares.
| SONAECOM SHARES | SONAE SGPS SHARES | |||
|---|---|---|---|---|
| Aggregate number of participations |
Number of shares |
Aggregate number of participations |
Number of shares | |
| Outstanding at 31 December 2012: | ||||
| Unvested | 10 | 786,207 | 10 | 1,186,787 |
| Total | 10 | 786,207 | 10 | 1,186,787 |
| Movements in year: | ||||
| Awarded | 3 | 186,159 | 3 | 250,399 |
| Vested | (4) | (247,423) | (4) | (342,242) |
| Cancelled / lapsed / corrected* | (3) | (167,680) | (3) | (296,353) |
| Outstanding at 31 December 2013: | ||||
| Unvested | 6 | 557,263 | 6 | 798,591 |
| Total | 6 | 557,263 | 6 | 798,591 |
* The adjustments are made for dividends paid and for share capital changes and others adjustments, namely, resulting from a change in the vesting of the MTIP, which may now be made through the purchase of shares with a discount.
For Sonaecom's share plans of 2010 and 2012 the responsibility was calculated taking into consideration the share price at the corresponding award date. For 2011 Sonaecom's share plan, the Company signed with Sonae-SGPS, S.A. a contract that agrees to the transfer of Sonaecom SGPS shares for employees and board members of the Group as requested of Sonaecom and under the MTIP of Sonaecom, and the liabilities are calculated based on the price fixed in the contract. The responsibility for the three plans was recorded under the heading 'Medium Term Incentive Plans Reserve'. For the Sonae SGPS share plans, the Group entered into hedging contract with external entities, and the responsibilities are calculated based on the prices agreed on those contracts. The responsibility for these plans is recorded under the captions 'Other current liabilities' and 'Other non-current liabilities'.
| SONAE SGPS SHARES | SONAECOM SHARES | |||
|---|---|---|---|---|
| 2010 Plan | 2011 Plan | 2012 Plan | 2011 Plan | |
| Notional value | 257,574 | 323,727 | 268,451 | 492,439 |
| Maturity | Mar-14 | Mar-15 | Mar-16 | Dec-16 |
| Level of inputs in the hierarchy of fair value | Level 2 | |||
| Valuation method | Current replacement cost | |||
| Fair value* | 174,734 | 490,711 | 125,071 | 634,672 |
* For the fair value calculation was used the share price at December 31
Share plan costs are recognised in the accounts over the period between the award and the vesting date of those plans. The costs recognised in previous years and in the year ended at 31 December 2013, were as follows:
| SONAECOM SHARES |
SONAE SGPS SHARES |
ZON OPTIMUS SGPS SHARES |
TOTAL | |
|---|---|---|---|---|
| Costs recognised in previous years | 2,595,999 | 3,212,054 | 129,532 | 5,937,585 |
| Costs recognised in the year | 309,436 | 164,200 | 269,551 | 743,187 |
| Costs of plans vested in previous years | (2,025,205) | (2,862,603) | - | (4,887,808) |
| Costs of plans vested in the year | (406,268) | (250,357) | - | (656,625) |
| 473,962 | 263,294 | 399,083 | 1,136,339 | |
| Responsability of plans | 756,970 | 898,769 | 399,083 | 2,054,822 |
| Fair value of hedging contracts (1) | (283,008) | (635,475) | - | (918,483) |
| Recorded in cash and cash equivalents (2) | - | - | (43,048) | (43,048) |
| Recorded in other current liabilities (note 19) | - | 126,013 | 208,464 | 334,477 |
| Recorded in other non current liabilities (note 17) | - | 137,281 | 233,667 | 370,948 |
| Recorded in reserves | 473,962 | - | - | 473,962 |
(1) Sonaecom has signed hedging contracts to cover its responsibilities related with the medium and long-term group' incentive plans, later transferring, through contracts, the responsibility for each company of the group. The fair value of the hedging contracts, considered in the table above, corresponds to the amount that covers Sonaecom employees' responsibility. (2) Sonaecom partially anticipated the maturity of the hedging contract with Sonae SGPS, receiving an amount equivalent to the present market value of Sonaecom shares.
In 27 August 2013, part of the Sonaecom and Sonae SGPS plans outstanding were converted to Zon Optimus plans. The conversion of the Sonaecom plans was made according to the merger ratio, but the conversion of Sonae SGPS plans was made according to the fair value of the shares. This decision was duly approved by the Board Nominations and Remunerations Committee. The cost of Zon Optimus plans was recognized until 30 September 2013, date on which Zon Optimus started to take responsibility for them. The responsibility of these plans was calculated based on share price of 30 September 2013 and was recorded under the headings of 'Other current liabilities' and 'Other non-current liabilities'.
During 2013 and 2012, the remunerations paid to Directors and other members of key management in functions at the years ended 31 December 2013 and 2012 were as follows:
| 2013 | 2012 | |
|---|---|---|
| Short-term employee benefits* | 1.223.450 | 1,710,382 |
| Share-based payments* | 370,100 | 455,700 |
| 1.593.550 | 2,166,082 | |
* Remuneration for key management personal transferred to Zon Optimus, has not been considered, following the merger between Optimus SGPS and Zon.
The short-term employee benefits, which include the salary and performance bonus, were calculated on an accruals basis. The share-based payments for 2013 and 2012 correspond to the value of the Medium Term Incentive Plan and will be awarded in 2014, in respect of performance during 2013 (and the Medium Term Incentive Plan awarded in 2013 in respect of performance during 2012, for the 2012 amounts), whose shares, or the cash equivalent, will be delivered in March 2017 and March 2016, respectively. Full details on the Group remuneration policy are disclosed in the Corporate Governance Report.
During the years ended at 31 December 2013 and 2012, the company employed an average number of 4 in both years. At 31 December 2013, the number of employees was 3.
In 2013 and 2012, the Company paid, in respect of fees, to the Statutory Auditor, Deloitte, and its network of companies, the following amounts:
| 2013 | 2012 | |
|---|---|---|
| Statutory audit | 8,000 | 9,786 |
| Other guarantee and reliability services | 10,000 | 22,000 |
| Tax advice | 2,877 | 30,030 |
| Total | 20,877 | 61,816 |
On 29 October 2013, Sonaecom has announced to make a voluntary tender offer for the acquisition of a maximum of 88,479,803 shares representing 24.16% of its own share capital.This transaction takes place after the merger of Optimus SGPS, S.A. and Zon Multimédia, SGPS, S.A., of which resulted Zon Optimus SGPS, S.A., in which Sonaecom, as a previous Optimus shareholder, became thereinafter the direct holder of 37,489,324 shares representing 7.28% of the share capital and voting rights of Zon Optimus and the indirect joint holder of 50.01% of the share capital and voting rights in Zon Optimus, through the 50% equity holding in Zopt, SGPS, S.A..
Sonaecom has the intention to accordingly give the option to its shareholders to sell, in equal standing conditions, their Sonaecom shares for consideration of the directly held 37,489,324 Zon Optimus shares, which are not necessary to the pursuit of Sonaecom's business purposes, thereby enabling direct exposure of Sonaecom shareholders to Zon Optimus, the reference asset of Sonaecom portfolio.
Sonaecom offers an overall price equivalent to Euro 2.45 per Sonaecom share, to be composed of Zon Optimus shares and, where applicable, a remaining cash amount, which represents a premium, per Sonaecom share, of circa: 10% over Sonaecom share closing price at 28 October 2013 and over the average weighted closing price of the last 30 days; 24% by reference to the last 90 days average weighted closing price of Sonaecom share; and 17% in relation to Sonaecom share average target price of Euro 2.10. For determining the Sonaecom/Zon Optimus share trade ratio, it was taken into consideration Zon Optimus share average weighed closing price of the last 5 trading days, which was that of Euro 5.08 per Zon Optimus share.
On 23 and 24 January 2014, under terms previously authorized by the Portuguese Securities Market Commission, CMVM, Sonae – SGPS, S.A. (Sonae) acquired over the counter 1,454,134 Sonaecom shares from Sonaecom directors and related parties.
The consideration of this acquisition was determined and settled on 20 February 2014, the date of calculation of the results of the tender offer, by the same amount paid to the shareholders who accepted the offer. Following this transaction, Sonae became the direct holder of 78,133,508 shares and the indirect holder of 194,063,119 shares, giving Sonae a total participation of 272,196,627 Sonaecom shares.
On 5 February 2014, Sonaecom made public the decision to launch a general and voluntary tender offer for the acquisition of shares representing the share capital of Sonaecom.
The offer was general and voluntary, with the offerer obliged to acquire all the shares that were the object of the offer and were, until the end of the respective period, subject to valid acceptance by the recipients.
The period of the offer, during which sales orders were received, ran for two weeks, beginning on 6 February and ending on 19 February 2014.
On 20 February 2014, the results of the offer were released. The level of acceptance reached 62%, corresponding to 54,906,831 Sonaecom shares. During the year 2014 Sonaecom will thus reduce its share capital in circa EUR 136 million. Euronext announced Sonaecom exclusion from the PSI-20 from 24 February 2014.
The physical and financial settlement of the offer occurred on 25 February 2014, being the consideration of the offer composed by 26,476,792 ZON OPTIMUS shares and 19,631 euros in cash.
Following the offer, Sonaecom became the holder of 11,012,532 ZON OPTIMUS shares, corresponding to 2.14% of the company's share capital.
On 28 February 2014, Goldman Sachs Inc. informed Sonaecom about the reduction of its qualifying holding on 25 February 2014 from 2.12% to 0.79% of its share capital, corresponding to 2,881,353 shares and voting rights.
Sonae-SGPS, S.A. informed Sonaecom on the acquisition, from 24 february to 7 march 2014, of shares representing the share capital and voting rights of Sonaecom. After the completion of this transaction, Sonae is the direct holder of 79,097,818 shares of Sonaecom, and the 194.063.119 voting rights corresponding to the shares held by its subsidiary Sonae Investiments, B.V. will continue to be attributable to it.
These consolidated financial statements were approved by the Board of Directors on 10 March 2014.
These financial statements are a translation of financial statements originally issued in Portuguese in accordance with International Financial Reporting Standards (IAS / IFRS) as adopted by the European Union and the format and disclosures required by those Standards, some of which may not conform to or be required by generally accepted accounting principles in other countries. In the event of discrepancies, the Portuguese language version prevails.
At 31 December 2013, the related parties of Sonaecom, SGPS, S.A. are as follows
Ana Cristina Dinis da Silva Fanha Vicente Soares Franck Emmanuel Dangeard Ângelo Gabriel Ribeirinho dos Santos Paupério Gervais Gilles Pellissier António Bernardo Aranha da Gama Lobo Xavier Jean-François René Pontal António de Sampaio e Mello Maria Cláudia Teixeira de Azevedo David Charles Denholm Hobley Miguel Nuno Santos Almeida David Graham Shenton Bain Pedro Rafael de Sousa Nunes Pedro Duarte Paulo Teixeira de Azevedo Rui José Silva Gonçalves Paiva
Álvaro Carmona e Costa Portela Christine Cross Belmiro de Azevedo Michel Marie Bon Bernd Hubert Joachim Bothe
Cape Technologies Limited Sonaecom - Serviços Partilhados, S.A. Digitmarket – Sistemas de Informação, S.A. Sonaetelecom BV Lugares Virtuais, S.A. Tecnológica Telecomunicações LTDA. Mainroad – Serviços em Tecnologias de Informação, S.A. Unipress – Centro Gráfico, Lda Miauger – Organização e Gestão de Leilões Electrónicos., S.A. WeDo do Brasil – Soluções Informáticas, Ltda PCJ - Público, Comunicação e Jornalismo, S.A. WeDo Consulting – Sistemas de Informação, S.A. Praesidium Services Limited WeDo Technologies Mexico, S de R.L. Público – Comunicação Social, S.A. We Do Technologies Panamá S.A. Saphety Brasil Transações Eletrônicas Ltda. WeDo Poland Sp. Z.o.o. Saphety – Transacciones Electronicas SAS We Do Technologies Singapore PTE. LTD. Saphety Level – Trusted Services, S.A. WeDo Technologies Australia PTY Limited Sociedade Independente de Radiodifusão Sonora, S.A. WeDo Technologies Egypt LLC Sonae com – Sistemas Informação, SGPS, S.A. WeDo Technologies (UK) Limited Sonaecom – Sistemas de Información España, S.L. WeDo Technologies Americas, Inc. Sonaecom BV WeDo Technologies BV
Sonaecom, SGPS, S.A. WeDo Technologies BV – Sucursal Malaysia
3shoppings - Holding,SGPS, S.A Bloco Q-Sociedade Imobiliária,SA ADD Avaliações Eng. A.e Pericias, Ltda Bloco W-Sociedade Imobiliária,SA Adlands B.V. BOM MOMENTO - Restauração, S.A. Aegean Park,SA Canasta-Empreendimentos Imobiliários,SA Agepan Eiweiler Management GmbH Carnes do Continente-Ind.Distr.Carnes,SA Agepan Tarket Laminate Park GmbH Co. KG Casa da Ribeira - Hotelaria e Turismo,SA Agloma Investimentos, Sgps, S.A. Cascaishopping- Centro Comercial, S.A. Agloma-Soc.Ind.Madeiras e Aglom.,SA Cascaishopping Holding I, SGPS, S.A. Airone - Shopping Centre, Srl CCCB Caldas da Rainha-Centro Com., SA ALEXA Administration GmbH Centro Colombo- Centro Comercial, S.A. ALEXA Holding GmbH Centro Residencial da Maia,Urban.,SA ALEXA Shopping Centre GmbH Centro Vasco da Gama-Centro Comercial,SA Algarveshopping- Centro Comercial, S.A. Chão Verde-Soc.Gestora Imobiliária,SA Aqualuz - Turismo e Lazer, Lda Cinclus Imobiliária,SA Arat Inmuebles, S.A. Citorres-Sociedade Imobiliária,SA ARP Alverca Retail Park, SA Coimbrashopping- Centro Comercial, S.A. Arrábidashopping- Centro Comercial, S.A. Colombo Towers Holding, BV Aserraderos de Cuellar,SA Contacto Concessões, SGPS, S.A. Atlantic Ferries-Tráf.Loc,Flu.e Marít,SA Contibomba-Comérc.Distr.Combustiveis,SA Avenida M-40 B.V. Contimobe-Imobil.Castelo Paiva,SA Azulino Imobiliária, S.A. Continente Hipermercados, S.A. BA Business Angels, SGPS, SA Country Club da Maia-Imobiliaria,SA BA Capital, SGPS Craiova Mall BV BB Food Service, SA Cronosaúde - Gestão Hospitalar, S.A. Be Artis-Conc.,Const.e Gest.Redes Com,SA Cumulativa - Sociedade Imobiliária, S.A. Be Towering-Gestão de Torres de Telec,SA Darbo SAS Beeskow Holzwerkstoffe Discovery Sports, SA Beralands BV Distodo Distribui e Logist,Lda Bertimóvel - Sociedade Imobiliária, S.A. Dortmund Tower GmbH BIG Picture 2 Films Dos Mares - Shopping Centre B.V. Dos Mares-Shopping Centre, S.A. Imoareia - Invest. Turísticos, SGPS, SA Dreamia, B.V IMOBEAUTY, S.A. Dreamia, Serv de Televisão, SA Imobiliária da Cacela, S.A. Ecociclo - Energia e Ambiente, SA Imoclub-Serviços Imobilários,SA Ecociclo II Imoconti- Soc.Imobiliária,SA Edições Book.it, S.A. Imodivor - Sociedade Imobiliária, S.A. Efanor Investimentos, SGPS, S.A. Imoestrutura-Soc.Imobiliária,SA Efanor Serviços de Apoio à Gestão, S.A. Imohotel-Emp.Turist.Imobiliários,SA Empracine-E.Pro.Act. Cinem,Lda Imomuro-Sociedade Imobiliária,SA Empreend.Imob.Quinta da Azenha,SA Imopenínsula - Sociedade Imobiliária, SA Equador & Mendes,Lda Imoplamac Gestão de Imóveis,SA Estação Viana - Centro Comercial, S.A. Imoponte-Soc.Imobiliaria,SA Estêvão Neves-Hipermercados Madeira,SA Imoresort - Sociedade Imobiliária, S.A. Euroresinas-Indústrias Quimicas,SA Imoresultado-Soc.Imobiliaria,SA Farmácia Selecção, SA Imosedas-Imobiliária e Seviços,SA
Fashion Division Canárias, SL Imosistema-Sociedade Imobiliária,SA Fashion Division, S.A. Impaper Europe GmbH FINSTAR-Socied.Investim.Par SA Implantação - Imobiliária, S.A. Fozimo-Sociedade Imobiliária,SA Infofield-Informática,SA Fozmassimo - Sociedade Imobiliária, SA Inparsa - Gestão Galeria Comercial, SA Freccia Rossa- Shopping Centre S.r.l. Inparvi SGPS, SA Fundo de Invest. Imobiliário Imosede Integrum - Energia, SA Fundo Esp.Inv.Imo.Fec. WTC Integrum Colombo Energia, SA Fundo I.I. Parque Dom Pedro Shop.Center Integrum Martim Longo - Energia, S.A. Fundo Invest. Imobiliário Imosonae Dois Integrum Vale do Caima - Energia, SA Fundo Invest.Imob.Shopp. Parque D.Pedro Integrum Vale do Tejo - Energia, SA Gaiashopping I- Centro Comercial, S.A. Interlog-SGPS,SA Gaiashopping II- Centro Comercial, S.A. Invesaude - Gestão Hospitalar S.A. GHP Gmbh Ioannina Develop. of Shopping Centers SA Gli Orsi Shopping Centre 1 Srl Isoroy SAS Glunz AG La Farga - Shopping Center, SL Glunz Service GmbH Land Retail B.V. Glunz UK Holdings Ltd Larim Corretora de Resseguros, Ltda Glunz Uka Gmbh Larissa Develop. of Shopping Centers, SA Golf Time-Golfe e Invest. Turísticos, SA Lazam MDS Corretora e Adm. Seguros, SA Guimarãeshopping- Centro Comercial, S.A. Le Terrazze - Shopping Centre 1 Srl Harvey Dos Iberica, S.L. Libra Serviços, Lda. Herco Consul.Riscos Corret.Seguros, Ltda Loop 5 - Shopping Centre, GmbH Herco, Consultoria de Risco, S.A. Lusomundo Audiovisuais, SA HighDome PCC Limited Lusomundo Cinemas, SA Iberian Assets, SA Lusomundo España, SL Igimo-Sociedade Imobiliária,SA Lusomundo Imobiliária 2, SA Iginha-Sociedade Imobiliária,SA. Lusomundo Moçambique, Lda Lusomundo Soc. Inv. Imob. SA Pareuro, BV Luz del Tajo - Centro Comercial S.A. Park Avenue Develop. of Shop. Centers SA Luz del Tajo B.V. Parklake Shopping Srl Madeirashopping- Centro Comercial, S.A. Parque Atlântico Shopping - C.C., SA Maiashopping- Centro Comercial, S.A. Parque D. Pedro 1 B.V. Maiequipa-Gestão Florestal,SA Parque de Famalicão - Empr. Imob., S.A. Marcas do Mundo-Viag. e Turismo Unip,Lda Parque Principado SL Marcas MC, ZRT Pátio Boavista Shopping Ltda. Marina de Tróia S.A. Pátio Campinas Shopping Ltda Marinamagic-Expl.Cent.Lúdicos Marít,Lda Pátio Goiânia Shopping Ltda Marmagno-Expl.Hoteleira Imob.,SA Pátio Londrina Empreend.e Particip.Ltda Martimope-Empreendimentos Turísticos, SA Pátio Penha Shopping Ltda. Marvero-Expl.Hoteleira Imob.,SA Pátio São Bernardo Shopping Ltda MDS Affinity-Sociedade de Mediação Lda Pátio Sertório Shopping Ltda MDS Africa SGPS, S.A. Pátio Uberlândia Shopping Ltda MDS Auto - Mediação de Seguros, SA Peixes do Continente-Ind.Dist.Peixes,SA MDS Corretor de Seguros, SA Per-Mar-Sociedade de Construções,SA
Mds Knowledge Centre, Unipessoal, Lda Pharmaconcept - Actividades em Saúde, SA MDS Malta Holding Limited PHARMACONTINENTE - Saúde e Higiene, S.A. MDS, SGPS, SA PJP - Equipamento de Refrigeração, Lda Megantic BV Plaza Eboli B.V. Miral Administração Corretagem Seg, Ltda Plaza Eboli - Centro Comercial S.A. MJLF-Empreendimentos Imobiliários, SA Plaza Mayor Holding, SGPS, S.A. Modalfa-Comércio e Serviços,SA Plaza Mayor Parque de Ócio B.V. MODALLOOP - Vestuário e Calçado, SA Plaza Mayor Parque de Ocio,SA Modelo - Dist.de Mat. de Construção,S.A. Plaza Mayor Shopping B.V. Modelo Continente Hipermercados,SA Plaza Mayor Shopping, SA Modelo Continente International Trade,SA Poliface North America Modelo Hiper Imobiliária,SA Porturbe-Edificios e Urbanizações,SA Modelo.com-Vendas p/Correspond.,SA Praedium - Serviços, SA Movelpartes-Comp.para Ind.Mobiliária,SA Praedium II-Imobiliária,SA Movimento Viagens-Viag. e Turismo U.Lda Praedium SGPS, SA MSTAR, SA Predicomercial-Promoção Imobiliária,SA Münster Arkaden BV Prédios Privados Imobiliária,SA Norte Shop. Retail and Leisure Centre BV Predisedas-Predial das Sedas,SA Norteshopping-Centro Comercial, S.A. Proj. Sierra Germany 4 (four)-Sh.C.GmbH Nova Equador Internacional,Ag.Viag.T,Ld Proj. Sierra Italy 2 - Dev.of Sh.C. Srl Nova Equador P.C.O. e Eventos Proj.Sierra Germany 2 (two)-Sh.C.GmbH Novobord (PTY) Ltd. Project 4, Srl Novodecor (PTY), LTD Project SC 1 BV Optimus - Comunicações, S.A. Project SC 2 BV OSB Deustchland Gmbh Project Sierra 11 BV Pantheon Plaza BV Project Sierra 12 BV Paracentro - Gest.de Galerias Com., S.A. Project Sierra 2 B.V. Project Sierra 6 BV Sierra Developments, SGPS, S.A. Project Sierra 8 BV Sierra Enplanta Ltda Project Sierra Four Srl Sierra European R.R.E. Assets Hold. B.V. Project Sierra Spain 1 B.V. Sierra Germany GmbH Project Sierra Spain 2 B.V. Sierra GP Limited Project Sierra Spain 2-Centro Comer. SA Sierra Greece, S.A. Project Sierra Spain 3 B.V. Sierra Investimentos Brasil Ltda Project Sierra Spain 3-Centro Comer. SA Sierra Investments (Holland) 1 B.V. Project Sierra Two Srl Sierra Investments (Holland) 2 B.V. Promessa Sociedade Imobiliária, S.A. Sierra Investments Holding B.V. Quorum Corretores de Seguros Ltda Sierra Investments SGPS, S.A. Racionaliz. y Manufact.Florestales,SA Sierra Italy Holding B.V. Raso - Viagens e Turismo, S.A. Sierra Italy Srl Raso, SGPS, SA Sierra Management, SGPS, S.A. River Plaza BV Sierra Portugal, SA River Plaza Mall, Srl Sierra Property Management Greece, SA Rochester Real Estate,Limited Sierra Romania Sh. Centers Services Srl RSI Corretora de Seguros, Ltda Sierra Services Holland B.V.
| S.C. Microcom Doi Srl | Sierra Solingen Holding GmbH |
|---|---|
| Saúde Atlântica - Gestão Hospitalar, SA | Sierra Spain 2 Services, S.A. |
| SC Aegean B.V. | Sierra Spain, Shop. Centers Services, SL |
| SC Assets SGPS, SA | Sierra Zenata Project B.V. |
| SC Finance BV | SII - Soberana Invest. Imobiliários, SA |
| SC Mediterranean Cosmos B.V. | SISTAVAC, S.A. |
| SC, SGPS, SA | SISTAVAC, SGPS, S.A. |
| SC-Consultadoria,SA | SISTAVAC-Sistemas HVAC-R do Brasil, Ltda |
| SC-Eng. e promoção imobiliária,SGPS,S.A | SKK SRL |
| SCS Beheer,BV | SKK-Central de Distr.,SA |
| SDSR - Sports Division 2, S.A. | SKKFOR - Ser. For. e Desen. de Recursos |
| SDSR - Sports Division SR, S.A. | Soc.Inic.Aproveit.Florest.-Energias,SA |
| Selifa-Empreendimentos Imobiliários,SA | Société de Tranchage Isoroy SAS. |
| Sempre à Mão - Sociedade Imobiliária,SA | Socijofra-Sociedade Imobiliária,SA |
| Sesagest-Proj.Gestão Imobiliária,SA | Sociloures-Soc.Imobiliária,SA |
| Sete e Meio - Invest. Consultadoria, SA | Soconstrução BV |
| Sete e Meio Herdades-Inv. Agr. e Tur.,SA | Soflorin,BV |
| Shopping Centre Colombo Holding, BV | Soira-Soc.Imobiliária de Ramalde,SA |
| Shopping Centre Parque Principado B.V. | Solinca - Health & Fitness, SA |
| SIAL Participações, Lda | Solinca-Investimentos Turísticos,SA |
| Sierra Asia Limited | Solinfitness - Club Malaga, S.L. |
| Sierra Berlin Holding BV | Solingen Shopping Center GmbH |
| Sierra Brazil 1 B.V. | SOLSWIM-Gestão e Expl.Equip.Aquáticos,SA |
| Sierra Central S.A.S. | Soltroia-Imob.de Urb.Turismo de Tróia,SA |
| Sierra Developments Holding B.V. | Somit Imobiliária,SA |
| Sierra Investments (Holland) 1 B.V. | Sonae - Specialized Retail, SGPS, SA |
| Sierra Investments (Holland) 2 B.V. | Sonae Capital Brasil, Lda |
| Sierra Investments Holding B.V. | Sonae Capital, SGPS, SA |
| Sierra Investments SGPS, S.A. | Sonae Center Serviços II, SA |
| Sierra Italy Holding B.V. | Sonae Ind., Prod. e Com.Deriv.Madeira,SA |
| Sierra Management Germany GmbH | Sonae Indústria - Management Services,SA |
| Sierra Management Italy S.r.l. | Sonae Industria (UK),Ltd |
| Sierra Management Romania, Srl | Sonae Industria de Revestimentos,SA |
| Sierra Management Spain – Gestión C.Com.S.A. | Sonae Indústria-SGPS,SA |
| Sierra Management, SGPS, S.A. | Sonae Investimentos, SGPS, SA |
| Sierra Portugal, S.A. | Sonae Investments,BV |
| SII – Soberana Invest. Imobiliários, S.A. | Sonae MC - Modelo Continente, SGPS, SA |
| SIRS – Sociedade Independente de Radiodifusão Sonora, S.A. | Sonae Novobord (PTY) Ltd |
| SISTAVAC, S.A. | Sonae RE, S.A. |
| SKK – Central de Distr., S.A. | Sonae Retalho Espana-Servicios Gen.,SA |
| SKK SRL | Sonae SGPS, SA |
| SKKFOR – Ser. For. e Desen. de Recursos | Sonae Sierra Brasil SA |
| Sociedade de Construções do Chile, S.A. | Sonae Sierra Brazil B.V. |
| Société de Tranchage Isoroy S.A.S. | Sonae Sierra, SGPS, S.A. |
| Socijofra – Sociedade Imobiliária, S.A. | Sonae Tafibra Benelux, BV |
Sociloures – Soc.Imobiliária, S.A. Sonae Turismo-SGPS,SA Soconstrução BV SONAECENTER SERVIÇOS, SA Sodesa, S.A. Sonaegest-Soc.Gest.Fundos Investimentos Soflorin, BV Sonaerp - Retail Properties, SA Soira – Soc.Imobiliária de Ramalde, S.A. Sondis Imobiliária,SA Solinca - Eventos e Catering, SA Sontaria-Empreend.Imobiliários,SA Solinca - Health and Fitness, SA Sontel BV Solinca – Investimentos Turísticos, S.A. Sontur BV Solinfitness – Club Malaga, S.L. Sonvecap BV Solingen Shopping Center GmbH Sopair, S.A. SOLSWIM-Gestão e Expl.Equip.Aquáticos,SA Sótaqua - Soc. de Empreendimentos Turist Soltroia – Imob.de Urb.Turismo de Tróia, S.A. Spanboard Products,Ltd Somit Imobiliária SPF- Sierra Portugal SONAE - Specialized Retail, SGPS, SA Spinarq Moçambique, Lda Sonae Capital Brasil, Lda Spinarq-Engenharia,Energia e Ambiente,SA Sonae Capital,SGPS, S.A. Spinveste - Promoção Imobiliária, SA Sonae Center II S.A. Spinveste-Gestão Imobiliária SGII,SA Sonae Center Serviços, S.A. Sport TV Portugal, SA Sonae Ind., Prod. e Com.Deriv.Madeira, S.A. Sport Zone Canárias Sonae Indústria – SGPS, S.A. Sport Zone España-Com.Art.de Deporte,SA Sonae Industria de Revestimentos, S.A. Sport Zone Turquia Sonae Indústria Manag. Serv, SA Spred, SGPS, SA Sonae Investimentos, SGPS, SA Tableros Tradema,S.L. Sonae Novobord (PTY) Ltd Tafiber,Tableros de Fibras Ibéricas,SL Sonae RE, S.A. Tafibra Suisse, SA Tafisa Canadá Societé en Commandite Valecenter Srl Tafisa Développement VALOR N, S.A. Tafisa France, SA Via Catarina- Centro Comercial, S.A. Tafisa Investissement Viajens y Turismo de Geotur España, S.L. Tafisa Participation Vistas do Freixo-Emp.Tur.Imobiliários,SA Tafisa UK,Ltd Vuelta Omega, S.L. Tafisa-Tableros de Fibras, SA Weiterstadt Shopping BV Taiber,Tableros Aglomerados Ibéricos,SL World Trade Center Porto, S.A. Tecmasa Reciclados de Andalucia, S.L. Worten Canárias Teconologias del Medio Ambiente,SA Worten España Distribución, SL Teliz Holding B.V. Worten-Equipamento para o Lar,SA Textil do Marco,SA ZIPPY - Comercio y Distribución, S.A. TLANTIC B.V. ZIPPY - Comércio e Distribuição, SA Tlantic Portugal-Sist. de Informação, SA Zippy Turquia Tlantic Sistemas de Informação Ltdª Zon Audiovisuais, SGPS Todos os Dias-Com.Ret.Expl.C.Comer.,S.A. Zon Cinemas, SGPS Tool Gmbh Zon Conteúdos, Lda Torre Ocidente, Imobiliária,SA ZON Finance BV Torre São Gabriel-Imobiliária,SA ZON III-COMUNICAÇ ELETRÓN SA Troia Market-Supermercados, S.A. ZON II-SERVIÇOS TELEVISÃO,SA
| SONAE/EFANOR/ZON GROUP COMPANIES | (continue) |
|---|---|
| Troia Natura, S.A. | Zon Lusomundo TV Lda |
| Troiaresort-Investimentos Turísticos, SA | ZON OPTIMUS, SGPS, S.A. |
| Troiaverde-Expl.Hoteleira Imob.,SA | Zon TV Cabo Açoreana, SA |
| Tulipamar-Expl.Hoteleira Imob.,SA | Zon TV Cabo Madeirense, SA |
| Unishopping Administradora Ltda. | Zon TV Cabo SGPS SA |
| Unishopping Consultoria Imob. Ltda. | Zon TV Cabo, SA |
| Upstar Comunicações SA | Zubiarte Inversiones Inmob,SA |
| Urbisedas-Imobiliária das Sedas,SA | ZYEVOLUTION-Invest.Desenv.,SA |
The signatories individually declare that, to their knowledge, the Management Report, the Consolidated and Individual Financial Statements and other accounting documents required by law or regulation were prepared meeting the standards of the applicable International Financial Reporting Standards, giving a truthful (fairly) and appropriate image, in all material respects, of the assets and liabilities, financial position and the consolidated and individual results of the issuer and that the Management Report faithfully describes the business evolution and position of the issuer and of the companies included in the consolidation perimeter and contains a description of the major risks and uncertainties that they face.
Duarte Paulo Teixeira de Azevedo Ângelo Gabriel Ribeirinho Paupério António Bernardo Aranha da Gama Lobo Xavier Maria Cláudia Teixeira de Azevedo Miguel Nuno Santos Almeida António Sampaio e Mello Gervais Gilles Pellissier David Charles Denholm Hobley Jean-François René Pontal Frank Emmanuel Dangeard
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This document may contain forward-looking information and statements, based on management's current expectations or beliefs. Forward-looking statements are statements that are not historical facts.
These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, including, but not limited to, changes in regulation, the telecommunications industry and economic conditions; and the effects of competition. Forward-looking statements may be identified by words such as "believes", "expects", "anticipates", "projects", "intends", "should", "seeks", "estimates", "future" or similar expressions.
Although these statements reflect our current expectations, which we believe are reasonable, investors, analysts and, generally, the recipients of this document are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. You are cautioned not to put undue reliance on any forward-looking information or statements. We do not undertake any obligation to update any forward-looking information or statements.
Report available at Sonaecom's institutional website
Carlos Alberto Silva Investor Relations Manager carlos.alberto.silva @sonae.com Tel: 351 93 100 23 49
Sonaecom SGPS, SA Rua Henrique Pousão, 432 – 2nd floor 4460-191 Senhora da Hora Portugal
Sonaecom SGPS is listed on the Euronext Stock Exchange. Information may be accessed on Reuters under the symbol 'SNC.LS' and on Bloomberg under the symbol 'SNC:PL'.
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