Annual Report • Apr 8, 2011
Annual Report
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Head Office: Rua João Mendonça, 529 – 4464-501 Senhora da Hora
Share Capital 1.000.000.000 Euro
Porto Commercial Registry and Fiscal Number 501 532 927
31 DECEMBER 2010
Sonae Investimentos, SGPS, SA is the company within the Sonae Group which aggregates the core activity of the group, retail.
During the course of 2010, Sonae Investimentos, SGPS, SA delivered a consolidated turnover of 4,801 million Euro - which represents an increase of 6% compared to the previous year. In this same period, the Company´s consolidated operating cash-flow reached 433 million Euro. This figure represents a ratio over total net sales of 9.0%, 1.1 p.p. more than the previous year.
Focusing on the evolution of the Company´s activity, we highlight the following aspects:
The food based businesses increased turnover (ex-fuel) by 5% to 3,275 million Euro reflecting:
Also worth mentioning was the increase in market share in 2010 (Source: Nielsen, Total Store Reading), with the sales growth clearly above that of the remaining modern retail operators in Portugal.
The business segment under analysis improved cash-flow by 16% to 231 million Euro, representing a margin over sales of 7.1%, with margins in the last quarter reaching 9.1%, in line with 4Q09. This situation reflected: (i) growth benefits via the dilution of fixed costs; (ii) the significant efforts carried out to improve operations with the aim of creating a more cost efficient model; (iii) the strengthening of international sourcing to private label products; and (v) greater levels of efficiency in promotional campaigns using the client loyalty card.
With regards to the specialised retail formats, turnover increased 12% to 1,272 million Euro. On a like-for-like basis, sales grew by 1%. Sonae SR Portugal sales increased by 5% (1% in L4L terms), whilst Sonae SR International sales increased 60% (decrease of 1% in L4L terms). The operations in Spain were responsible for circa 20% of specialised retail sales in 2010, accounting for 62% of Sonae SR sales growth in the year. Worten and Sport Zone were successful in strengthening their position in the Iberian market, however the products offered by the fashion formats proved to be in sync with demand in the current macroeconomic climate.
This business segment witnessed an operating cash flow decrease of 3 million Euro to 45 million Euro, representing a margin over sales of 3.5%. This performance reflects two opposing impacts: (i) a 2% EBITDA increase in the Portuguese operation; and (ii) a significant investment in the organic growth of operations in Spain, involving more than 52,000 m2 compared to 2009 (2,000 m2 in Saudi Arabia). Sonae SR international EBITDA is in line with its aim of reaching positive EBITDA in 2010, and of the company becoming a key player in Spain.
The retail properties profitability particularly reflects internal rents, defined in accordance with the returns on the underlying investments, which are broadly in line with market capitalisation rates. Operating cash flow increased circa 35% to 149 million Euro due to the retail properties unit having completed the sale and leaseback operation of its logistics centre in Azambuja.
In this same period, investment management turnover exceeded 167 million Euro, and operating cash flow was 2 million Euro.
During the course of the year in question, Sonae Investimentos, SGPS, SA consolidated operating income totalled 263 million Euro. This figure is 25% greater than that registered in the previous year.
In this same period, negative financial results totalled 51 million Euro, incorporating a reduction of circa 1 million Euro compared to 2009.
At the same time, the Consolidated Net Result for the period, attributable to Shareholders of the Holding Company, amounted to 169 million Euro, compared to 138 million Euro in the previous year.
During the course of 2010, Sonae Investimentos carried out an overall investment of 209 million Euro. This figure was directed towards the execution of the Company´s expansion plan, allowing it to end the year with a portfolio of 1,019 stores and a sales area of 971 thousand m2 (+8% on 2009 year end portfolio).
During the month of March, a subsidiary of the Group concluded a sale & leaseback operation of its Continente and Worten stores located in the Vasco da Gama Shopping Centre to the Open Real Estate Investment Fund "Imofomento". The total value of the transaction was 42.3 million Euro with an initial yield of 6.1%, on a "Triple Net" basis, generating a capital gain of 16.6 million Euro.
In 2011, Sonae Investimentos will continue to act in line with its corporate strategic guideline of creating value via its international expansion and strengthening of its businesses.
The food based retail unit will continue to focus on leadership and profitability via: (i) consolidating market leadership on Portugal; (ii) evaluating new adjacent business opportunities; (iii) management of its business in Portugal as a cash-flow generator; (iv) at the same time it will dedicate efforts in seeking new international opportunities.
The specialised retail unit will maintain focused on growth and internationalisation via: (i) continued investment in Spain and strengthening of presence in the country; (ii) assessment and preparation of entry into new geographies, via franchising model and/or joint-venture opportunities; (iii) consolidation of market leadership in Portugal and increase in profitability.
Additional sale & leaseback asset transactions are planned for during the year, with the aim of freeing up invested capital in real estate assets to finance growth, in line with the strategy announced by the retail property unit.
The general financial risk management principles of the Company are found in detail in Note 3 of the Appendix to the Income Statement.
Sonae Investimentos through its subsidiaries acquired 100,000,000 of own shares for the total sum of 320,000,000 Euros which remained in the Group as at 31st December 2010.
Remuneration paid and attributed
The following remuneration was attributed to the Board of Directors (including fixed remuneration, short term variable remuneration and medium term variable remuneration) by the Company and the Group´s societies:
| 2009 | 2010 | |||||||
|---|---|---|---|---|---|---|---|---|
| amounts in Euro | Fixed Remuneration |
Short Term Variable Remuneration |
Medium Term Variable Remuneration |
Total | Fixed Remuneration |
Short Term Variable Remuneration |
Medium Term Variable Remuneration |
Total |
| Directors | ||||||||
| Duarte Paulo Teixeira Azevedo | 50,400 | 0 | 0 | 50,400 | 12,500 | 0 | 0 | 12,500 |
| Ângelo Gabriel Rib Santos Paupério | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Nuno Manuel Moniz Trigoso Jordão* | 411,560 | 190,900 | 290,200 | 892,660 | 87,570 | 0 | 0 | 87,570 |
| Total | 461,960 | 190,900 | 290,200 | 943,060 | 100,070 | 0 | 0 | 100,070 |
* until April 2010
The remuneration of the members of the Statutory Audit Board is composed of a set annual amount, based on the Company´s financial situation and market practices. The set annual amount for the members of this committee were as follows:
| Total | 20,000 | 20,000 |
|---|---|---|
| Óscar José Alçada da Quinta | 6,000 | 6,000 |
| Arlindo Dias Duarte Silva | 6,000 | 6,000 |
| UHY & Associados, SROC , Lda representada por António Francisco Barbosa dos Santos |
8,000 | 8,000 |
| Member of the Statutory Audit Board | 2009 | 2010 |
amounts in Euro
Sonae Investimentos Statutory Auditor and audit firm is Deloitte. The figures invoiced to Sonae Investimentos in 2009 and 2010, including subsidiaries, are as follows:
| 2009 | 2010 | |||
|---|---|---|---|---|
| Statutory Audit | 543,855 | 34% | 569,983 | 48% |
| Other Compliance and Assurance Services | 15,000 | 1% | 11,907 | 1% |
| Tax Consultancy Services | 41,500 | 3% | - | |
| Other Services | 1,018,357 | 63% | 607,465 | 51% |
| Total | 1,618,712 | 1,189,355 |
amounts in Euro
The fees relative to auditing services and other compliance and assurance services increased by 14% in 2010, representing 49% of total fees. The other services represented 51% of total fees and were assessed by the Statutory Audit Board.
In 2010, the fees for other services included: consulting services provided to several subsidiaries of Sonae Investimentos (22% of total fees), and services related to tax incentives (29% of total fees).
The tax advisory services and other services are provided by different professionals who are not involved in the auditing process, thus it is considered that the auditors impartiality is enhanced.
In 2010, fees paid by Sonae Investimentos, in Portugal, to companies within the Deloitte network, represented less than 1% of Deloitte´s annual turnover in Portugal.
The External Auditor quality system controls and monitors the potential risks of loss of independence or possible conflict of interests with Sonae.
Under the terms of article 62º-B of Law Decree nº 487/99 dated 16th November (altered by Decree Law nº 224/2008, 20th November), on an annual basis, the Statutory Audit Board receives a declaration of independence from the auditor, where services rendered by them and other entities within the same network are described, in addition to respective remuneration paid, eventual threats to independence and measures to safeguard against them.
The remuneration of the Board of Shareholder's General Meeting is constituted by a set figure, as detailed below:
| Total | 5,250 | 5,250 |
|---|---|---|
| Secretary | 1,500 | 1,500 |
| Chairman | 3,750 | 3,750 |
| Board of Shareholder's General Meeting | 2009 | 2010 |
amount in Euro
Sonae Investimentos, SGPS, S.A. net profit for the year, as a standalone company, totalled 450,539,261.63 Euro, for which the Board of Directors propose the following distribution:
| Legal Reserve___ | 22,526,963.08 Euros |
|---|---|
| Free Reserve____ | 428,012,298.55 Euros |
| Total ______ | 450,539,261.63 Euros |
We thank all of our customers, suppliers, financial institutions and shareholders for their support and preferences demonstrated. To the external auditors and statutory auditors we also owe our gratitude for their cooperation throughout the year. Finally, a special word of thanks to all of Sonae Investimentos employees for their enthusiasm, dedication and competence demonstrated once again.
Matosinhos, 15 th March 2011
The Board of Directors,
Duarte Paulo Teixeira de Azevedo (President)
Ângelo Gabriel Ribeirinho dos Santos Paupério
Nuno Manuel Moniz Trigoso Jordão
sale of articles + services rendered.
Turnover + Other revenues - negative Goodwill - reversal of impairment losses - operating costs + profit/loss on disposals of subsidiaries - provisions for warranty extensions
Turnover + other income + negative goodwill – operating costs - provisions for warranty extensions + profit/loss on disposals of subsidiaries – amortizations and impairment losses
Gross investment in fixed assets (tangible and intangible), investment properties and acquisitions of subsidiaries; less amounts generated over assets disposals
customer debts (receivables derived from the normal course of the Group's activities) – suppliers (amount payable resulting from purchases derived from the normal course of the Group's activities) + inventories (goods booked at acquisition cost, less quantity discounts and impairment losses) + other assets and liabilities (State and other public entities + associated companies + accruals and prepayments + deferred taxes + provisions for risks and charges + fixed asset suppliers + sundry debtors and creditors)
gross tangible and intangible assets + other gross fixed assets (including Goodwill) + amortisations and impairment losses + financial investments + working capital
Sonae Investimentos, SGPS, S.A. Corporate Governance practices annual report, pursuant to the terms of regulation number 4 of article 245 A of the Portuguese Securities Code.
As set out in Article 8, nº 1 b) of the Portuguese Securities Market Commission Regulation nº 05/2008, the shareholders with qualified shareholdings on the 31st December 2010 are listed below:
| Shareholder | Nr. of shares | % Share Capital |
% of Voting Rights |
|---|---|---|---|
| Efanor Investimentos, SGPS, SA | |||
| By Sonae, SGPS, SA | 768,580,810 | 76.858% | 85.398% |
| By Sonae Investments, BV | 131,419,190 | 13.142% | 14.602% |
| By da Sonae - Specialized Retail, SGPS, SA (1) | 100,000,000 | 10.000% | - |
| Total attributable to Efanor Investimentos, SGPS, SA | 1,000,000,000 | 100.000% | 100.000% |
| (1) considered own shares according to the Portuguese Companies Act since Sonae - Specialized Retail, SGPS, S owned by Sonae Investimentos, SGPS, SA. |
A is fully |
owned by Sonae Investimentos, SGPS, SA.
There are no shareholders who hold special rights.
As set in the company´s Articles of Association (if nothing is stated, the guidelines shall be those of the governing law):
The Shareholders General Meeting is made up of shareholders with voting rights, holders of shares or securities for subscription, that until 5 business days prior to the Assembly taking place, present prove of their shareholding, under the terms established by Law. The presence of shareholders who have preferential shares without voting rights in the Shareholders General Meeting, and their taking part in the discussion of matters regarding order of the day, depends on the General Assembly Authorisation.
One share corresponds to one vote.
Shareholders who are private individuals can be represented at the Shareholders' General Meetings by sending a letter to the Chairman of the Board of the Shareholders General Meeting, stating the name and address of the representative and date of the meeting. Legal entities may be represented by a person designated by them in writing, whose designation authenticity will be verified by the Chairman of the Board of the Shareholders General Meeting.
If the Company is listed as a publicly quoted company, shareholders can vote by mail, but only in relation to changes to the Articles of Association and Company Governing Bodies election.
Postal votes will only be considered when received at the Company's registered office by registered mail, receipt delivery, addressed to the Chairman of the Board of the Shareholders´ General Meeting at least 3 days prior to the date of the General Meeting, notwithstanding the requirement of proof of shareholding.
The voting declaration must be signed by the shareholder or by his/hers legal representative. In the case of a private individual, it should be accompanied by a certified copy of his/her identity card. In case of a legal entity, the signature should be notarised and should specify that the signatory is authorised and mandated for that purpose.
Voting declarations will only be considered valid when they clearly and unequivocally set out:
a) The item or items of the agenda they refer to;
b) The specific proposal to which they relate to with an indication of the respective proposer or proposers;
c) The precise and unconditional voting intention on each proposal.
Notwithstanding, a shareholder is allowed to include in a written voting declaration, regarding an identified proposal, the intention to vote against all alternative proposals, in relation to the same item on the agenda, without further specification.
The shareholders who send their voting declaration by mail shall be deemed to have abstained from voting on any proposals that are not specifically included in their written voting declarations.
Postal votes count as negative votes regarding resolution proposals presented after the date on which the same votes were issued.
It is the Chairman of the Board of the Shareholders'General Meeting responsibility, or the person replacing him, to verify voting declarations sent by mail, disregarding any votes relating to declarations that have not been accepted.
It is the Company´s responsibility to guarantee the confidentiality of votes sent by mail, until voting takes place.
The shareholder must, at least five days prior to the Shareholders General Meeting, carry out the due and necessary proof of share ownership.
The Shareholders General Meeting may deliberate at first call so long as there are present or represented shareholders whom represent more than 50% of the issued share capital.
Chapter 4 – Rules applicable to the nomination and replacement of the Statutory Governing Bodies members and changes to the Company's Articles of Association
The Board of Directors is made up of an even or odd number of members. A minimum of 3 and maximum of 11, elected at the Shareholders General Meeting.
In case of death, resignation or temporary or permanent incapacity of any member, the Board of Directors will provide a substitute.
In the case of the company being a publicly quoted company, concessionaire of the State or equivalent entity, the definitive lack of a Director elected under the provision of article 392 of the Portuguese Companies Act (special election rules apply), results in new elections.
Notwithstanding, governing law does not prevent that the substitution may be decided by the Shareholders General Meeting.
As set forth in governing law, changes to the Articles of Association depend on the Shareholders General Meeting Resolution.
Required quorum for amendment to the Articles of Association:
a) The Articles of Association state that at first call to deliberate on any matter, shareholders whom represent more than 50% of the share capital must be present or represented;
b) In accordance with chapter 3, article 383 of the Portuguese Companies Act, the Assembly, on a second call, can deliberate regardless of the number of shareholders present, represented or the share capital by them represented.
Under the terms of chapter 3 article 386 of the Portuguese Companies Act, the resolution regarding a change to the articles of association, must be approved by 2/3 of votes, regardless of the Assembly meeting during a first or a second call.
Article 5, chapter 2 of the Articles of Association states that the Company's "share capital can be increased, through new entries in cash, of up to five thousand million Euro, in one or more stages, by resolution of the Boards of Directors, which will determine, in accordance with the law, the conditions of subscription and the categories of shares to be issued, based on those already existing at the time".
This authorisation was approved by the Shareholders General Meeting which took place on 2nd of May 2007 and remains valid for a period of 5 years under the terms of chapter 2 b) of article 456 of the Portuguese Companies Act.
The existence of an effective internal control environment, particularly in the process of financial reporting, is a commitment Sonae Investimentos Board of Directors has. It aims to identify and improve most relevant
process in terms of preparation and disclosure of financial information, with the aims of transparency, consistency, simplicity and materiality. The objective of the internal control system is to ensure a reasonable guarantee in relation to the preparation of financial statements in accordance with the accounting principles adopted, and quality of financial reporting.
The reliability of the financial information is guaranteed not only by the clear separation between who prepares it and the users, but also by the implementation of various control procedures during the process of preparation and disclosure of financial information
The internal control system regarding accounting, preparation and disclosure of financial information, includes the following key controls:
The Management Report is prepared by the department of Investor Relations, with the contribution and additional verification of various business and support areas. The Corporate Governance report is prepared by the department of Legal Support and Corporate Governance;
The various documents which constitute the annual report are reviewed and approved by Sonae Investimentos Board of Directors. After the approval, the documents are sent to the External Auditor, who provides the legal accounts certification and External Auditing Report;
Amongst the risk causes which may materially affect the accounting and financial reporting, we note the following:
More specific information on how these, and other risk causes were mitigated, can be consulted during the course of notes to the financial statements.
Sonae Investments adopts various actions related to the continuous improvement of the Financial Risk Control System, including:
Improvement in control documentation – Following work carried out in 2010, during 2011 Sonae Investimentos will continue to improve the documentation and systemisation of risks and the internal control system related to the concern for financial information. This work includes the identification of risk/causes (initial risk), and identification of process with greater materiality, the control of documentation and the final analysis (residual risk) after the implementation of potential improvements in controls:
Fulfilment Review – The department of Legal Support and Corporate Governance, in cooperation with the Administrative, Investor Relations, Internal Auditing and Risk Management departments, and in accordance with other necessary departments, coordinates a periodic review of the compliance with legal and regulatory requirements regarding the processes of underlying government and corresponding financial information, which are disclosed in the Management Report and Corporate Governance Report.
Matosinhos, 15th of March 2011
The Board of Directors,
Duarte Paulo Teixeira de Azevedo (President)
Ângelo Gabriel Ribeirinho dos Santos Paupério
Nuno Manuel Moniz Trigoso Jordão
The signatories individually declare that, to their knowledge, the Report of the Board of Directors , the Consolidated and Individual Financial Statements and other accounting documents required by law or regulation were prepared in compliance with International Financial Reporting Standards as adopted by the European Union, giving a fair and appropriate image of the assets and liabilities, financial position and the consolidated and individual results of Sonae Investimentos, SGPS, SA and of the companies included in the consolidation perimeter, and that the Report of the Board of Directors faithfully describes the progress of the business and position of Sonae Investimentos, SGPS, SA and of the companies included in the consolidation perimeter and contains a description of the major risks and uncertainties that they face.
Matosinhos, 15 March 2011
The Board of Directors
Duarte Paulo Teixeira de Azevedo; Presidente do Conselho de Administração
Ângelo Gabriel Ribeirinho dos Santos Paupério;
Nuno Manuel Moniz Trigoso Jordão;
Disclosure of shares and other securities held by members of the Board of Directors and by those discharging managerial responsibilities, as well as by people closely connected with them (article 248 B of the Portuguese Securities Code), and disclosure of the respective transactions during the year involving such shares and other securities:
| Additions | Reductions | ||||||
|---|---|---|---|---|---|---|---|
| Date | Quantity | Aver. Price € | Quantity Aver. Price € | 31.12.2010 Quantity |
|||
| Duarte Paulo Teixeira de Azevedo () () () (**) Efanor Investimentos, SGPS, SA (1) Migracom, SGPS, SA (4) Sonae, SGPS, SA |
1 1,969,996 3,293 (a) |
||||||
| Ângelo Gabriel Ribeirinho dos Santos Paupério () (*) Sonae, SGPS, SA |
250,000 | ||||||
| Additions | Reductions | Balance as of 31.12.2010 |
|||||
| Date | Quantity | Aver. Price € | Quantity Aver. Price € | Quantity | |||
| (1) Efanor Investimentos, SGPS, SA Sonae, SGPS, SA (3) Pareuro, BV (2) |
659,650,000 2,000,000 |
||||||
| (2) Pareuro, BV Sonae, SGPS, SA (3) |
400,000,000 | ||||||
| (3)Sonae, SGPS, SA Sonae Investments, BV (4) Sonae Investimentos, SGPS, SA Sale |
26.11.2010 | 56,200,000 | 3.200 | 2,000,000 768,580,810 |
|||
| (4) Sonae Investments BV Sonae Investimentos, SGPS, SA Sale |
01.10.2010 | 43,800,000 | 3.200 | 131,419,190 | |||
| (5) Sonae - Specialized Retail, SGPS, SA Sonae Investimentos, SGPS, SA Purchase Purchase |
01.10.2010 26.11.2010 |
43,800,000 56,200,000 |
3.200 3.200 |
100,000,000 | |||
| (6) Migracom, SGPS, SA Sonae, SGPS, SA (3) Imparfin, SGPS, SA (7) |
1,485,000 150,000 |
||||||
| (7) Imparfin, SGPS, SA Sonae, SGPS, SA (3) |
4,105,280 |
(*) Member of the Board of Directors of Sonae Investimentos, SGPS, SA
(**) Member of the Board of Directors of Sonae, SGPS, SA (directly and indirectly dominant company) (3)
(***) Member of the Board of Directors of Efanor Investimentos SGPS, SA (directly and indirectly dominant company) (1)
(****) Member of the Board of Directors of Imparfin, SGPS, SA (7)
(a) Shares held by underage descendents under his/her charge
Number of shares held by shareholders owning more than 10%, 33% and 50% of the Sonae Investimentos SGPS, SA share capital:
| Sonae, SGPS, SA | 768,580,810 |
|---|---|
| Sonae Investments, BV | 131,419,190 |
Shares held and voting rights of companies owning more than 2% of the share capital of the company, as required by article 8 nr.1 b) of Securities Market Regulation Board (CMVM) regulation 05/2008:
| Shareholder | Nr. of shares | % Share Capital |
% of Voting Rights |
|---|---|---|---|
| Efanor Investimentos, SGPS, SA | |||
| By Sonae, SGPS, SA | 768,580,810 | 76.858% | 85.398% |
| By Sonae Investments, BV | 131,419,190 | 13.142% | 14.602% |
| By da Sonae - Specialized Retail, SGPS, SA | 100,000,000 | 10.000% | - |
| Total attributable to Efanor Investimentos, SGPS, SA | 1,000,000,000 | 100.000% | 100.000% |
| 1) Considered treasury shares in accordance w ith Commercial Companies Code as Sonae - Specialized Retail, SGPS, SA is fully ow by Sonae Investimentos, SGPS, SA. |
ned |
by Sonae Investimentos, SGPS, SA.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2010 AND 2009
(Translation of consolidated financial statements originally issued in Portuguese.
In case of discrepancies the Portuguese version prevails)
(Amounts expressed in euro)
| ASSETS | Notes | 31 December 2010 | 31 December 2009 |
|---|---|---|---|
| NON-CURRENT ASSETS: | |||
| Tangible assets | 10 | 2,132,257,452 | 2,198,493,423 |
| Intangible assets | 11 | 153,674,164 | 162,320,303 |
| Goodwill | 12 | 518,235,811 | 519,885,038 |
| Investments in associates | 6 | 53,887,757 | 2,376,473 |
| Other investments | 7 and 9 | 34,556,256 | 763,866 |
| Deferred tax assets | 20 | 98,959,834 | 90,471,037 |
| Other non-current assets | 9 and 14 | 37,391,624 | 4,336,556 |
| Total non-current assets | 3,028,962,898 | 2,978,646,696 | |
| CURRENT ASSETS: | |||
| Stocks | 15 | 664,630,207 | 588,968,421 |
| Trade accounts receivable | 9 and 16 | 39,793,524 | 36,331,126 |
| Other debtors | 9 and 17 | 107,928,638 | 128,845,634 |
| Taxes recoverable | 18 | 38,933,630 | 28,379,704 |
| Other current assets | 19 | 41,951,076 | 32,538,142 |
| Investments | 9 and 13 | 15,642,909 | 57,659,791 |
| Cash and cash equivalents | 9 and 21 | 200,024,469 | 111,407,067 |
| Total current assets | 1,108,904,453 | 984,129,885 | |
| Non-current assets available for sale | 10 | 9,500,686 | - |
| TOTAL ASSETS | 4,147,368,037 | 3,962,776,581 | |
| EQUITY AND LIABILITIES | |||
| EQUITY: | |||
| Share capital | 22 | 1,000,000,000 | 1,000,000,000 |
| Treasury shares | 22 | (320,000,000) | - |
| Legal reserve | 117,087,918 | 114,000,000 | |
| Reserves and retained earnings | (265,503,577) | (279,954,941) | |
| Profit/(Loss) for the period attributable to the equity holders of the Parent Company | 168,595,954 | 138,171,091 | |
| Equity attributable to the equity holders of the parent company | 700,180,295 | 972,216,150 | |
| Equity attributable to non-controlling interests | 23 | 75,434,780 | 74,344,125 |
| TOTAL EQUITY | 775,615,075 | 1,046,560,275 | |
| LIABILITIES: | |||
| NON-CURRENT LIABILITIES: | |||
| Loans | 9 and 24 | 303,599,257 | 285,894,893 |
| Bonds | 9 and 24 | 899,337,511 | 987,483,025 |
| Obligation under finance leases | 9, 24 and 25 | 7,170,863 | 8,620,393 |
| Other loans | 9 and 24 | 162,624 | 198,853 |
| Other non-current liabilities | 9 and 27 | 425,408,286 | 16,222,928 |
| Deferred tax liabilities | 20 | 108,202,465 | 96,744,418 |
| Provisions | 32 | 21,495,563 | 9,263,092 |
| Total non-current liabilities | 1,765,376,569 | 1,404,427,602 | |
| CURRENT LIABILITIES: | |||
| Loans | 9 and 24 | 10,889,883 | 26,390,951 |
| Bonds | 9 and 24 | 89,554,618 | 64,899,489 |
| Obligation under finance leases | 9, 24 and 25 | 2,752,393 | 4,704,670 |
| Other loans | 9 and 24 | 5,278,846 | 7,935,788 |
| Trade creditors | 9 and 29 | 1,121,852,468 | 1,062,040,575 |
| Other creditors | 9 and 30 | 154,874,375 | 133,158,621 |
| Taxes and contributions payable | 18 | 52,891,000 | 65,634,240 |
| Other current liabilities | 31 | 166,595,831 | 144,535,487 |
| Provisions | 32 | 1,686,979 | 2,488,883 |
| Total current liabilities | 1,606,376,393 | 1,511,788,704 | |
| TOTAL LIABILITIES | 3,371,752,962 | 2,916,216,306 | |
| TOTAL EQUITY AND LIABILITIES | 4,147,368,037 | 3,962,776,581 |
The accompanying notes are part of these consolidated financial statements.
(Amounts expressed in euro)
| Notes | 31 December 2010 | 31 December 2009 | |
|---|---|---|---|
| Sales | 35 | 4,664,262,067 | 4,420,413,159 |
| Services rendered | 35 | 136,903,890 | 125,452,037 |
| Investment income | 36 | 12,591,027 | 1,639,444 |
| Financial income | 37 | 3,348,834 | 8,269,478 |
| Other income | 38 | 452,060,350 | 389,849,255 |
| Cost of goods sold and materials consumed | 15 | (3,573,186,538) | (3,436,653,360) |
| Changes in stocks of finished goods and work in progress | 115,278 | - | |
| External supplies and services | 39 | (615,023,693) | (565,677,205) |
| Staff costs | 40 | (539,077,297) | (504,143,624) |
| Depreciation and amortisation | 10 and 11 | (163,541,459) | (141,185,028) |
| Provisions and impairment losses | 32 | (18,953,842) | (6,867,019) |
| Financial expense | 37 | (54,569,541) | (58,026,872) |
| Other expenses | 41 | (93,445,005) | (71,340,106) |
| Share of results of associated undertakings | 6 | 532,931 | (652,675) |
| Profit/(Loss) before taxation | 212,017,002 | 161,077,484 | |
| Income Tax | 42 | (43,651,281) | (24,335,041) |
| Profit/(Loss) after taxation | 168,365,721 | 136,742,443 | |
| Attributable to: | |||
| Equity holders of the Parent Company | 168,595,954 | 138,171,091 | |
| Non-controlling interests | 23 | (230,233) | (1,428,648) |
| Profit/(Loss) per share | |||
| Basic | 44 | 0.171391 | 0.138171 |
| Diluted | 44 | 0.171391 | 0.138171 |
The accompanying notes are part of these consolidated financial statements.
(Amounts expressed in euro)
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Net Profit / (Loss) for the period | 168,365,721 | 136,742,443 |
| Exchange differences arising on translation of foreign operations | 319,866 | 78,943 |
| Changes in hedge and fair value reserves | 3,172,468 | (1,900,007) |
| Deferred tax related to changes in fair value reserves | (840,702) | 775,121 |
| Other comprehensive income for the period | 2,651,632 | (1,045,943) |
| Total comprehensive income for the period | 171,017,353 | 135,696,500 |
| Attributable to: | ||
| Equity holders of the Parent Company | 171,249,324 | 137,125,148 |
| Non-controlling interests | (231,971) | (1,428,648) |
The accompanying notes are part of these consolidated financial statements.
| Attributable to Equity Holders of the Parent Company | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Reserves and Retained Earnings | ||||||||||||
| Notes | Share Capital |
Treasury Shares |
Legal Reserve |
Foreign Currency Translation Reserves |
Hedging Reserves |
Legal reserves in accordance with article 342º of CSC a) |
Other Reserves and Retained Earnings |
Total | Net Profit/(Loss) |
Total | Non-controlling Interests (Note 23) |
Total Equity |
| Balance as at 1 January 2009 | 1,000,000,000 | - | 99,300,000 | 3,666 | (3,316,342) | - | (346,889,834) | (250,902,510) | 170,993,512 | 920,091,002 | 11,201,548 | 931,292,550 |
| Total comprehensive income for the period | - | - | - | 78,943 | (1,124,886) | - | - | (1,045,943) | 138,171,091 | 137,125,148 | (1,428,648) | 135,696,500 |
| Appropriation of profit of 2008: Transfer to legal reserves and retained earnings Dividends distributed 22 Aquisitions of shares of affiliated undertakings Equity increases in affiliated companies Others |
- - - - |
- - - - |
14,700,000 - - - |
- - - - |
- - - - |
- - - - |
156,293,512 (85,000,000) - - |
170,993,512 (85,000,000) - - |
(170,993,512) - - - |
- (85,000,000) - - |
- (4,170) 63,575,395 1,000,000 - |
- (85,004,170) 63,575,395 1,000,000 - |
| Balance as at 31 December 2009 | 1,000,000,000 | - | 114,000,000 | 82,609 | (4,441,228) | - | (275,596,322) | (165,954,941) | 138,171,091 | 972,216,150 | 74,344,125 | 1,046,560,275 |
| Balance as at 1 January 2010 | 1,000,000,000 | - | 114,000,000 | 82,609 | (4,441,228) | - | (275,596,322) | (165,954,941) | 138,171,091 | 972,216,150 | 74,344,125 | 1,046,560,275 |
| Total comprehensive income for the period | - | - | - | 319,866 | 2,333,504 | - | - | 2,653,370 | 168,595,954 | 171,249,324 | (231,971) | 171,017,353 |
| Appropriation of profit of 2009: Transfer to legal reserves and retained earnings |
- | - | 3,087,918 | - | - | - | 135,083,173 | 138,171,091 | (138,171,091) | - | - | - |
| Dividends distributed 22 |
- | - | - | - | - | - | (70,000,000) | (70,000,000) | - | (70,000,000) | - | (70,000,000) |
| Treasury shares 22 |
- (320,000,000) | - | - | - | - | - | - | - | (320,000,000) | - | (320,000,000) | |
| Free reserves made unavailable 22 |
- | - | - | - | - | 342,000,000 | (342,000,000) | - | - | - | - | - |
| Supplementary Capital 22 |
- | - | - | - | - | - | 372,000,000 | 372,000,000 | - | 372,000,000 | - | 372,000,000 |
| Distribution of free reserves 22 |
- | - | - | - | - | - | (425,000,000) | (425,000,000) | - | (425,000,000) | - | (425,000,000) |
| Aquisitions of shares of affiliated undertakings | - | - | - | - | - | - | (74,566) | (74,566) | - | (74,566) | - | (74,566) |
| Others | - | - | - | - | - | - | (210,613) | (210,613) | - | (210,613) | 1,322,626 | 1,112,013 |
| Balance as at 31 December 2010 | 1,000,000,000 (320,000,000) 117,087,918 | 402,475 | (2,107,724) | 342,000,000 | (605,798,328) | (148,415,659) | 168,595,954 | 700,180,295 | 75,434,780 | 775,615,075 |
The accompanying notes are part of these consolidated financial statements.
a) CSC - Commercial Companies Code The Board of Directors
(Amounts expressed in euro)
| Notes | 31 December 2010 | 31 December 2009 | |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Cash receipts from trade debtors | 4,832,466,691 | 4,534,192,087 | |
| Cash paid to trade creditors | (3,929,882,529) | (3,555,050,756) | |
| Cash paid to employees | (528,850,650) | (501,164,871) | |
| Cash flow generated by operations | 373,733,512 | 477,976,460 | |
| Income taxes (paid) / received | (50,026,729) | (6,191,259) | |
| Other cash receipts and (payments) relating to operating activities | (4,285,470) | 4,411,035 | |
| Net cash flow from operating activities (1) | 319,421,313 | 476,196,236 | |
| INVESTMENT ACTIVITIES | |||
| Cash receipts arising from: | |||
| Investments | 45 | 33,931,997 | 4,432,881 |
| Tangible assets | 95,163,747 | 20,469,381 | |
| Intangible assets | 181,928 | 155,010 | |
| Interest and similar income | 1,032,179 | 4,528,665 | |
| Loans granted | 405,691,614 | 161,384,500 | |
| Dividends | 1,333,374 | 461,660 | |
| Others | 10,011,822 | - | |
| 547,346,661 | 191,432,097 | ||
| Cash Payments arising from: | |||
| Investments | 45 | (54,857,023) | (21,516,094) |
| Tangible assets | (202,583,161) | (310,616,677) | |
| Intangible assets | (12,924,203) | (16,228,004) | |
| Loans granted | (421,880,260) | (158,786,000) | |
| Others | (1,000,530) | (1,728) | |
| (693,245,177) | (507,148,503) | ||
| Net cash used in investment activities (2) | (145,898,516) | (315,716,406) | |
| FINANCING ACTIVITIES | |||
| Cash receipts arising from: | |||
| Loans obtained | 5,754,401,364 | 10,186,721,460 | |
| Cover of accumulated losses | 995,750 | 1,000,000 | |
| Capital increases, additional paid in capital and share premiums | 980,000 | - | |
| Supplementary capital | 372,000,000 | - | |
| 6,128,377,114 | 10,187,721,460 | ||
| Cash Payments arising from: | |||
| Loans obtained | (5,340,345,178) | (10,197,242,163) | |
| Interest and similar charges | (40,174,270) | (69,345,711) | |
| Dividends | (495,000,000) | (85,004,170) | |
| Purchase of treasury shares | (320,000,000) | - | |
| Others | (2,390,325) | (422,298) | |
| (6,197,909,773) | (10,352,014,342) | ||
| Net cash used in financing activities (3) | (69,532,659) | (164,292,882) | |
| Net increase in cash and cash equivalents (4) = (1) + (2) + (3) | 103,990,138 | (3,813,052) | |
| Effect of foreign exchange rate | (128,333) | (284,775) | |
| Cash and cash equivalents at the beginning of the period | 21 | 88,341,782 | 91,870,059 |
| Cash and cash equivalents at the end of the period | 21 | 192,460,253 | 88,341,782 |
The accompanying notes are part of these consolidated financial statements.
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
(Amounts expressed in euro)
Sonae Investimentos, SGPS, S.A., has it head-office at Rua João Mendonça nº 529, 4464-501 Senhora da Hora, Portugal, and is the parent company of a group of companies, as detailed in Notes 4 to 6 the Sonae Investimentos Group ("Sonae Investimentos"). Sonae Investimentos operations are described in the management report and in Note 45.
The principal accounting policies adopted in preparing the accompanying consolidated financial statements are as follows:
The accompanying consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards ("IFRS"); as adopted by the European Union. This standards were issued by the International Accounting Standards Board ("IASB") and interpretations issued by International Financial Reporting Interpretations Committee ("IFRIC") or by the previous Standing Interpretations Committee ("SIC"), that have been adopted by the European Union as at the consolidated financial statements issuance date.
Interim financial statements are presented quarterly, in accordance with IAS 34 – "Interim Financial Reporting".
The accompanying consolidated financial statements have been prepared from the books and accounting records of the Company, subsidiaries and joint ventures, adjusted in the consolidation process, on a going concern basis and under the historical cost convention, except for financial instruments which are stated at fair value.
Up to the approval date of these financial statements, the European Union endorsed the following standards, interpretations, amendments and revisions, some of which have become effective during the year 2010:
| Effective Date (Financial years beginning on/or |
|
|---|---|
| With mandatory application in 2010: | after) |
| IFRS 3 – Business combinations and IAS 27, consolidated and separate financial statements (revised 2008) |
01-07-2009 |
| IAS 28 (revised 2008) Investments in Associates | 01-07-2009 |
| IFRS 1 (revised) – First-time adoption of International Financial Reporting standards |
1-01-2010 |
| IFRS 1 – Amendment (additional exemptions) | 1-01-2010 |
| IFRS 2 – Amended (for group cash-settled share-based payment transactions) | 1-01-2010 |
| IFRIC 12 – Service Concession Arrangements | 1-01-2010 |
| IFRIC 15 – Agreements for the Construction of Real Estate | 1-01-2010 |
| IFRIC 16 – Hedges of a Net Investment in a Foreign Operation | 01-07-2009 |
| IFRIC 17 – Distributions of Non-cash Assets to Owners | 01-07-2009 |
| IFRIC 18 – Transfer of Assets from Customers | 01-07-2009 |
| Improvements to the International Financial Reporting Standards (2009) | Several (on/after 1-01-10) |
| Alterations to IAS 39 – Financial Instruments: Recognition and Measurement – Instruments: Eligible hedged items |
01-07-2009 |
The adoption, during 2010, of the above mentioned Standards has not led to material impacts to the enclosed consolidated financial statements of Sonae Investimentos, with the exception of the described below.
During the period it has been adopted for the first time the revised version of IFRS 3 – Business combinations (revised 2008), IAS 27 –Consolidated and separate financial statements (revised 2008) and IAS 28 – Investments in associates:
These adoptions have affected the accounting for business combinations in the current period:
(b) the recognition and subsequent accounting requirements for, contingent consideration: previously, contingent consideration was recognized at the acquisition date only if payment of the contingent consideration was probable and it could be measured reliably; any subsequent adjustments to the contingent consideration were always made against the cost of the acquisition. Under the revised standard, contingent consideration is measured at fair value at the acquisition date; subsequent adjustments to the consideration are recognized against the cost of the acquisition only to the extent that they arise from new information obtained within the measurement period (12 months) about the fair value at the date of acquisition. All other subsequent adjustments to contingent consideration classified as an asset or a liability are recognized in profit or loss;
(c) the accounting treatment of acquisition related costs: generally leading to those costs being recognized as an expense in profit or loss as incurred, whereas previously they were accounted for as part of the cost of acquisition;
| With mandatory application after 2010: | Effective Date (Financial years beginning on/or after) |
|---|---|
| IAS 24 – Related Party Disclosures (revised) | 01-01-2011 |
| IFRS 1 – Amendment (Limited exemption from the requirement to provide comparative disclosures in accordance with IFRS 7 for first-time adopters) |
01-07-2010 |
| IAS 32 – Amendment (Classification of Rights Issues) | 01-02-2010 |
| IFRIC 14 – Amendment (Prepayments of a Minimum Funding Requirement) | 01-01-2011 |
| IFRIC 19 – Extinguishing Financial Liabilities with Equity Instruments | 01-07-2010 |
The above mentioned standards endorsed by the European Union, were not adopted by the Company in 2010, because its application is not mandatory for this financial year, and the Company has decided not to make an early adoption of the standards.
No significant impacts are expected to arise in the financial statements resulting from the adoption of these standards.
The main accounting policies adopted by the Group are as follows:
Investments in companies in which Sonae Investimentos owns, directly or indirectly, more than 50% of the voting rights at Shareholders' General Meetings or is able to establish financial and operational policies so as to benefit from its activities (definition of control normally used by Sonae Investimentos), were included in the consolidated financial statements using the full consolidation method. Equity and net profit attributable to minority shareholders are shown separately, under the caption Non-controlling interests, in the consolidated statement of financial position and in the consolidated income statement, respectively. Companies included in the consolidated financial statements are listed in Note 4.
The comprehensive income is attributable to the owners of the Sonae Investimentos Group and non-controlling interests even if the situation results in a deficit balance at the level of non-controlling interests.
Assets and liabilities of each subsidiary are measured at their fair value at the acquisition date or gain of control (measurement period of twelve months). The excess of the of the consideration transferred plus the fair value of any previously held interests and non-controlling interests over the fair value of the identifiable net assets acquired is recognized as goodwill (Note 2.2.d)). Any excess of the fair value of identifiable assets over consideration transferred, previously held interests and non-controlling interests recognized as income in profit or loss for the period of acquisition in the caption "Other income", after reassessment of the estimated fair value attributed to the net assets acquired. Sonae Investimentos Group will choose on a transaction-by-transaction basis, the measurement of non-controlling interests, (i) according to the non-controlling interests share of assets liabilities and contingent liabilities of the acquiree, or (ii) according to their fair value.
The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from the effective date of their gain of control or up to the effective date of loss of control, as appropriate.
Adjustments to the financial statements of Sonae Investimentos companies are performed, whenever necessary, in order to adapt accounting policies to those used by Sonae Investimentos. All intra-group transactions, balances, income and expenses and distributed dividends are eliminated on consolidation.
Whenever Sonae Investimentos has, in substance, control over other entities created for a specific purpose, even if no share capital interest is directly held in those entities, these are consolidated by the full consolidation method.
Investments in jointly controlled companies are included in the accompanying consolidated financial statements in accordance with the proportionate consolidation method as from the date when joint control is acquired. In accordance with this method, the Group includes in the accompanying consolidated financial statements its share of assets, liabilities, income and expenses of these companies, on a line-by-line basis.
Any excess of the acquisition cost over the Group's interest in the fair value of identifiable net assets acquired is recognized as goodwill (Note 2.2.d)). Any excess of the Group's share in the fair value of net assets acquired over cost is recognized as income in profit or loss for the period of acquisition after reassessment of the estimated fair value of the net identifiable assets and liabilities acquired in the caption "Other operational income".
Sonae Investimentos' share of inter-company balances, transactions and dividends distributed are eliminated in proportion of interests attributable to Sonae Investimentos.
Investments in jointly controlled companies are classified as such based on shareholders' agreements that establish joint control.
Companies included in the accompanying consolidated financial statements in accordance with the proportionate method are listed in Note 5.
Investments in associated companies (companies where Sonae Investimentos exercises significant influence but does not establish financial and operational policies – usually corresponding to holdings between 20% and 50% in a company's share capital) are accounted for in accordance with the equity method.
Under the equity method, investments are recorded at cost, adjusted by the amount corresponding to Sonae Investimentos' share of changes in equity (including net profit) of associated companies and to dividends received.
Any excess of the cost of acquisition over Sonae Investimentos' share in the fair value of the identifiable net assets acquired is recognized as goodwill (Note 2.2.d)), which is included in the caption Investment in associated companies. Any excess of Sonae Investimentos' share in the fair value of the identifiable net assets acquired over cost is recognized as income in the profit or loss for the period of acquisition, after reassessment of the estimated fair value of the net assets acquired under the caption Share of profit of associates.
An assessment of investments in associated companies is performed when there is an indication that the asset might be impaired. Any impairment loss is recorded in the income statement. Impairment losses recorded in prior years that are no longer justifiable are reversed.
When Sonae Investimentos's share of losses exceeds the carrying amount of the investment, the investment is reported at nil value and recognition of losses is discontinued, unless Sonae Investimentos is committed beyond the value of its investment. In these situations impairment is recorded for that amount.
The Sonae Investimentos's share in unrealized gains arising from transactions with associated companies is eliminated. Unrealized losses are eliminated, but only to the extent that there is no evidence of impairment of the asset transferred.
Investments in associated companies are disclosed in Note 6.
The excess of consideration transferred in the acquisition of investments in subsidiaries, jointly controlled and associated companies plus the amount of any non-controlling interests (in the case of affiliated companies) over Sonae Investimentos's share in the fair value of the identifiable assets, liabilities and contingent liabilities of those companies at the date of acquisition, when positive, is shown as Goodwill (Note 12) or as Investments in associated companies (Note 6). The excess of the consideration transferred in the acquisition of investments in foreign companies plus the amount of any non-controlling interests (in the case of affiliated companies) over the fair value of their identifiable assets, liabilities and contingent liabilities at the date of acquisition is calculated using the functional currency of each of those companies. Translation to the Sonae Investimentos functional currency (Euro) is made using the closing exchange rate. Exchange rate differences arising from this translation are recorded and disclosed in "Other Reserves and Retained earnings".
Goodwill is not amortized, but it is subject to impairment tests on an annual basis. Net recoverable amount is determined based on business plans used by Sonae Investimentos management or on valuation reports issued by independent entities. Impairment losses recognized in the period are recorded in the income statement under the caption "Provisions and impairment losses".
Impairment losses related with goodwill will not be reversed.
Any excess of Sonae Investimentos's share in the fair value of identifiable assets, liabilities and contingent liabilities, in affiliated companies, associated companies and jointly controlled companies, plus, in affiliated companies, the amount of non-controlling interests, at acquisition date, if negative, is recognized as income in the profit or loss for the period, after reassessment of the fair value of the identifiable assets, liabilities and contingent liabilities acquired.
Assets and liabilities denominated in foreign currencies in the financial statements of foreign companies are translated to euro using exchange rates at the statement of financial position date. Profit and loss and cash flows are converted to euro using the average exchange rate for the period. Exchange rate differences originated after 1 January 2004 are recorded as equity under Translation reserves in Reserves and retained earnings. Exchange rate differences that were originated prior to 1 January 2004 (date of transition to IFRS) were written-off through "Other Reserves and Retained earnings".
Goodwill and fair value adjustments arising from the acquisition of foreign companies are recorded as assets and liabilities of those companies and translated to euro using exchange rates at the statement of financial position date.
Whenever a foreign company is sold (totally or partially), but with loss of control, accumulated exchange rate differences are recorded in the income statement as a gain or loss on the disposal, in the caption Investment income.
Exchange rates used on translation of foreign group, jointly controlled and associated companies are listed below:
| 31 December 2010 | 31 December 2009 | |||
|---|---|---|---|---|
| End of period | Average of period | End of period | Average of period | |
| Brazilian Real | 0.45092 | 0.42982 | 0.39820 | 0.36282 |
Tangible assets acquired up to 1 January 2004 (transition date to IFRS) are recorded at acquisition or production cost, or revalued acquisition cost, in accordance with generally accepted accounting principles in Portugal until that date, net of depreciation and accumulated impairment losses.
Tangible assets acquired after that date, are recorded at acquisition cost, net of depreciation and accumulated impairment losses.
Depreciations are calculated on a straight line basis, as from the date the asset is first used, over the expected useful life for each class of assets, and recorded against the income statement caption "Depreciation and amortization".
The impairment losses detected on tangible assets are recorded in the year, in wide the estimation is made, recorded against the consolidate income statement caption "Provisions and impairment losses".
The depreciation rates used correspond to the following estimated useful lives:
| Years | |
|---|---|
| Land and Buildings | 50 |
| Plant and machinery | 10 to 15 |
| Vehicles | 5 |
| Tools | 4 |
| Office equipment | 10 |
| Other tangible assets | 5 |
Maintenance and repair costs relating to tangible assets are recorded directly as expenses in the year they are incurred.
Tangible assets in progress represent fixed assets still under construction-development and are stated at acquisition cost net of impairment losses. These assets are depreciated from the date they are completed or become ready for use.
Gains or losses on sale or disposal of tangible assets are calculated as the difference between the selling price and the carrying amount of the asset at the date of its sale-disposal. These are recorded in the income statement under either "Other income" or "Other expenses".
Intangible assets are stated at acquisition cost, net of depreciation and accumulated impairment losses. Intangible assets are only recognized if it is probable that future economic benefits will flow from them, if they are controlled by the Sonae Investimentos and if their cost can be reliably measured.
Expenditure on research associated with new technical know-how is recognized as an expense recorded in the income statement when it is incurred.
Expenditure on development is recognized as an intangible asset if Sonae Investimentos demonstrates the technical feasibility and its intention to complete the asset, its ability to sell or use it and the probability that the asset will generate future economic benefits. Expenditure on development which does not fulfill these conditions is recorded as an expense in the period in which it is incurred.
Internal costs associated with maintenance and development of software is recorded as an expense in the period in which they are incurred. Only costs directly attributable to projects for which the generation of future economic benefits is probable are capitalized as intangible assets.
Amortizations are calculated on a straight line basis as from the date the asset is first used, over the expected useful life which usually is 5 years. It is recorded in the caption of "Amortizations and depreciations".
Brands and patents with undefined useful lives are not amortized, but are subject to impairment tests on an annual basis.
Lease contracts are classified as (i) a finance lease if the risks and rewards incidental to ownership lie with the lessee and (ii) as an operating lease if the risks and rewards incidental to ownership do not lie with the lessee.
Whether a lease is classified as finance or an operating lease depends on the substance of the transaction rather than the form of the contract.
Assets acquired through finance lease contracts as well as the correspondent responsibilities, are posted by the financial method, posting in the statement of financial position the acquired asset and the pending debts according to the contractual financial plan at fair value or, if less, at the present level of payments. Both the finance charge and the depreciation expense for depreciable assets are taken to the income statement in the period in which they are incurred.
Lease payments under operating lease contracts are recognized as an expense on a straight line basis over the lease term.
For operating lease agreements where Sonae Investimentos is lessor, assets remain recorded in the Sonae Investimentos' statement of financial position and the revenue is recognized on a straight line basis during the period of the agreement.
Government grants are recorded at fair value when there is reasonable assurance that they will be received and that Sonae Investimentos will comply with the conditions attaching to them.
Grants received as compensation for expenses, namely grants for personnel training, are recognized as income in the same period as the relevant expense.
Investment grants related to fixed assets are disclosed as "Other current liabilities" and are recognized as income on a straight line basis over the expected useful lives of those underlying assets.
Grants related to incurred costs are recorded as profit in the extent there is a reasonable assurance that these will be received, that the granted costs have already been incurred and that Sonae Investmentos will comply with the conditions necessary for its grant.
Assets are assessed for impairment at each statement of financial position date whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognized in the income statement under "Provisions and impairment losses".
The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm's length transaction less the costs of disposal. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if this is not possible, for the cashgenerating unit to which the asset belongs.
Reversal of impairment losses recognized in prior years is only recorded when it is concluded that the impairment losses recognized for the asset no longer exist or have decreased. This analysis is performed whenever there is an indication that the impairment loss previously recognized has been reversed. The reversal is recorded in the income statement as "Other income". However, the increased carrying amount of an asset due to a reversal of an impairment loss is recognized to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognized for that asset in prior years.
Borrowing costs are usually recognized as an expense in the period in which they are incurred.
Borrowing costs directly attributable to the acquisition, construction or production of tangible and intangible assets, real state projects classified as inventories or investment properties are capitalized as part of the cost of the qualifying asset. Borrowing costs are capitalized from the beginning of preparation of the activities to construct or develop the asset up to the time the production or construction is complete or when asset development is interrupted. Any income earned on funds temporarily invested pending their expenditure on the qualifying asset, is deducted from the borrowing costs that qualify for capitalization.
Consumer goods are stated at the lower of acquisition cost deducted from discounts obtained and net realizable value, cost is determined on a weighted average basis.
Differences between cost and net realizable value, if negative, are shown as expenses under the caption "Cost of goods sold and materials consumed".
Provisions are recognized when, and only when, Sonae Investimentos has an obligation (legal or implicit) resulting from a past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of that obligation. Provisions are reviewed and adjusted at the statement of financial position date to reflect the best estimate as of that date.
Restructuring provisions are recognized by Sonae Investimentos whenever a formal and detailed restructuring plan exists and that plan has been communicated to the parties involved.
The Company classifies the financial instruments in the categories presented and conciliated with the Statement of financial position disclosed in Note 9.
Investments are classified into the following categories:
-Held to maturity;
-Investments measured at fair value through profit or loss;
-Available for sale;
Held to maturity investments are classified as "Non-current assets" unless they mature within 12 months of the statement of financial position date. Investments classified as held to maturity have defined maturities and the Group has the intention and ability to hold them until the maturity date.
The investments measured at fair value through profit or loss include the investments held for trading that Sonae Investimentos acquires with the purpose of trading in the short term. They are disclosed in the consolidated statement of financial position as current investments.
Sonae Investimentos classifies as available for sale those investments that are neither included as investments measured at fair value through profit or loss nor as investments held to maturity. These assets are classified as non-current assets, except if the sale is expected to occur within 12 months from the date of classification.
All purchases and sale of investments are recognized on the trade date, independently of the settlement date.
Investments are initially recorded at cost, which is the fair value of the consideration paid for them including, transaction costs, apart from investments measured at fair value through profit or loss, in which the investments are initially recognized at fair value and transaction costs are recognized in the income statement.
Investments measured at fair value through profit or loss and available for sale investments are subsequently carried at fair value, without any deduction for transaction costs which may be incurred on sale by reference to their quoted market value at statement of financial position date. Investments in equity instruments that do not have a market price and whose fair value cannot be reliably measured are stated at acquisition cost less impairment losses.
Gains or losses arising from a change in fair value of available for sale investments are recognized directly in equity, under "Investments fair value reserve", in the caption "Reserves and retained earnings", until the investment is sold or otherwise disposed of, or until it is determined to be impaired, at which time the cumulative gain or loss previously recognized in equity is transferred to net profit or loss.
Changes in the fair value of investments measured at fair value through profit or loss are included in consolidated income statement for the period under financial expenses or financial income.
Held to maturity investments are carried at amortized cost using the effective interest rate, net of capital reimbursements and interest income received.
Trade accounts receivables and other accounts receivable are recorded at their nominal value and presented in the consolidated statement of financial position net of impairment losses, recognized under the caption "Impairment losses on accounts receivable", in order to reflect its net realizable value.
Impairment is recognized if there is objective and measurable evidence that, as a result of one or more events that occurred, the balance will not be fully received. For this purpose, each Sonae Investimentos subsidiary takes into consideration market information that evidences that the client is not accomplishing its responsibilities as well as historic information about due and not received balances.
Recognized Impairment losses equal the difference between the carrying amount of the receivable and the corresponding present value of the estimated future cash-flows, discounted at the initial effective interest rate. The initial effective interest rate is considered null when the collection is expected within one year.
Financial liabilities and equity instruments are classified and accounted for based upon their contractual substance, independently from the legal form they assume.
Equity instruments are contracts that evidence a residual interest in the assets of Sonae Investimentos after deducting all of its liabilities. Equity instruments issued by Sonae Investimentos are recorded at the proceeds received, net of direct issue costs.
Loans are recorded as liabilities at their nominal value, net of up-front fees and commissions related to the issuance of those instruments. Financial expenses are calculated based on the effective interest rate and are recorded in the income statement on an accruals basis, in accordance with the accounting policy defined in Note 2.16. The portion of the effective interest charge relating to up-front fees and commissions, if not paid in the period, is added to the book value of the loan.
Accounts payable are stated at their nominal value, as they do not bear interests and the effect of discounting is considered immaterial.
Sonae Investimentos uses derivatives in the management of its financial risks to hedge such risks. Derivatives are not used for trading purposes.
Sonae Investimentos' criteria for classifying a derivative instrument as a cash flow hedge instrument include:
Cash flow hedge instruments used by Sonae Investimentos to hedge the exposure to changes in interest rates of its loans are initially accounted for at cost value, and subsequently adjusted to the corresponding fair value. Changes in fair value of these cash flow hedge instruments are recorded in equity under the caption "Hedging reserves", included in the caption "Reserves and Retained Earnings", and then recognized in the income statement over the same period in which the hedged instrument affects profit or loss. The inefficiencies, when they exist, are recorded under "Financial income" and "Financial expenses".
The fair value of these financial instruments is estimated using specific software based on the discounted cash flow of the difference between the fixed interest rate of the fixed leg and the indexed variable interest rate inherent to the variable leg, through the use of interest rate curves taken from Bloomberg.
Hedge accounting of derivative instruments is discontinued when the instrument matures or is sold. Whenever a derivative instrument can no longer be qualified as a hedging instrument, the fair value differences recorded and deferred in equity under the caption "Hedging reserve", included in the caption "Reserves and Retained Earnings", are transferred to profit and loss of the year or in the carrying amount of the asset that resulted from the hedged forecast transaction. Subsequent changes in fair value are recorded in the income statement.
In those cases in which the derivatives, despite being negotiated to hedge financial risks inherent to the business (essentially, currency "forwards" to hedge future imports of inventories), do not fulfill the criteria for hedge accounting under IAS 39, changes in the fair value are recorded directly in the income statement.
When embedded derivatives exist, they are accounted for as separate derivatives when the risks and the characteristics are not closely related to economic risks and characteristics of the host contract, and these are not stated at fair value gains and losses which are not realizable are recorded in the Income Statement.
Additionally, Sonae Investimentos also negotiates, in specific situations, interest rate derivatives and foreign exchange rate derivatives directed to hedge fair values. In these cases, the derivatives are stated at fair value through the Income statement. When the hedged instrument is not measured at fair value (i.e. loans which are recorded at amortized cost) the book value is adjusted by the amount which is effectively hedged through the profit and loss.
Sonae Investimentos may agree to become part of a derivative transaction in order to hedge cash-flows hedge related to exchange rate risk. In some cases, these derivatives may not fulfill the criteria for hedging accounting under IAS 39, and if so changes in their fair value are recognized in the income statement.
Cash and cash equivalents include cash on hand, cash at bank, term deposits and other treasury applications which mature in less than three months and are subject to insignificant risk of change in value.
In the consolidated statement of cash flows, cash and cash equivalents also include bank overdrafts, which are included in the balance consolidated sheet caption of "current bank loans".
The non-current assets (or disposal group) are recorded as held for sale if it is expected that the book value will be recovered through the sale and not through the use in the operations. This condition is achieved only if the sale is highly probable and the asset (or disposal group) is available for the immediate sale in the actual conditions. Additionally, there must be in progress actions that should allow concluding the sale within 12 months counting from the classification´s date in this caption. The non-current assets (or disposal group) recorded as held for sale are booked at the lower amount of the historical cost or the fair value deducted from costs, not being amortized after being classified as held for sale.
Share-based payments result from Deferred Performance Bonus Plans which were attributed by Sonae Investimentos, and are indexed to the evolution of the Sonae SGPS, S.A. shares' price (Parent Company of Sonae Investimentos, SGPS, S.A.).
Share based payment liabilities are measured at fair value on the date they are granted (usually in March each year) and are subsequently remeasured at the end of each reporting period based on the number of shares granted and the corresponding fair value at the closing date. These obligations are stated as staff costs and other current and non-current liabilities, and are recorded on a straight line basis, between the date the shares are granted and their vesting date, taking into consideration the time elapsed between these dates when referring to shares as call options which can be net settled through down payment. In the case of equity-settled share-based payment transactions, these obligations are recognized as staff costs and stated in Reserves and are recorded on a straight line basis between the date the shares are granted and their vesting date.
Contingent assets are not recognized in the financial statements but disclosed where an inflow of economic benefits is probable.
Contingent liabilities are not recorded in the financial statements, instead they are disclosed in the notes to the financial statements, unless the probability of a cash outflow is remote, in which case, no disclosure is made.
The tax charge for the year is determined based on the taxable income of each company included in the consolidation perimeter taking into consideration deferred taxes.
Current income tax is determined based on the taxable income of companies included in the consolidation, in accordance with the tax rules in force in their respective country of incorporation.
Deferred taxes are calculated using the statement of financial position liability method, reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are calculated and annually remeasured using the tax rates that have been enacted or substantively enacted and therefore expected to apply in the periods when the temporary differences are expected to reverse.
Deferred tax assets are recognized only when it is probable that sufficient taxable profits will be available against which the deferred tax assets can be used, or when taxable temporary differences are recognized and expected to reverse in the same period. At each statement of financial position date a review is made of the deferred tax assets recognized is made, being reduced whenever their future use is no longer probable.
Deferred tax assets and liabilities are recorded in the income statement, except if they relate to items directly recorded in equity. In these cases the corresponding deferred tax is recorded in Equity.
Revenue from the sale of goods is recognized in the consolidated income statement when the risks and benefits have been transferred to the buyer and the amount of the revenue can be measured reasonably. Sales are recorded net of sales taxes and discounts and other expenses arising from the sale, and are measured as the fair value of the amount received or receivable.
Revenue from services rendered is recorded in the consolidated income statement taking into consideration the stage of completion of the transaction at statement of financial position date, excepting travel agency services.
Income related to services rendered by travel agencies is recognized with the issuance of invoice. At statement of financial position date, adjustments are made under the caption "Other current assets" and "Other current liabilities" in order to accrue for revenue of the services already rendered but whose billing had not occurred yet, as well as for the associated expenditures.
Dividends are recognized as income in the year they are attributed to the shareholders.
The deferral of revenue related with customer loyalty programs, (attribution of awards) are measured taking into account the likelihood of redemption and are deducted to revenue when their award credits are granted. The corresponding liability is recognized in the caption "Other Creditors."
Income and expenses are recorded in the year to which they relate, independently of the date of the corresponding payment or receipt. Income and expenses for which their real amount is not known are estimated.
"Other current assets" and "Other current liabilities" include income and expenses of the reporting year which will only be invoiced in the future. Those captions also include receipts and payments that have already occurred but will only correspond to income or expenses in future years, thus being recorded in the income statement of the future period.
Transactions are recorded in the financial statements of each subsidiary based on the functional currency of that subsidiary using the exchange rates on the date of each transaction.
At each statement of financial position date, all monetary assets and liabilities expressed in foreign currencies are translated to the functional currency of each entity at the foreign exchange rates prevailing as of that date. All nonmonetary assets and liabilities recorded at fair value and stated in foreign currencies are converted to the functional currency of each subsidiary, using the exchange rate at the date the fair value was determined.
Exchange gains and losses arising from differences between the historical foreign exchange rates and those prevailing at the date of collection, payment or the date of the statement of financial position, are recorded as profits or loss for the period, except those related to non-monetary assets or liabilities, in which, the adjustments to the fair value are directly recorded under equity.
When exposure to currency risk is aimed to be minimized, Sonae Investimentos negotiates hedging currency derivatives (Note 2.11.f).
Post statement of financial position events that provide additional information about conditions that existed at the statement of financial position date (adjusting events), are reflected in the consolidated financial statements. Post statement of financial position events that are not-adjusting events are disclosed in the notes to the consolidated financial statements when considered to be material.
The most significant accounting estimates reflected in the financial statements are as follows:
Estimates used are based on the best information available during the preparation of these financial statements and are based on the best knowledge of past and present events. Although future events are neither controlled by Sonae Investimentos nor foreseeable, some could occur and have impact on the estimates. Changes to the estimates used by management that occur after the date of these consolidated financial statements, will be recognized in net income prospectively, in accordance with IAS 8.
The main estimates and assumptions in relation to future events included in the preparation of consolidated financial statements are disclosed in the correspondent notes.
Information regarding operating segments identified is included in Note 46.
Treasury Shares are recorded at their acquisition cost as a reduction to equity. Gains or losses arising from sales of own shares are recorded in "Other reserves and retained earnings"
Legal reserves:
Portuguese commercial legislation requires that at least 5% of annual net profit must be appropriated to a legal reserve, until such reserve reaches at least 20% of the share capital. This reserve is not distributable, except in the case of liquidation of the Company, but it may be used to absorb losses, after all the other reserves are exhausted, or to increase the share capital.
Hedging Reserves:
Hedging Reserves reflect the changes in fair value of "cash flow" hedging derivates that are considered as effective (Note 2.11.f), and is not distributable or used to cover losses.
Currency translation reserve:
The currency translation reserve corresponds to exchange differences relating to the translation from the functional currencies of Sonae Investimentos foreign subsidiaries and joint ventures into euro, in accordance with the accounting policy described in Note 2.17.
Legal reserve in accordance with article 342 of CSC:
The reserves constituted according to Art. 342 of ("CSC"), reflect the value of treasury shares acquired in the period and comply with commercial legislation relating with legal reserves.
According to Portuguese commercial legislation the amount of distributable reserves is computed considering the Company's individual financial statements presented in accordance with International Financial Reporting Standards as adopted by the European Union.
Risk management general principles are approved by the Board of Directors, and its implementation is supervised by the Group's finance department.
The interest and exchange rate risk have a decisive importance in what concerns market risk management.
Derivatives are used to hedge certain exposures related to Sonae Investimentos market risk and, Sonae Investimentos does not enter into derivatives or other financial instruments for trading or speculative purposes.
Sonae Investimentos' exposure to the interest rate risk arises mainly from the long term loans which bear interests indexed to Euribor.
Sonae Investimentos' aim is to limit the cash-flow and net income volatility having in mind their operational activity profile by the use of an adequate combination of variable and fix rate debt. Sonae Investimentos' policy allows interest rate derivates usage in order to reduce Euribor's variability exposure and not for speculative purposes.
Derivatives used by the Sonae Investimentos in interest rate risk management qualify as hedging instruments as they configure perfect hedging operations. Conditions established for these cash flow hedge instruments are identical to those of the corresponding loans in terms of base rates, calculation rules, rate setting dates and repayment schedules of the loans and for these reasons they qualify as perfect hedges.
The interest rate sensitivity analysis is based on the following assumptions:
Changes in market interest rates affect the interest income or expense of variable interest financial instruments (the interest payments of which are not designated as hedged items of cash flow hedges against interest rate risks). As a consequence, they are included in the calculation of income-related sensitivities;
Changes in market interest rates only affect interest income or expense in relation to financial instruments with fixed interest rates if these are recognized at their fair value. As such, all financial instruments with fixed interest rates that are carried at amortised cost are not subject to interest rate risk as defined in IFRS 7;
In the case of fair value hedges designed for hedging interest rate risks, when the changes in the fair values of the hedged item and the hedging instrument attributable to interest rate movements are offset almost completely in the income statement in the same period, these financial instruments are also not exposed to interest rate risk;
Changes in the market interest rate of financial instruments that were designated as hedging instruments in a cash flow hedge (to hedge payment fluctuations resulting from interest rate movements) affect the hedging reserve in equity and are therefore taken into consideration in the equity-related sensitivity calculation with impact in equity (other reserves);
Changes in the fair values of derivative financial instruments and other financial assets and liabilities are estimated by discounting the future cash flows to net present values using appropriate market rates prevailing at the year end, and assuming a parallel shift in interest rate curves;
For the purposes of sensitivity analysis, such analysis is performed based on all financial instruments outstanding during the year.
Under these assumptions, if interest rates of euro denominated financial instruments had been 75 basis points higher, the consolidated net profit before tax for the period ended as at 31 December 2010 would decrease by approximately 8.9 million euro (9 million euro as at 31 December 2009) and would have a positive impact in equity of approximately 0.5 million euro (1.6 million euro as at 31 December 2009), as a consequence of interests rate change effect according to interest rate risk, considering the contractual fixing dates and excluding other effects arising from the company operations.
The impact on the financial statements of changes in exchange rate is immaterial, as the most part of the transactions are denominated in euro. Sonae Investimentos is only exposed to foreign exchange risk due to inventories imports made and denominated in US Dollars.
The exchange risk management purpose is to provide a stable decision platform when deciding and negotiating the purchases of inventories establishing fixed exchange rates. The hedging follows all the purchase process, since procurement up to the formal agreement of purchase.
The exchange risk exposure is monitored through the purchase of forwards with the goal of minimizing the negative impacts of volatility in exposure level as a consequence of changes of the amounts of imports denominated in other currencies rather than euro.
As at 31 December 2010 and 2009 the assets and liabilities denominated in a currency different from the subsidiary functional currency where the following:
| Assets | Liabilities | |||
|---|---|---|---|---|
| 31 December 2010 31 December 2009 |
31 December 2010 | 31 December 2009 | ||
| Brazilian Real | 28,126,526 | 17,023,089 | 8,590,147 | 8,426,783 |
| British Pound | 702 | 5,184 | 414,678 | 228,735 |
| US Dollar | - | - | 8,772,345 | 6,589,632 |
| Other Currencies | 6,636 | 29,981 | 777 | 908 |
The amounts presented above, only include assets and liabilities expressed in different currency than the functional currency used by the affiliated or jointly controlled company. Therefore it does not represent any risk of financial statements translation. Considering the exposure above, which is considered immaterial, no sensitivity analysis is disclosed.
The purpose of liquidity risk management is to ensure, at all times, that the group has the financial capacity to fulfill its commitments as they become due and to carry on its business activities and strategy, through the management of the trade off cost and maturity of debt.
Sonae Investimentos follows an active policy of re-financing its debts by maintaining a high level of unused and available on demand resources to face short term needs and by increasing or maintaining an adequate debt maturity, according to the estimated cash-flows, and to the capability of leveraging its statement of financial position.
Negotiating contractual terms which reduce the possibility of the lenders being able to demand an early termination is also considered as an important mean of managing liquidity risk. The group also assures, in its relationship with financial institutions, a high level of diversification of financing sources and counterparties, in order to ease the ability of entering new loan agreements and to minimize the effects of any relationship discontinuance.
The liquidity analysis of each class of financial liabilities is presented in the corresponding notes.
Sonae Investimentos is exposed to the credit risk in its current operational activity. The credit risk in the scope of its current operational activity is managed through a system of gathering financial and qualitative information from independent entities that supply risk information, in order to allow the assessment of credit risk from debtors. The credit risk from suppliers arises from advances made to or discounts billed to suppliers and are mitigated by the expectation of maintaining the commercial relationship. The amounts presented in the statement of financial position are net of impairment losses, thus reflect its fair value.
Sonae Investimentos is also exposed to the credit risk in its relationship with financial institutions, in result of bank deposits, debt instruments available facilities, derivates, among others.
The credit risk is limited by risk concentration management and by a selection of counterparties, which have a high national and international prestige, with at least a credit rating of BBB or equivalent.
The subsidiaries included in the consolidated financial statements, its head offices and percentage of capital held as at 31 December 2010 and 31 December 2009 are as follows:
| Percentage of capital held | |||||||
|---|---|---|---|---|---|---|---|
| 31 December 2010 | 31 December 2009 | ||||||
| COMPANY | Head Office | Direct | Total | Direct | Total | ||
| Sonae Investimentos- SGPS, S.A. | Matosinhos | HOLDING | HOLDING | HOLDING | HOLDING | ||
| Arat Inmuebles, SA | a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% | |
| Azulino Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| BB Food Service, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Bertimóvel - Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Best Offer - Prestação de Informações por Internet, SA |
a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Bikini, Portal de Mulheres, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Bom Momento - Comércio Retalhista, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Canasta - Empreendimentos Imobiliários, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Carnes do Continente - Industria e Distribuição Carnes, SA |
a) | Santarém | 100.00% | 100.00% | 100.00% | 100.00% | |
| Chão Verde - Sociedade de Gestão Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Citorres - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| Contibomba - Comércio e Distribuição de Combustíveis, SA |
a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Contimobe - Imobiliária de Castelo de Paiva, SA | a) | Castelo de Paiva | 100.00% | 100.00% | 100.00% | 100.00% | |
| Continente Hipermercados, SA | a) | Lisbon | 100.00% | 100.00% | 100.00% | 100.00% | |
| Cumulativa - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% | |
| 1) | Difusão - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Edições Book.it, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Efanor - Design e Serviços, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Estevão Neves - Hipermercados da Madeira, SA | a) | Funchal | 100.00% | 100.00% | 100.00% | 100.00% | |
| Farmácia Selecção, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
1)
| SONAE INVESTIMENTOS, SGPS, SA | ||||||
|---|---|---|---|---|---|---|
| Fozimo - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Fozmassimo - Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Fundo de Investimento Imobiliário Fechado Imosede |
a) | Maia | 54.55% | 54.55% | 54.55% | 54.55% |
| Fundo de Investimento Imobiliário Fechado Imosonae Dois |
a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Global S - Hipermercado, Lda | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Good and Cheap - Comércio Retalhista, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Hipotética - Comércio Retalhista, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Igimo - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Iginha - Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Imoconti - Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Imoestrutura - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Imomuro - Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Imoresultado - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Imosistema - Sociedade Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Infofield - Informática, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Inventory - Acessórios de Casa, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Just Sport - Comércio de Artigos de Desporto, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Marcas MC, zRT | a) | Budapest (Hungary) |
100.00% | 100.00% | 100.00% | 100.00% |
| MJLF - Empreendimentos Imobiliários, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| MC - SGPS, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Modalfa - Comércio e Serviços, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Modalloop – Vestuário e Calçado, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Modelo - Distribuição de Materiais de Construção, SA |
b) | Maia | 50.00% | 50.00% | 50.00% | 50.00% |
| Modelo Continente Hipermercados, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Modelo Continente Seguros- Sociedade Mediação, SA |
a) | Porto | 75.00% | 75.00% | 75.00% | 75.00% |
| Modelo Hiper Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Modelo Hipermercados Trading, SA | a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% |
| Modelo.com - Vendas p/Correspond., SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| SONAE INVESTIMENTOS, SGPS, SA | ||||||
|---|---|---|---|---|---|---|
| NA - Comércio de Artigos de Desporto, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| NA - Equipamentos para o Lar, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Peixes do Continente - Indústria e Distribuição de Peixes, SA |
a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Pharmacontinente - Saúde e Higiene, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Pharmaconcept – Actividades em Saúde, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Predicomercial - Promoção Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Selifa - Empreendimentos Imobiliários de Fafe, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Sempre à Mão - Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Sesagest - Proj.Gestão Imobiliária, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% |
| Socijofra - Sociedade Imobiliária, SA | a) | Gondomar | 100.00% | 100.00% | 100.00% | 100.00% |
| Sociloures - Sociedade Imobiliária, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Soflorin, BV | a) | Amsterdam (The Netherlands) |
100.00% | 100.00% | 100.00% | 100.00% |
| Solaris Supermercados, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Sonae Capital Brasil, Lda | a) | São Paulo (Brazil) | 100.00% | 100.00% | 100.00% | 100.00% |
| Sonaecenter Serviços II, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Sonaerp – Retail Properties, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% |
| Sonae Specialized Retail, SGPS, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Sonae Retalho España - Servicios Generales, SA | a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% |
| SIAL Participações, Ltda | a) | São Paulo (Brazil) | 100.00% | 100.00% | 100.00% | 100.00% |
| Sondis Imobiliária, SA | a) | Maia | 100.00% | 100.00% | 100.00% | 100.00% |
| Sontária Empreendimentos Imobiliários, SA | a) | Porto | 100.00% | 100.00% | 100.00% | 100.00% |
| Sonvecap, BV | a) | Amsterdam (The Netherlands) |
100.00% | 100.00% | 100.00% | 100.00% |
| Sport Zone - Comércio de Artigos de Desporto, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Sport Zone Canarias, SL, | a) | Tenerife (Spain) | 51.00% | 51.00% | - | - |
| Sport Zone España- Comércio de Articulos de Deporte, SL |
a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% |
| Textil do Marco, SA | a) | Marco de Canaveses |
92.76% | 92.76% | 80.37% | 80.37% |
| Tlantic Portugal- Sistemas de Informação, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% |
| Tlantic Sistemas de Informação, Ltda | a) | Porto Alegre | 100.00% | 100.00% | 100.00% | 100.00% |
| SONAE INVESTIMENTOS, SGPS, SA | |||||||
|---|---|---|---|---|---|---|---|
| (Brazil) | |||||||
| Todos os Dias - Com. Ret. Expl. C. Comer., SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Valor N, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Well W - Electrodomésticos e Equipamentos, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| 2) | Worten Canarias, SL, | a) | Tenerife (Spain) | 100.00% | 100.00% | - | - |
| Worten Equipamento para o Lar, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Worten España Distribución, SL | a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% | |
| Zippy – Comércio e Distribuição, SA | a) | Matosinhos | 100.00% | 100.00% | 100.00% | 100.00% | |
| Zippy - Comércio Y Distribución, SA | a) | Madrid (Spain) | 100.00% | 100.00% | 100.00% | 100.00% | |
These entities were consolidated using the full consolidation method, considering that they are controlled by Sonae Investimentos SGPS, S.A.
Jointly controlled companies included in the consolidation financial statements, their head offices and the percentage of share capital held as at 31 December 2010 and 2009 are as follows:
| Percentage of capital held | |||||
|---|---|---|---|---|---|
| 31 December 2010 | 31 December 2009 | ||||
| COMPANY | Head office | Direct | Total | Direct | Total |
| Equador & Mendes - Agência de Viagens e Turismo, Lda |
Lisbon | 50.00% | 37.50% | 50.00% | 37.50% |
| Marcas do Mundo - Viagens e Turismo, Sociedade Unipessoal, Lda |
Lisbon | 50.00% | 50.00% | 50.00% | 50.00% |
| Movimentos Viagens - Viagens e Turismo, Sociedade Unipessoal, Lda |
Lisbon | 50.00% | 50.00% | 50.00% | 50.00% |
| Nova Equador Internacional,Agência de Viagens e Turismo, Lda |
Lisbon | 50.00% | 37.50% | 50.00% | 37.50% |
| Puravida - Viagens e Turismo, Lda | Lisbon | 50.00% | 50.00% | 50.00% | 50.00% |
| Nova Equador P.C.O. e Eventos, Sociedade Unipessoal, Lda |
Lisbon | 50.00% | 37.50% | 50.00% | 37.50% |
| Raso SGPS, SA | Lisbon | 50.00% | 50.00% | 50.00% | 50.00% |
|---|---|---|---|---|---|
| Raso - Viagens e Turismo, SA | Lisbon | 50.00% | 50.00% | 50.00% | 50.00% |
| Viajens y Turismo de Geotur España, S.L. | Madrid (Spain) | 50.00% | 50.00% | 50.00% | 50.00% |
These entities were consolidated using the proportionate consolidation method.
Aggregate amounts excluding intra-group eliminations corresponding to the percentage of capital held in these jointly controlled companies included in the financial statements for the period using the proportionate consolidation method can be summarized as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Non current assets | 39,834,261 | 35,087,564 |
| Current assets | 28,372,242 | 30,936,870 |
| Non current liabilities | 8,165,019 | 3,577,682 |
| Current liabilities | 34,048,800 | 35,666,824 |
| 31 December 2010 | 31 December 2009 | |
| Income | 101,419,804 | 99,308,194 |
| Expenses | 102,574,679 | 102,025,017 |
Associated companies, their head offices and the percentage of share capital held as at 31 December 2010 and 2009 are as follows:
| Percentage of capital held | |||||||
|---|---|---|---|---|---|---|---|
| 31 December 2010 | 31 December 2009 | Book value | |||||
| COMPANY | Head Office | Direct | Total | Direct | Total | 31 December 2010 | 31 December 2009 |
| 1) MDS SGPS, SA | Maia | 46.92% | 46.92% | - | - | 51,000,000 | - |
| 1) Mundo VIP | Lisbon | 33.34% | 33.34% | - | - | 1,101,337 | - |
| Sonaegest - Soc. Gestora de Fundos de Investimento, SA |
Maia | 40.00% | 40.00% | 40.00% | 40.00% | 539,748 | 824,888 |
| Sempre a Postos - Produtos Alimentares e Utilidades, Lda |
Lisbon | 25.00% | 25.00% | 25.00% | 25.00% | 1,246,672 | 1,551,585 |
| Total | 53,887,757 | 2,376,473 |
1) Companies acquired in the period
Associated companies are consolidated using the equity method.
During the periods ended as at 31 December 2010 and 2009 movements in Investments in associated companies are made up as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Investments in associated companies | ||
| Opening Balance as at 1 January | 2,376,473 | 64,671,483 |
| Acquisition of share capital of associates | 52,101,337 | - |
| Change of consolidation method (Note 9) | - | (61,380,675) |
| Effect in net income | 532,931 | (652,675) |
| Dividends distributed | (1,122,984) | (261,660) |
| 53,887,757 | 2,376,473 |
Aggregated values of financial indicators of associated companies are as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Total Assets | 172,289,345 | 18,725,950 |
| Total Liabilities | 121,455,627 | 10,446,448 |
| 31 December 2010 | 31 December 2009 | |
| Income | 67,568,853 | 69,864,523 |
| Expenses | 65,698,606 | 66,906,494 |
The acquisitions mentioned above generated Goodwill of 29,154,618 euro (MDS SGPS, SA) and 1,789,754 euro (Mundo Vip, SA). The goodwill is recognized under the caption "Investments in associates".
Taking into account that these acquisitions were only concluded in the end of the fourth quarter of 2010, the company accounted these associates for the first time at December 2010, therefore there aren´t any effects in the income statement related with these associates. The financial indicators mentioned above, don't have contributions from these companies included in income and expenses.
Other non-current investments, their head offices, percentage of share capital held and book value as at 31 December 2010 and 2009 are as follows:
| Percentage of capital held | |||||||
|---|---|---|---|---|---|---|---|
| 31 December 2010 | 31 December 2009 | Book value | |||||
| COMPANY | Head Office | Direct | Total | Direct | Total | 31 December 2010 | 31 December 2009 |
| Dispar - Distrib. de Participações, SGPS, SA Lisbon | 7.14% | 7.14% | 7.14% | 7.14% | 9,976 | 9,976 | |
| Insco - Insular de Hipermerc., SA | Ponta Delgada | 10.00% | 10.00% | 10.00% | 10.00% | 748,197 | 748,197 |
| Other investments | 33,798,083 | 5,693 | |||||
| 34,556,256 | 763,866 |
Under the caption other non-current investments there is an amount of 33,732,640 euro (45,121,122 euro as at 31 December 2009 in the caption "Investments in current assets"), related to deposited amounts on an Escrow Account which are invested in investment funds with superior rating and guarantee contractual liabilities assumed by Sonae Investimentos which may arise from the sale of Sonae Distribuição Brasil,S.A. and for which provisions were recorded (Note 32 and 33).
Although in accordance with the deadlines contractually established, the Escrow Account should have already been released by the buyer. That didn't happen as there are some points of disagreement on the use of the Escrow Account, namely as to whether or not, to retain the Escrow Account for ongoing fiscal procedures that have not yet been decided (Note 33). It is the understanding of the Board of Directors, based on legal opinions of Brazilian and Portuguese lawyers, that the company is acting in accordance with the agreement and that this amount shall be entirely received, and that there are legal means that may be operated so as to compel the buyer to authorize the reimbursement of the Escrow account. There are negotiations currently under way between the two parties in order to release the above mentioned amount.
Other investments include investments in non-listed companies which fair values cannot be reliably measured. As so, these investments are recorded at cost net of any impairment losses.
During the periods ended as at 31 December 2010 and 2009 movements in other non-current investments are made up as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Investments in other companies | ||
| Opening balance as at 1 January | 827,896 | 787,936 |
| Acquisitions in the period | - | - |
| Changes in consolidation perimeter | - | 2,500 |
| Disposals in the period | (41,941) | - |
| Transfers (Note 13) | 33,732,639 | 37,460 |
| Closing balance as at 31 December | 34,518,594 | 827,896 |
| Accumulated impairment losses | (22,338) | (64,029) |
| 34,496,256 | 763,866 | |
| Financial investments advances | ||
| Opening balance as at 1 January | - | 1,584,193 |
| Changes in consolidation perimeter | - | (1,584,193) |
| Increases | 60,000 | - |
| Closing balance as at 31 December | 60,000 | - |
| 34,556,256 | 763,866 |
The main disposals of companies that have occurred in the period ended as at 31 December 2010 were the following:
| COMPANY | Head Office | Direct | Total |
|---|---|---|---|
| Retail Properties | |||
| Difusão Sociedade imobiliária, SA |
Maia | 100.00% | 100.00% |
| Sontária - Empreendimentos Imobiliários, SA |
Maia | 100.00% | 100.00% |
| Investments Management | |||
| Modelo Continente Seguros - Sociedade Mediação, SA |
Porto | 100.00% | 75.00% |
The disposals mentioned above had the following impact on the consolidated financial statements:
| Mod. Cont. Seg. - Soc. Med. |
Sontaria | Difusão | Total | 31 December 2009 | |
|---|---|---|---|---|---|
| Net assets | |||||
| Tangible and intangible assets (Note 10 and 11) | 1,058,540 | 3,613,563 | 26,237,804 | 30,909,907 | 32,233,072 |
| Deferred tax assets (Note 20) | 15,246 | (0) | 45,191 | 60,437 | 64,889 |
| Other assets | 111,985 | 10,178 | 1,775,423 | 1,897,586 | 2,733,034 |
| Cash and cash equivalents | 1,095 | 544 | 258,238 | 259,877 | 9,526 |
| Deferred tax liabilities (Note 20) | (65,343) | - | (554,498) | (619,841) | (540,330) |
| Other liabilities | (1,453,692) | (2,990,482) | (26,012,429) | (30,456,603) | (34,453,779) |
| (332,169) | 633,803 | 1,749,729 | 2,051,363 | 46,412 | |
| Goodwill (Note 12) | - | 3,069,135 | - | 3,069,135 | |
| Non-controlling interests (Note 23) | (557,535) | - | - | (557,535) | |
| Shareholder's loans, treasury operations and interests | - | 2,740,052 | 25,166,711 | 27,906,763 | |
| Costs related to the disposal | - | - | 644,896 | 644,896 | |
| Profit in disposal | 4,135,478 | 2,417,301 | 5,816,838 | 12,369,617 | |
| Consideration received | 3,245,774 | 8,860,291 | 33,378,174 | 45,484,239 | |
| Effective cash payment received | 1,075,000 | - | 33,378,174 | 34,453,174 | |
| Future cash receivements (Note 14 and 17) | 2,170,773 | 8,860,291 | - | 11,031,064 | |
| 3,245,773 | 8,860,291 | 33,378,174 | 45,484,238 | ||
| Net cash-flow arising from disposal | |||||
| Effective cash payment received | 1,075,000 | - | 33,378,174 | 34,453,174 | |
| Cash payment received related to shareholder's loans and interests | - | - | 375,263 | 375,263 | |
| Effective cash payment related to the disposal costs | - | - | (644,896) | (644,896) | |
| Cash and cash equivalents disposed | (1,095) | (544) | (258,238) | (259,877) | |
| 1,073,905 | (544) | 32,850,303 | 33,923,664 |
Difusão owns a building which has remained in use by the group after the company's disposal through an operating lease agreement, with an initial term of 20 years (term extensions are possible).
Investments in Sontária – Empreendimentos Imobiliários, S.A and Modelo e Continente Seguros – Sociedade de Mediação, Lda were disposed to related entities of the Sonae Group.
The financial instruments classification according to the policies disclosed in note 2.11 is as follows:
| Note | Loans and accounts receivable |
Available for sale |
Assets at fair value through profit or loss (Note 25) |
Hedging derivatives (Note 26) |
Sub-total | Assets not within the scope of IFRS 7 |
Total | |
|---|---|---|---|---|---|---|---|---|
| As at 31 December 2010 | ||||||||
| Non-current assets | ||||||||
| Other investments | 7 | 33,732,640 | 823,616 | - | - | 34,556,256 | - | 34,556,256 |
| Other non-current assets | 14 | 36,892,152 | - | - | - | 36,892,152 | 499,472 | 37,391,624 |
| 70,624,792 | 823,616 | - | - | 71,448,408 | 499,472 | 71,947,880 | ||
| Current assets | ||||||||
| Trade receivables | 16 | 39,793,524 | - | - | - | 39,793,524 | - | 39,793,524 |
| Other debtors | 17 | 107,928,638 | - | - | - | 107,928,638 | - | 107,928,638 |
| Investments | 13 | 15,185,750 | - | - | 457,159 | 15,642,909 | - | 15,642,909 |
| Cash and cash equivalents | 21 | 200,024,469 | - | - | - | 200,024,469 | - | 200,024,469 |
| 362,932,381 | - | - | 457,159 | 363,389,540 | - | 363,389,540 | ||
| 433,557,173 | 823,616 | - | 457,159 | 434,837,948 | 499,472 | 435,337,420 | ||
| As at 31 December 2009 Non-current assets |
||||||||
| 7 | - | 763,866 | - | - | 763,866 | - | 763,866 | |
| Other investments | 14 | 3,768,746 | - | - | - | 3,768,746 | 567,810 | 4,336,556 |
| Other non-current assets | 3,768,746 | 763,866 | - | - | 4,532,612 | 567,810 | 5,100,422 | |
| Current assets | ||||||||
| Trade receivables | 16 | 36,331,126 | - | - | - | 36,331,126 | - | 36,331,126 |
| Other debtors | 17 | 128,845,634 | - | - | - | 128,845,634 | - | 128,845,634 |
Investments 13 57,294,670 - 365,121 - 57,659,791 - 57,659,791 Cash and cash equivalents 21 111,407,067 - - - 111,407,067 - 111,407,067
333,878,497 - 365,121 - 334,243,618 - 334,243,618 337,647,243 763,866 365,121 - 338,776,230 567,810 339,344,040
| Note | Financial liabilities recorded at amortised cost |
Liabilities at fair value through profit or loss (Note 26) |
Hedging derivatives (Note 26) |
Sub-total | Liabilities not within the scope of IFRS 7 |
Total | |
|---|---|---|---|---|---|---|---|
| As at 31 December 2010 | |||||||
| Non-current liabilities | |||||||
| Bank loans | 24 | 303,599,257 | - | - | 303,599,257 | - | 303,599,257 |
| Bonds | 24 | 899,337,511 | - | - | 899,337,511 | - | 899,337,511 |
| Obligations under finance leases 24 and 25 | 7,170,863 | - | - | 7,170,863 | - | 7,170,863 | |
| Other loans | 24 | 162,624 | - | - | 162,624 | - | 162,624 |
| Other non-current liabilities | 27 | 421,512,555 | - | - | 421,512,555 | 3,895,731 | 425,408,286 |
| 1,631,782,810 | - | - | 1,631,782,810 | 3,895,731 | 1,635,678,541 | ||
| Current liabilities | |||||||
| Bank loans | 24 | 10,889,883 | - | - | 10,889,883 | - | 10,889,883 |
| Bonds | 24 | 89,554,618 | - | - | 89,554,618 | - | 89,554,618 |
| Obligations under finance leases 24 and 25 | 2,752,393 | - | - | 2,752,393 | - | 2,752,393 | |
| Other loans | 24 | 33,466 | 76,618 | 5,168,762 | 5,278,846 | - | 5,278,846 |
| Trade creditors | 29 | 1,121,852,468 | - | - | 1,121,852,468 | - | 1,121,852,468 |
| Other creditors | 30 | 154,874,375 | - | - | 154,874,375 | - | 154,874,375 |
| 1,379,957,203 | 76,618 | 5,168,762 | 1,385,202,583 | - | 1,385,202,583 | ||
| 3,011,740,013 | 76,618 | 5,168,762 | 3,016,985,393 | 3,895,731 | 3,020,881,124 | ||
| As at 31 December 2009 | |||||||
| Non-current liabilities | |||||||
| Bank loans | 24 | 285,894,893 | - | - | 285,894,893 | - | 285,894,893 |
| Bonds | 24 | 987,483,025 | - | - | 987,483,025 | - | 987,483,025 |
| Obligations under finance leases 24 and 25 | 8,620,393 | - | - | 8,620,393 | - | 8,620,393 | |
| Other loans | 24 | 198,853 | - | - | 198,853 | - | 198,853 |
| Other non-current liabilities | 27 | 13,078,044 | - | - | 13,078,044 | 3,144,884 | 16,222,928 |
| 1,295,275,208 | - | - | 1,295,275,208 | 3,144,884 | 1,298,420,092 | ||
| Current liabilities | |||||||
| Bank loans | 24 | 26,390,951 | - | - | 26,390,951 | - | 26,390,951 |
| Bonds | 24 | 64,899,489 | - | - | 64,899,489 | - | 64,899,489 |
| Obligations under finance leases 24 and 25 | 4,704,670 | - | - | 4,704,670 | - | 4,704,670 | |
| Other loans | 24 | 33,466 | 79,039 | 7,823,283 | 7,935,788 | - | 7,935,788 |
| Trade creditors | 29 | 1,062,040,575 | - | - | 1,062,040,575 | - | 1,062,040,575 |
| Other creditors | 30 | 133,158,621 | - | - | 133,158,621 | - | 133,158,621 |
| 1,291,227,772 | 79,039 | 7,823,283 | 1,299,130,094 | - | 1,299,130,094 | ||
| 2,586,502,980 | 79,039 | 7,823,283 | 2,594,405,302 | 3,144,884 | 2,597,550,186 |
As at 31 December 2010 and 2009 the financial instruments at fair value through profit/loss are the only derivatives that do not qualify as hedging derivatives.
The table below details the financial instruments that are measured subsequent to initials recognition at fair value, grouped into 3 levels base on the degree to which the fair value is observable:
Level 1: fair value measurements are those derived from quoted prices;
Level 2: fair value measurements are determined from valuation techniques. The main inputs of the models are observable on the market;
Level 3: fair value measurements are those derived from valuation techniques, whose main inputs are not based on observable market data.
| 31 December 2010 | 31 December 2009 | ||||||
|---|---|---|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||
| Financial assets measured at fair value | |||||||
| Investments | - | 457,159 | - | - | 365,122 | - | |
| - | 457,159 | - | - | 365,122 | - | ||
| Financial liabilities measured at fair value | |||||||
| Derivatives | - | 5,168,762 | - | - | 7,823,283 | - | |
| - | 5,168,762 | - | - | 7,823,283 | - |
During the periods ended as at 31 December 2010 and 2009 movements in tangible assets as well as depreciation and accumulated impairment losses are made up as follows:
| Tangible assets | ||||||||
|---|---|---|---|---|---|---|---|---|
| Land and | Plant and | Vehicles | Office Equipment | Others | Tangible assets in |
Tangible Assets | ||
| Buildings | Machinery | progress | ||||||
| Gross assets: | ||||||||
| Opening balance as at 1 January 2009 | 1,496,938,520 | 717,639,990 | 19,243,726 | 100,438,037 | 30,827,572 | 195,762,509 | 2,560,850,354 | |
| Capital Expenditure | 13,592,515 | 1,175,373 | 85,291 | 4,039,525 | 79,557 | 279,410,521 | 298,382,782 | |
| Acquisitions of subsidiaries | 94,389,008 | 1,165,807 | 9,721 | 455,278 | 52,594 | 51,140,433 | 147,212,841 | |
| Disposals | (6,742,135) | (22,416,074) | (780,574) | (5,311,735) | (1,270,088) | (27,006,341) | (63,526,947) | |
| Exchange rate effect | 85,614 | 242,867 | 7,459 | 169,281 | - | - | 505,221 | |
| Transfers | 125,907,703 | 250,304,719 | 1,935,027 | 12,252,525 | 6,337,484 | (406,844,261) | (10,106,803) | |
| Opening balance as at 1 January 2010 | 1,724,171,225 | 948,112,682 | 20,500,650 | 112,042,911 | 36,027,119 | 92,462,861 | 2,933,317,448 | |
| Capital Expenditure | 11,169,685 | 3,220,765 | 206,796 | 1,647,124 | 60,506 | 175,638,820 | 191,943,696 | |
| Disposals | (66,352,907) | (37,244,222) | (1,251,303) | (14,477,256) | (2,420,138) | (2,885,372) | (124,631,198) | |
| Disposals of subsidiaries (Note 8) | (35,610,467) | (3,786,739) | - | (306,791) | - | (23,904) | (39,727,901) | |
| Exchange rate effect | 30,113 | 140,865 | 5,066 | 110,170 | - | - | 286,214 | |
| Transfers | 41,481,451 | 147,900,282 | 1,561,296 | 7,364,708 | 3,104,694 | (222,878,560) | (21,466,129) | |
| Closing balance as at 31 December 2010 | 1,674,889,100 | 1,058,343,633 | 21,022,505 | 106,380,866 | 36,772,181 | 42,313,845 | 2,939,722,130 | |
| Accumulated depreciation and impairment losses | ||||||||
| Opening balance as at 1 January 2009 | 192,480,780 | 340,961,819 | 14,532,932 | 66,543,019 | 22,030,535 | - | 636,549,085 | |
| Depreciation and impairment losses | 26,190,902 | 76,013,208 | 1,913,068 | 14,421,593 | 5,112,918 | - | 123,651,689 | |
| Acquisitions of subsidiaries | 18,326 | 943,697 | 8,490 | 425,589 | 49,132 | - | 1,445,234 | |
| Disposals | (554,679) | (17,920,041) | (755,471) | (4,931,820) | (1,032,434) | - | (25,194,445) | |
| Exchange rate effect | 47,514 | 107,181 | 4,018 | 59,679 | - | - | 218,392 | |
| Transfers | - | (1,561,674) | (9,190) | (278,294) | 3,228 | - | (1,845,930) | |
| Opening balance as at 1 January 2010 | 218,182,843 | 398,544,190 | 15,693,847 | 76,239,766 | 26,163,379 | - | 734,824,025 | |
| Depreciation and impairment losses | 28,588,157 | 94,905,459 | 2,020,606 | 12,695,373 | 4,941,421 | - | 143,151,016 | |
| Disposals | (7,216,109) | (33,504,597) | (1,234,183) | (14,179,485) | (2,333,832) | - | (58,468,206) | |
| Disposals of subsidiaries (Note 8) | (5,940,969) | (3,471,935) | - | (156,868) | - | - | (9,569,772) | |
| Exchange rate effect | 17,442 | 74,926 | 1,524 | 44,761 | - | - | 138,653 | |
| Transfers | (428,731) | (1,096,755) | (34,984) | (946,739) | (103,829) | - | (2,611,038) | |
| Closing balance as at 31 December 2010 | 233,202,633 | 455,451,288 | 16,446,810 | 73,696,808 | 28,667,139 | - | 807,464,678 | |
| Carrying amount | ||||||||
| As at 31 December 2009 | 1,505,988,382 | 549,568,492 | 4,806,803 | 35,803,145 | 9,863,740 | 92,462,861 | 2,198,493,423 | |
| As at 31 December 2010 | 1,441,686,467 | 602,892,345 | 4,575,695 | 32,684,058 | 8,105,042 | 42,313,845 | 2,132,257,452 |
Most significant amounts included in the caption tangible assets in progress refer to the following projects:
| 31 December 2010 31 December 2009 | ||
|---|---|---|
| Refurbishment and expansion of stores in the retail businesses located in Portugal |
24,944,491 | 42,956,387 |
| Refurbishment and expansion of stores in the retail businesses located in Spain |
6,391,982 | 4,787,987 |
| Projects "Modelo" and "Continente" stores for which advance payments were made |
10,389,230 | 13,005,347 |
| Construction in progress in Maia (Business Park) | - | 30,981,983 |
| Others | 588,142 | 731,157 |
| 42,313,845 | 92,462,861 |
"Tangible assets" disposals includes 44,471,990 euro related with the sale & leaseback of the following real estate assets: Campo Grande, Leiria, Mem Martins, Odivelas, Peniche, Póvoa de Varzim, Quinta do Conde and Rio Tinto. The sale of these real estate properties was followed by the beginning of operational lease contracts for periods of 20 years (under certain circumstances the extension of this period is possible). These contracts give Sonae Investimentos preferential rights as well as repurchase options over the disposed real estate, at fair value at end of the operational lease.
Transfers from tangible assets refer mainly to transfers to "Non-current assets held for sale" of two real estate properties owned by Sonae Investimentos, in Alverca and Torres Vedras, which net value amounted to 13,342.458 euro. As at 31 December 2010, these assets are recorded at fair value less any estimated selling costs in the consolidated statement of financial position caption "Non-current assets held for sale" by a total amount of 9,500,686 euro. The difference between the two amounts was recorded in the income statement under the caption "Other expenses" (Note 41).
During the periods ended as at 31 December 2010 and 2009, movements in intangible assets as well as depreciation and accumulated impairment losses are made up as follows:
| Intangible assets | ||||||
|---|---|---|---|---|---|---|
| Gross cost: | Industrial property |
Software | Premium paid for property occupation |
Others | Intangible assets in progress |
Total Intangible Assets |
| Opening balance as at 1 January 2009 | 93,146,363 | 122,614,082 | 16,744,110 | 1,790,425 | 20,204,279 | 254,499,259 |
| Capital expenditure | 636,750 | 104,497 | - | 10,500 | 14,563,291 | 15,315,038 |
| Acquisitions of subsidiaries | 2,569,260 | 2,110 | - | - | - | 2,571,370 |
| Disposals | (2) | (91,270) | - | - | (117,467) | (208,739) |
| Exchange rate effect | - | 43,529 | - | - | - | 43,529 |
| Transfers | 3,671,700 | 14,266,288 | (1,030,915) | (17,458) | (23,186,918) | (6,297,303) |
| Opening balance as at 1 January 2010 | 100,024,071 | 136,939,236 | 15,713,195 | 1,783,467 | 11,463,185 | 265,923,154 |
| Capital expenditure | 1,627,066 | 420,903 | - | - | 13,125,107 | 15,173,076 |
| Disposals | (1,309,019) | (427,852) | (1,008,821) | - | (16,241) | (2,761,933) |
| Disposals of subsidiaries (Note 8) | (1,930) | (1,318,060) | - | - | (90,839) | (1,410,829) |
| Exchange rate effect | - | 40,348 | - | - | - | 40,348 |
| Transfers | 1,090,273 | 7,422,054 | 75,000 | - | (10,098,538) | (1,511,211) |
| Closing balance as at 31 December 2010 | 101,430,461 | 143,076,629 | 14,779,374 | 1,783,467 | 14,382,674 | 275,452,605 |
| Accumulated depreciation and impairment losses | ||||||
| Opening balance as at 1 January 2009 | 8,010,594 | 64,555,623 | 16,127,634 | 1,516,052 | - | 90,209,903 |
| Depreciation of the period | 3,195,382 | 14,153,413 | 79,902 | 104,642 | - | 17,533,339 |
| Acquisitions of subsidiaries | 32,799 | 2,110 | - | - | - | 34,909 |
| Disposals | (2) | (4,493) | - | - | - | (4,495) |
| Exchange rate effect | - | 26,854 | - | - | - | 26,854 |
| Transfers | (116,707) | (3,199,895) | (881,057) | - | - | (4,197,659) |
| Opening balance as at 1 January 2010 | 11,122,066 | 75,533,612 | 15,326,479 | 1,620,694 | - | 103,602,851 |
| Depreciation of the period | 3,650,826 | 16,664,297 | - | 75,320 | - | 20,390,443 |
| Disposals | (129,676) | (342,629) | (951,451) | - | - | (1,423,756) |
| Disposals of subsidiaries (Note 8) | (687) | (658,364) | - | - | - | (659,051) |
| Exchange rate effect | - | 20,079 | - | - | - | 20,079 |
| Transfers | (51,987) | (100,133) | - | (4) | - | (152,124) |
| Closing balance as at 31 December 2010 | 14,590,542 | 91,116,861 | 14,375,028 | 1,696,010 | - | 121,778,441 |
| Carrying amount | ||||||
| As at 31 de December de 2009 | 88,902,005 | 61,405,624 | 386,716 | 162,773 | 11,463,185 | 162,320,303 |
| As at 31 de December de 2010 | 86,839,919 | 51,959,768 | 404,346 | 87,457 | 14,382,674 | 153,674,164 |
Intangible assets in progress were mainly composed of software and software development projects.
Additionally this heading also includes the fair value attributed to a group of brands with indefinite useful lives among which the "Continente" brand amounts to 75,000,000 euro (the same amount as at December 2009).
During the periods ended 31 December 2010 and 2009, movements in goodwill as well as in the corresponding impairment losses, are as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Gross value: | ||
| Opening balance | 528,076,621 | 529,211,677 |
| New companies in the consolidation perimeter (Note 8) |
- | 2,297,794 |
| Disposals of subsidiaries (Note 8) | (9,886,491) | - |
| Transfers | 1,419,908 | - |
| Decreases | - | (3,432,850) |
| Closing balance | 519,610,038 | 528,076,621 |
| Accumulated impairment | ||
| losses: | ||
| Opening balance | 8,191,583 | 8,191,583 |
| Disposals of subsidiaries (Note 8 and 32) | (6,817,356) | - |
| Closing balance | 1,374,227 | 8,191,583 |
| Carrying amount: | 518,235,811 | 519,885,038 |
Goodwill is allocated to each business concept (Retail brands), being afterwards distributed by each cash generating unit inside each format.
Goodwill allocation to real estate, is done by each existing real-estate at acquisition date.
Impairment tests on Goodwill are performed on an annual basis and if there is any indication of impairment loss.
For this purpose, Sonae Investimentos uses the internal valuation results of its business concepts, using annual planning methodologies, supported in 5 year business plans that consider cash-flow projections for each unit which depend on detailed assumptions properly supported. These plans take in consideration the impact of main actions that will be carried out by each business concept as well as study of resources allocation to Sonae Investimentos.
The case scenarios are elaborated with an average capital cost of 7 to 10% depending on the market and business concept. Perpetuity growth rate was considered to be between 0 and 1%.
At 31 December 2010 and 2009, the caption "Goodwill" can be detailed as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Food based retail | 405,645,382 | 404,610,544 |
| Specialised retail | 84,184,028 | 84,184,028 |
| Investment management | 20,884,949 | 20,884,949 |
| Retail Real Estate | 3,410,263 | 3,410,263 |
| Others | 4,111,189 | 6,795,254 |
| 518,235,811 | 519,885,038 |
As at 31 December 2010 and 2009 this caption is made up as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Other investments: | ||
| Opening balance as at 1 January | 57,294,670 | 60,956,595 |
| Increases in the period | 3,016,812 | 7,118,919 |
| Decreases in the period | (11,002,536) | (10,780,844) |
| Increase/(Decrease) in fair value | - | - |
| Transfers | (34,123,196) | - |
| Closing balance as at 31 December | 15,185,750 | 57,294,670 |
| Accumulated impairment losses | - | - |
| Closing balance as at 31 December | 15,185,750 | 57,294,670 |
| Derivative financial instruments | ||
| Fair value as at 1 January | 365,121 | 1,849,128 |
| Increase/(Decrease) in fair value | 92,038 | (1,484,007) |
| Fair value as at 31 December (Note 26) | 457,159 | 365,121 |
| Total of Other Investments (Note 9) | 15,642,909 | 57,659,791 |
As at 31 December 2010 and 2009, "Other non-current assets" are detailed as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Loans granted to related parties | 17,555,234 | - |
| Trade accounts receivable and other debtors | ||
| Bails (a) | 4,680,630 | 2,949,266 |
| Legal deposits (b) | 927,976 | 819,480 |
| Recognition of the value to be received Carrefour ( c) | 11,543,000 | - |
| Amount receivable for selling the Modelo Cont.Seguros | 2,170,773 | - |
| Others | 14,539 | - |
| Total financial instruments (Note 9) | 36,892,152 | 3,768,746 |
| Other non-current assets | 499,472 | 567,810 |
| 37,391,624 | 4,336,556 |
Most significant values included in "Trade accounts receivable and other debtors" refer to:
a) Amounts related with guarantees of lease contracts in group stores located in Spain, which have not matured until this date;
b) Amounts related to legal deposits made by a Brazilian subsidiary, for which are recorded the correspondent liabilities in the caption "Other non-current liabilities" (Note 27), with no defined maturity;
c) As a result of agreements signed in 2005 by former subsidiary - Sonae Distribuição Brazil, SA (sold to Wal-Mart in 2005) with Carrefour Comércio e Indústria Ltda, Sonae assumed the responsibility to compensate Carrefour for the expenses that would arise from the 10 stores licensing process in the Brazilian state of São.Paulo that were sold to that entity. During 2010, Carrefour triggered a bank warranty "on first demand" amounting to 25,340,145.80 Brazilian real (approximately 11 million euro) for alleged expenses incurred with the mentioned stores and that allegedly, arose from the need to remedy deficiencies cited by competent authorities for the licensing process. However no evidence of those expenses was presented to Sonae, or proof of necessity of carrying out such costs for the licensing process as established on the mentioned agreement.
It is the understanding of the Board of Directors and the Group attorneys that the amount paid will be recovered. The company will start the legal proceedings against Carrefour Comércio e Indústria, Ltda. to recover the above mentioned amount. It's the Board of Directors and the Group attorneys understanding that the amount is recoverable, since Carrefour has never proved the existence of the costs that it claims and which validate the usage of the above mentioned warranty, or through the warranty expiration date (according with Brazilian law).
According to Group attorneys, the amount improperly received by Carrefour for which a reimbursement will be requested (25,340,145.80 Brazilian real), will earn interests at the SELIC rate, and it is the Board of Directors understanding that the legal proceedings will last up to 8 years.
As at 31 December 2010 and 2009, Inventories are as follows:
| 31 December 2010 31 December 2009 |
||
|---|---|---|
| Raw materials and consumables | 689,675 | 478,165 |
| Goods for sale | 684,133,662 | 607,095,836 |
| Finish and intermediate goods | 199,723 | 202,575 |
| Work in progress | 273,471 | 146,535 |
| 685,296,531 | 607,923,111 | |
| Accumulated impairment losses on Inventories (Note 32) | (20,666,324) | (18,954,690) |
| 664,630,207 | 588,968,421 |
Cost of goods sold as at 31 December 2010 and 2009 may be detailed as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Opening balance | 607,574,001 | 549,329,990 |
| Changes in consolidation perimeter | - | 805,629 |
| Purchases | 3,655,807,606 | 3,500,491,469 |
| Adjustments | (6,974,559) | (6,711,302) |
| Closing balance | 684,823,337 | 607,574,001 |
| 3,571,583,711 | 3,436,341,785 | |
| Impairment losses (Note 32) | 1,602,827 | 311,575 |
| 3,573,186,538 | 3,436,653,360 |
The amounts recorded under "Adjustments" for the years ended 31 December 2010 and 2009 correspond mainly to charitable contributions to community.
As at 31 December 2010 and 2009, trade accounts receivable are detailed as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Trade accounts receivable | 40,393,272 | 36,212,476 |
| Doubtful receivables | 5,662,412 | 8,659,576 |
| 46,055,684 | 44,872,052 | |
| Accumulated impairment losses on Trade Debtors (Note 32) |
(6,262,160) | (8,540,926) |
| 39,793,524 | 36,331,126 |
Current trade accounts receivable caption includes 8,363,623 euro (8,082,308 euro as at 31 December 2009) related to travel agency clients, as well as 13,109,761 euro (15,127,459 euro as at 31 December 2009), related to gross sales to participated companies.
The values presented above mainly refer to debts originated by Sonae Investimentos operational activity. The amounts presented on the face of the statement of financial position are net of impairment losses, do not bear interests and the discount effect is immaterial. As a result, amounts disclosed are considered to reflect their fair value.
As at 31 December 2010 and 2009, the ageing of the trade receivables is as follows:
| Trade Receivables | ||||
|---|---|---|---|---|
| 31 December 2010 | 31 December 2009 | |||
| Not due | 11,117,060 | 17,466,169 | ||
| Due but not impaired | ||||
| 0 - 90 days | 23,114,340 | 17,129,117 | ||
| + 90 days | 2,125,381 | 1,619,721 | ||
| Total | 25,239,721 | 18,748,838 | ||
| Due and impaired | ||||
| 0 - 90 days | 2,218,162 | 144,612 | ||
| 90 - 180 days | 1,161,363 | 69,111 | ||
| 180 - 360 days | 489,425 | 526,502 | ||
| + 360 days | 5,829,953 | 7,916,820 | ||
| Total | 9,698,903 | 8,657,045 | ||
| 46,055,684 | 44,872,052 |
The trade accounts receivable not due, do not present any sign of impairment. The amounts disclosed are considered to reflect their fair value.
As at 31 December 2010 and 2009, "Other debtors" are as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Granted loans to related companies | 41,268 | 1,008,193 |
| Other debtors | ||
| Trade suppliers - debtor balances | 74,842,000 | 70,708,453 |
| Credit sales over third parties | 4,121,362 | 1,275,849 |
| Special regime for settlement of tax and social security debts | 12,382,502 | 13,999,945 |
| VAT recoverable on real estate assets | 5,676,892 | 17,696,916 |
| Disposal of investments (Note 8) | 8,860,291 | - |
| Accounts receivable from the disposal of tangible fixed assets | 2,646,339 | 4,957,938 |
| Advances on suppliers | 6,700,000 | 14,642,280 |
| Other current assets | 11,540,237 | 21,044,317 |
| 126,769,623 | 144,325,698 | |
| Accumulated impairment losses (Note 32) | (18,882,253) | (16,488,257) |
| Total of Financial Instruments (Note 9) | 107,928,638 | 128,845,634 |
As at 31 December 2010, the amounts disclosed as 'Trade suppliers - debtor balances' relates to commercial discounts billed to suppliers to be net settled with future purchases.
The amount disclosed as "Special regime for settlement of tax and social security debts" corresponds to taxes which were disputed and subject to reimbursement claims. The Board of Directors is confident of the arguments presented by the Group and expects court decisions to be in favour of the Group. As a result, Sonae Investimentos hasn´t recorded any related impairment losses
Granted loans to related companies earn interests at market rates and do not have defined maturity but are deemed to be received within 12 months.
As at 31 December 2010 and 2009, the "Other debtors" ageing, without impairment losses, is as follows:
| Other Debtors | ||||
|---|---|---|---|---|
| 31 December 2010 | 31 December 2009 | |||
| Not due | 23,318,350 | 62,081,785 | ||
| Due but not impaired | ||||
| 0 - 90 days | 69,305,254 | 54,168,127 | ||
| + 90 days | 13,385,545 | 11,734,186 | ||
| Total | 82,690,799 | 65,902,313 | ||
| Due and impaired | ||||
| 90 - 180 days | 1,815,713 | 475,884 | ||
| 180 - 360 days | 407,477 | 2,435,882 | ||
| + 360 days | 18,578,553 | 14,438,027 | ||
| Total | 20,801,743 | 17,349,793 | ||
| 126,810,892 | 145,333,891 |
There is no indication that the debtors not due will not fulfill their obligations. The carrying amount of other debtors is estimated to be approximately its fair value.
As at 31 December 2010 and 2009, Taxes recoverable and taxes and contributions payable are made up as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Tax recoverable | ||
| Income taxation | 2,264,262 | 1,924,355 |
| VAT | 34,894,596 | 24,964,725 |
| Other taxes | 1,774,772 | 1,490,624 |
| 38,933,630 | 28,379,704 | |
| Taxes and contributions payable | ||
| Income taxation | 19,955,295 | 29,309,595 |
| VAT | 17,847,307 | 24,620,277 |
| Staff income taxes withheld | 4,695,308 | 1,918,973 |
| Social security contributions | 10,286,418 | 9,383,376 |
| Other taxes | 106,672 | 402,019 |
| 52,891,000 | 65,634,240 |
As at 31 December 2010 and 2009, "Other current assets" are made up as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Commercial Discounts | 15,897,088 | 13,001,652 |
| Interests to be received | 1,764,353 | 1,674,227 |
| Commissions to be received | 1,679,770 | 1,640,164 |
| Rents | 5,843,859 | 3,916,650 |
| Condominiums management fee's | 1,784,906 | 1,702,948 |
| Insurance premiums paid in advance | 3,855,977 | 3,054,380 |
| Claims | 1,514,969 | 186,255 |
| Software Licenses | 1,354,762 | 1,340,938 |
| Other current assets | 8,255,392 | 6,020,929 |
| 41,951,076 | 32,538,142 |
Deferred tax assets and liabilities as at 31 December 2010 and 2009 are as follows, split between the different types of temporary differences:
| Deferred tax assets | Deferred tax liabilities | |||
|---|---|---|---|---|
| 31 December 2010 | 31 December 2009 | 31 December 2010 | 31 December 2009 | |
| Difference between fair value and acquisition cost | 2,636,088 | 3,450,247 | 29,793,323 | 29,131,447 |
| Harmonisation adjustments | 10,696 | 29,142 | 54,161,634 | 47,638,444 |
| Provisions and impairment losses not accepted for tax purposes | 5,794,376 | 5,308,282 | - | - |
| Write off of tangible and intangible assets | 6,042,666 | 7,811,377 | - | - |
| Valuation of hedging derivatives | 815,455 | 1,622,203 | 54,899 | 96,757 |
| Amortisation of Goodwill for tax purposes | - | - | 20,940,048 | 13,960,032 |
| Non taxed exchange differences | - | - | - | 928,553 |
| Revaluation of tangible assets | - | - | 1,856,488 | 2,129,663 |
| Tax losses carried forward | 83,007,413 | 72,114,888 | - | - |
| Reinvested capital gains/(losses) | - | - | 1,338,941 | 2,102,270 |
| Others | 653,140 | 134,898 | 57,132 | 757,252 |
| 98,959,834 | 90,471,037 | 108,202,465 | 96,744,418 |
During the periods ended 31 December 2010 and 2009, movements in "Deferred tax assets and liabilities" are as follows:
| Deferred tax assets | Deferred tax liabilities | |||
|---|---|---|---|---|
| 31 December 2010 | 31 December 2009 | 31 December 2010 | 31 December 2009 | |
| Opening balance | 90,471,037 | 67,426,816 | 96,744,418 | 81,182,365 |
| Effects in net income: | ||||
| Difference between fair value and acquisition cost | (931,451) | (395,583) | (654,055) | 1,981,706 |
| Amortisation and Depreciation harmonisation adjustments | (18,447) | 98,883 | 7,116,993 | 8,391,966 |
| Provisions and impairment losses not accepted for tax purposes | 428,177 | (1,898,596) | - | - |
| Write-off of tangible and intangible assets | (1,713,182) | (1,478,421) | (9,349) | (4,774) |
| Write-off of deferred costs | - | - | - | - |
| Valuation of hedging derivatives | 30,126 | (105,155) | (45,686) | 77,546 |
| Revaluation of tangible assets | - | - | (227,935) | (149,910) |
| Tax losses carried forward | 10,867,138 | 27,076,410 | - | - |
| Amortisation of Goodwill for tax purposes | - | - | 6,980,016 | 6,980,016 |
| Non taxed exchange differences | - | - | (1,136,223) | (5,422,220) |
| Reinvested capital gains/(losses) | - | - | (763,329) | (155,523) |
| Changes in tax rates | 122,202 | - | 1,285,468 | - |
| Others | 525,342 | (1,456,513) | (566,687) | 160,953 |
| 9,309,905 | 21,841,025 | 11,979,213 | 11,859,760 | |
| Effects in equity: | ||||
| Valuation of hedging derivatives | (837,501) | 304,313 | 3,828 | (470,808) |
| Exchange rate effect | 76,830 | 745,155 | 94,847 | 1,051,253 |
| Others | - | - | - | 2,614 |
| (760,671) | 1,049,468 | 98,675 | 583,059 | |
| Acquisitions of subsidiaries | - | 153,728 | - | 3,119,234 |
| Disposals of subsidiaries (Note 8) | (60,437) | - | (619,841) | - |
| Allocation of fair value on companies acquisitions | - | - | - | - |
| Closing balance | 98,959,834 | 90,471,037 | 108,202,465 | 96,744,418 |
As at 31 December 2010 and 2009, in Portuguese companies the tax rate used to calculate the deferred tax assets arising from tax losses carried forward was 25%. For the deferred tax assets arising from temporary differences, the considered rate was 26.5%, increased approximately in 2% for companies that predict the payment of a tax surplus, a taxable income above 2 million euro (this tax surplus was only established in 2010). The companies or branch offices located in other countries have used their tax.
As at 31 December 2010 and 2009, and in accordance with the tax statements presented by companies that recorded deferred tax assets arising from tax losses carried forward and using exchange rates effective at that time, tax losses carried forward can be summarized as follows:
| 31 December 2010 | 31 December 2009 | |||||
|---|---|---|---|---|---|---|
| Tax losses carried forward |
Deferred tax assets |
Time limit | Tax losses carried forward |
Deferred tax assets | Time limit | |
| With limited time use | ||||||
| Generated in 2004 | - | - | 2010 | 159,844 | 39,961 | 2010 |
| Generated in 2005 | 296,604 | 74,151 | 2011 | 509,857 | 127,464 | 2011 |
| Generated in 2006 | - | - | 2012 | - | - | 2012 |
| Generated in 2007 | 801,519 | 200,380 | 2013 | 15,270,805 | 3,817,701 | 2013 |
| Generated in 2008 | 3,541,099 | 885,276 | 2014 | 3,571,591 | 892,898 | 2014 |
| Generated in 2009 | 9,829,967 | 2,457,492 | 2015 | 10,454,096 | 2,613,524 | 2015 |
| Generated in 2010 | 1,209,545 | 302,387 | 2014 | - | - | |
| 15,678,734 | 3,919,686 | 29,966,194 | 7,491,549 | |||
| Without limited time use | - | - | 940,305 | 319,704 | ||
| With a time limit different from the above mentioned |
263,625,755 | 79,087,727 | 214,345,452 | 64,303,636 | ||
| 263,625,755 | 79,087,727 | 215,285,757 | 64,623,339 | |||
| 279,304,489 | 83,007,413 | 245,251,950 | 72,114,888 |
As at 31 December 2010 and 2009, deferred tax assets were assessed and only recognized to the extent it was probable that sufficient taxable profits will be available in the future against which the deferred tax assets can be used, or when taxable temporary differences are recognized by the same entity and expected to reverse in the same period. This assessment was based on business plans of Sonae Investimentos companies, which are periodically reviewed and updated, and on identified and available tax planning opportunities.
During 2008, at the Specialized Retail segment, deferred tax assets amounting 18,240,000 euro were recorded related to tax losses carried forward from the subsidiary Worten España, S.A. generated in the current and in past years, of which 11,829,000 euro were previous to the acquisition, and therefore had an impact in the calculated negative goodwill. During 2009 and 2010, the Company recorded deferred tax assets amounting to 15,803,178 euro, related to tax losses carried forward generated in the current year, from the subsidiary Worten Espanã, S.A. and 9,378,757 euro from the subsidiary Sport Zone Espanã, S.A. The deferred tax assets are supported by the company's business plans that estimate its recoverability in a period from 6 to 8 years (the last in a more conservative perspective). In Spain, the reporting period of tax losses is 15 years.
As at 31 December 2010 deferred tax assets relating tax losses generated in the years 2010, 2009 and 2008, by Modelo Continente S.A. Spanish Branch, amount to 33,504,788 euro (29,632,938 euro as at 31 December 2009). The mentioned ax losses can be recovered within the Income Tax Group established in Spain, according to Spanish law, for a period of 15 years. Modelo Continente S.A. Spanish Branch, as at 31 December 2010, was the dominant entity within the group of companies taxed in accordance with the Spanish regime for taxing groups of companies. It is the understanding of The Board of Directors, based on existing business plans, that the mentioned deferred tax assets are fully recoverable.
Additionally Spanish law allows the annual deduction, for tax purposes, of 5% of goodwill recognized on the acquisition of foreign based companies before 21 December 2007. Sonae, has recognized ,within this scope deferred tax liabilities relating goodwill depreciation, generated with the acquisition of Continente Hipermercados (ex-Carrefour Portugal), amounting to 465,334,400 euro (Goodwill amount for tax purposes).
In 2010, Spanish Tax authorities notified Modelo Continente S.A. Spanish Branch of a decrease in 2008 tax losses incurred, amounting to approximately 23,266,000 million euro, challenging the deduction of Goodwill depreciation, generated on the acquisition of Continente Hipermercados. That branch appealed to the proper Spanish Authorities (Tribunal Económico - Administrativo Central de Madrid) in 15 December 2010, and it is the Board of Directors understanding that the decision will be favourable to the Group, thus maintaining the recognition of deferred tax assets and deferred tax liabilities related with Goodwill. As at 31 December 2010, tax losses arising from the depreciation of Goodwill, including 2008, amount to 69,800,000 euro (46,533,000 euro as at 31 December 2009).
As at 31 December 2010, there were tax losses carried forward, amounting to 42,730,667 euro (30,903,888 euro as at December 2009), for which no deferred tax asset were recognized for prudential reasons.
| 31 December 2010 | 31 December 2009 | |||||
|---|---|---|---|---|---|---|
| Tax losses carried forward |
Deferred tax credit | Time limit | Tax losses carried forward |
Deferred tax credit | Time limit | |
| With limited time use | ||||||
| Generated in 2004 | - | - | 2010 | 292,987 | 73,247 | 2010 |
| Generated in 2005 | 22,523 | 5,631 | 2011 | 22,523 | 5,631 | 2011 |
| Generated in 2006 | 337,684 | 84,420 | 2012 | 337,684 | 84,420 | 2012 |
| Generated in 2007 | 819,543 | 204,886 | 2013 | 819,543 | 204,886 | 2013 |
| Generated in 2008 | 5,191,322 | 1,297,831 | 2014 | 5,191,322 | 1,297,831 | 2014 |
| Generated in 2009 | 3,392,370 | 848,091 | 2015 | 3,391,900 | 847,975 | 2015 |
| Generated in 2010 | 8,059,162 | 2,014,791 | 2014 | - | - | |
| 17,822,604 | 4,455,650 | 10,055,959 | 2,513,990 | |||
| Without limited time use | 11,077,728 | 3,766,427 | 5,871,991 | 1,996,477 | ||
| With a time limit different from the above mentioned |
13,830,335 | 3,457,584 | 14,975,938 | 3,756,324 | ||
| 42,730,667 | 11,679,661 | 30,903,888 | 8,266,791 |
As at 31 December 2010 and 2009, Cash and cash equivalents are as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Cash at hand | 6,847,595 | 6,120,299 |
| Bank deposits | 193,164,261 | 105,275,640 |
| Treasury applications | 12,613 | 11,128 |
| Cash and cash equivalents on the balance sheet (Note 9) | 200,024,469 | 111,407,067 |
| Bank overdrafts (Note 24) | (7,564,216) | (23,065,285) |
| Cash and cash equivalents on the statement of cash flows | 192,460,253 | 88,341,782 |
Bank overdrafts are disclosed in the statement of financial position under Current bank loans.
As at 31 December 2010, the share capital, which is fully subscribed and paid for, is made up of 1.000.000.000 ordinary shares, which do not have the right to a fixed dividend, with a nominal value of 1 euro each.
As at 31 December 2010, the company's subscribed share capital are held as follows:
| Entity | 31 December 2010 | 31 December 2009 |
|---|---|---|
| Sonae, SGPS, S.A. | 76.858% | 82.480% |
| Sonae Investments, BV | 13.142% | 17.520% |
| Sonae Specialized Retail, SGPS, SA | 10.000% | - |
As at 31 December 2010, Efanor Investimentos, SGPS, S.A. and its subsidiaries held 52.98% of the share capital of Sonae, SGPS, S.A.
In the Shareholders Annual General Meeting held on 26 April 2010, a gross dividend of 70 million euro was approved (85 million euro in 2009).
During the period, a subsidiary Company of Sonae Investimentos SGPS, SA, (Sonae Specialized Retail SGPS, SA) acquired 100,000,000 shares of Sonae Investimentos at a price of 3.20 euro per share to its shareholders. As at 31 December 2010, Sonae Investimentos holds 10% of treasury shares. Following the mentioned acquisition free reserves amounting to the cost of the above mentioned shares were made unavailable. The distribution of this reserve depends on the termination or disposal of the treasury shares.
The General Meeting held on 29 December 2010 a distribution of free reserves, amounting to 425 million euro, to shareholders was approved.
During the period supplementary capital entries were made by shareholders Sonae SGPS, SA and Sonae Investments BV, amounting to 372,000,000 euro.
Movements in non-controlling interests during the periods ended as at 31 December 2010 and 2009 are as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Opening balance as at 1 January | 74,344,125 | 11,201,548 |
| Dividends | - | (4,170) |
| Acquisition/Creation of subsidiaries | 980,000 | 63,575,395 |
| Disposal of subsidiaries (Note 8) | (557,535) | - |
| Cover losses | 995,750 | - |
| Others | (97,327) | 1,000,000 |
| Profit for the period attributable to non-controlling interests | (230,233) | (1,428,648) |
| Closing balance as at 31 December 2009 | 75,434,780 | 74,344,125 |
As at 31 December 2010 and 2009, Borrowings are made up as follows:
| 31 December 2010 | 31 December 2009 | |||||
|---|---|---|---|---|---|---|
| Outstanding amount | Outstanding amount | |||||
| Limit | Current | Non Current | Limit | Current | Non Current | |
| Bank loans | ||||||
| Sonae Distribuição, SGPS, S.A. - commercial paper | 682,500,000 | - | 292,000,000 | 692,500,000 | - | 271,000,000 |
| Others | 3,333,334 | 11,666,666 | 3,333,333 | 15,000,000 | ||
| 3,333,334 | 303,666,666 | 3,333,333 | 286,000,000 | |||
| Bank overdrafts (Note 21) | 7,564,216 | - | 23,065,285 | - | ||
| Up-front fees beard with the issuance of loans | (7,667) | (67,409) | (7,667) | (105,107) | ||
| Bank loans | 10,889,883 | 303,599,257 | 26,390,951 | 285,894,893 | ||
| Bonds | ||||||
| Bonds Modelo Continente / 2003 | 82,000,000 | - | - | 82,000,000 | ||
| Bonds Modelo Continente / 2005 / 2010 | - | - | 64,925,000 | 0 | ||
| Bonds Modelo Continente / 2005 / 2012 | - | 150,000,000 | - | 150,000,000 | ||
| Bonds Modelo Continente / 2007 / 2012 | - | 200,000,000 | - | 200,000,000 | ||
| Bonds Sonae Distribuição / 2007 / 2015 | - | 200,000,000 | - | 200,000,000 | ||
| Bonds Sonae Distribuição / 2007 / 2015 | - | 310,000,000 | - | 310,000,000 | ||
| Bonds Sonae Distribuição / 2009 / 2014 | 8,000,000 | 42,000,000 | - | 50,000,000 | ||
| Up-front fees bearded with the issuance of loans | (445,382) | (2,662,489) | (25,511) | (4,516,975) | ||
| Bonds | 89,554,618 | 899,337,511 | 64,899,489 | 987,483,025 | ||
| Other loans | 33,466 | 162,624 | 33,466 | 198,853 | ||
| Derivative instruments (Note 26) | 5,245,380 | 0 | 7,902,322 | 0 | ||
| Other loans | 5,278,846 | 162,624 | 7,935,788 | 198,853 | ||
| Obligations under finance leases (Note 25) | 2,752,393 | 7,170,863 | 4,704,670 | 8,620,393 | ||
| 108,475,740 | 1,210,270,255 | 103,930,898 | 1,282,197,164 |
The interest rate as at 31 December 2010 of bonds and loans was on average 1.83% (1.65% as at 31 December 2009). The fair value of these loans is estimated to be similar to their market value.
The derivative instruments are recorded at fair value (Note 26).
The face value loans and interests maturities are as follows (including obligations under financial leases):
| 31 December 2010 | 31 December 2009 | |||||
|---|---|---|---|---|---|---|
| Capital | Interests | Capital | Interests | |||
| N+1 | 103,683,409 | 24,590,989 | 96,061,754 | 29,795,282 | ||
| N+2 | 370,645,105 | 20,872,439 | 95,469,679 | 28,206,844 | ||
| N+3 | 175,485,486 | 14,984,323 | 370,883,410 | 24,724,436 | ||
| N+4 | 306,106,457 | 11,511,601 | 205,263,112 | 19,684,796 | ||
| N+5 | 357,414,181 | 6,442,119 | 255,078,237 | 7,737,123 | ||
| After N+5 | 3,348,925 | 133,624 | 360,124,809 | 5,820,539 | ||
| 1,316,683,563 | 78,535,095 | 1,382,881,001 | 115,969,020 |
The maturities above were estimated in accordance with the contractual terms of loans, which do not have any financial covenants.
The amounts considered in commercial paper have subscription guarantee for a period of 4 years. Since it is the Group's intention to maintain the use of this form of financing for a period over one year, therefore the Group classified these amounts as non-current.
As at 31 December 2010 and 2009, the available credit facilities are as follows:
| 31 December 2010 | 31 December 2009 | ||||
|---|---|---|---|---|---|
| Commitments of less than one year |
Commitments of more than one year |
Commitments of less than one year |
Commitments of more than one year |
||
| Unused credit facilities | 273,845,368 | 198,000,000 | 359,466,654 | 204,000,000 | |
| Agreed credit facilities | 279,620,074 | 490,000,000 | 382,351,624 | 475,000,000 |
As at 31 December 2010 and 2009, Obligations under finance leases are as follows:
| Obligations under finance leases | Minimum finance lease payments | Present value of minimum finance lease payments |
||
|---|---|---|---|---|
| Amounts under finance leases: | 31 December 2010 | 31 December 2009 | 31 December 2010 | 31 December 2009 |
| N+1 | 3,002,925 | 5,027,261 | 2,752,393 | 4,704,670 |
| N+2 | 1,606,480 | 1,834,291 | 1,446,610 | 1,635,399 |
| N+3 | 1,249,724 | 1,675,151 | 1,133,680 | 1,521,156 |
| N+4 | 831,397 | 1,009,822 | 740,525 | 893,569 |
| N+5 | 810,580 | 803,933 | 735,783 | 708,624 |
| After N+5 | 3,274,346 | 4,086,663 | 3,114,265 | 3,861,645 |
| 10,775,452 | 14,437,121 | 9,923,256 | 13,325,063 | |
| Interests | (852,196) | (1,112,058) | ||
| 9,923,256 | 13,325,063 | |||
| Current obligations under finance leases | 2,752,393 | 4,704,670 | ||
| Non-current obligations under finance leases | 7,170,863 | 8,620,393 |
Lease agreements bear interests at usual market rates and have defined contracted lines and, generally, the lessee has call options over the leased assets.
As at 31 December 2010 and 2009, the fair value of financial obligations under financial lease contracts is similar to its book value.
Obligations under finance leases are guaranteed by related assets.
As at 31 December 2010 and 2009, the net value of assets acquired under finance leases can be detailed as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Assets acquired under finance leases | ||
| Lands and buildings | 22,767,479 | 30,878,104 |
| Vehicles | 28,860 | 46,590 |
| Fixture and Fittings | 3,535,022 | 5,170,024 |
| Total tangible assets | 26,331,361 | 36,094,718 |
As at 31 December 2010, the acquisition cost of Tangible assets amounted to 34,663,805 euro (47,776,405 euro as at 31 December 2009).
In what concerns financial risk management policy, Sonae Investimentos uses exchange rate derivatives, essentially to hedge future cash flows.
As at 31 December 2010, the fair value of the exchange rate derivatives, calculated taking into consideration the present market value of equivalent financial instruments, is estimated as follows:
| 31 December 2010 | 31 December 2009 | ||
|---|---|---|---|
| Assets (Note 13) | 457,159 | 365,121 | |
| Liabilities (Note 24) | (954,898) | (79,039) | |
| (497,739) | 286,082 |
Gains and losses for the year arising from changes in the fair value of exchange rate derivatives amounting to (362,701) euro ((617,803) euro as at 2009)) were recorded under the caption "Hedging Reserve" of Comprehensive Income, when considered hedging instruments and in income statement, under the caption "Other expenses" when not.
The derivatives recorded as liabilities, as at 31 December 2010, were zero cost collars. According to the adopted accounting principles, those instruments meet all the requirements to be designated as interest rate hedging instruments.
The fair value is as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Liabilities (Note 24) | (4,290,482) | (7,823,283) |
| (4,290,482) | (7,823,283) |
These interest rate derivatives are valued at fair value, at the financial position sheet date, based on valuations performed by Sonae Investimentos using specific software and on external valuations when this software does not deal with specific instruments. The fair value of interest rate derivatives was calculated, as at the financial position sheet date, based on the discounted cash flow of the difference between the fixed interest rate of the fixed leg and the indexed variable interest rate inherent to the variable leg.
The fair value of derivatives is detailed as follows:
| Assets | Liabilities | |||
|---|---|---|---|---|
| 31 December 2010 | 31 December 2009 | 31 December 2010 | 31 December 2009 | |
| Derivatives not qualified as hedging | ||||
| Exchange rate | - | 365,121 | 76,618 | 79,039 |
| Interest rate | - | - | - | - |
| Hedging derivatives | ||||
| Exchange rate | 457,159 | - | 878,280 | - |
| Interest rate | - | - | 4,290,482 | 7,823,283 |
| Interest and exchange rate | - | - | - | - |
| 457,159 | 365,121 | 5,245,380 | 7,902,322 |
As at 31 December 2010 and 2009 "Other non-current liabilities" are made up as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Shareholders loans | 417,902,648 | 10,931,827 |
| Fixed assets suppliers | 1,237,500 | 1,287,500 |
| Other non-current liabilities | 2,372,407 | 858,717 |
| Total of financial instruments (Note 9) | 421,512,555 | 13,078,044 |
| Share based payments (Note 28) | 3,216,439 | 2,069,462 |
| Accruals and deferrals | 679,292 | 1,075,422 |
| Other non-current liabilities | 425,408,286 | 16,222,928 |
This caption includes a subordinate bond loan repayable after 10 years issued by Sonae Investimentos fully subscribed. This loan was fully subscribed and paid for by Sonae SGPS, SA on 28 December 2010, amounting to 400 million euro corresponding to 8,000 bonds with a nominal value of 50,000 euro each.
The amount payable to participating companies refers to a shareholders' loan granted by a minority shareholder to a subsidiary that bears interest at usual market rate. The fair value of this loan is similar to its book value, with no defined maturity.
As at 31 December 2010, the caption "Other non-current liabilities" includes 972,408 euro (858.717 euro as at 31 December 2009) mainly refers to the estimated amounts to fulfill the legal and tax obligations of a Brazilian subsidiary which were considered appropriate to face up to future losses on lawsuits and for which legal deposits exist, which are recorded under the caption "Other non-current assets" (Note 14), with no defined maturity.
In 2010 and in previous years, Sonae Investimentos granted deferred performance bonuses to its directors and eligible employees based on shares to be acquired at nil cost, three years after they were attributed to the employee. The acquisition can be exercised during the period commencing on the third anniversary of the grant date and the end of that year. Sonae Investimentos has the right to deliver, instead of shares, the equivalent in cash. The period of rights only occurs if the employee is employed by the company of the Sonae Group at maturity.
As at 31 December 2010 and 2009, the market value of total liabilities arising from share-based payments may be summarised as follows:
| Grant | Vesting | Number of | Fair value | ||
|---|---|---|---|---|---|
| year | year | participants | 31 December 2010 | 31 December 2009 | |
| Shares | |||||
| 2007 | 2010 | 40 | - | 891,596 | |
| 2008 | 2011 | 43 | 1,688,691 | 1,468,048 | |
| 2009 | 2012 | 43 | 3,680,318 | 3,272,289 | |
| 2010 | 2013 | 46 | 2,288,719 | - | |
| Total | 7,657,728 | 5,631,933 |
As at 31 December 2010 and 2009 the financial statements include the following amounts corresponding to the period elapsed between the date of granting and those dates for each deferred bonus plan:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Staff costs | 2,487,799 | 2,666,299 |
| Recorded in previous years | 2,417,344 | 294,759 |
| 4,905,143 | 2,961,058 | |
| Other non-current liabilities (Note 27) | 3,216,439 | 2,069,462 |
| Other current liabilities (Note 31) | 1,688,704 | 891,596 |
| 4,905,143 | 2,961,058 | |
The share based payment plan costs are recognized during the years between the grant and vesting date as staff costs.
As at 31 December 2010 and 2009, Trade creditors are as follows:
| Payable to | ||||
|---|---|---|---|---|
| 31 December 2010 | up to 90 days | More than 90 days | ||
| Trade creditors - current account | 991,799,465 | 991,676,612 | 122,853 | |
| Trade creditors - Invoice Accruals | 130,053,003 | 130,053,003 | - | |
| 1,121,852,468 | 1,121,729,615 | 122,853 | ||
| Payable to | ||||
| 31 December 2009 | up to 90 days | |||
| Trade creditors - current account | 910,506,317 | 910,299,299 | 207,018 | |
| Trade creditors - Invoice Accruals | 151,534,258 | 151,061,225 | 473,033 | |
| 1,062,040,575 | 1,061,360,524 | 680,051 |
As at 31 December 2010 and 2009 this caption includes amounts payable to suppliers resulting from Sonae Investimentos operating activity. Sonae Investimentos believes that the fair value of these balances does not differ significantly from its book value.
Trade creditors' maturity can be detailed as follows:
| 31 December 2010 | 31 December 2009 | 31 December 2008 | |
|---|---|---|---|
| Total Trade creditors up to 90 days |
1,121,852,468 | 1,062,040,575 | 898,101,628 |
| Euro | 1,121,729,615 | 1,061,360,524 | 892,716,934 |
| % over Total | 100.0% | 99.9% | 99.4% |
| More than 90 days | 122,853 | 680,051 | 5,384,694 |
The total amount payable has almost entirely a maturity of less than 90 days.
During the year 2010 was made available to a very limited number of suppliers a "confirming" program payments system, being those trade creditors capable of discounting these payments in an early date.
As at 31 December 2010 and 2009, "Other creditors" are as follows:
| Payable to | ||||
|---|---|---|---|---|
| 31 December 2010 | up to 90 days | 90 to 180 days | More than 180 days | |
| Fixed asset suppliers | 58,103,689 | 55,998,460 | 849,484 | 1,255,745 |
| Other debtors | 43,343,332 | 42,787,254 | 103,941 | 452,137 |
| 101,447,021 | 98,785,714 | 953,425 | 1,707,882 | |
| Related undertakings (Note 43) | 53,427,354 | |||
| 154,874,375 | ||||
| Payable to | ||||
| 31 December 2009 | up to 90 days | 90 to 180 days | More than 180 days | |
| Fixed asset suppliers | 76,905,111 | 74,236,764 | 1,073,012 | 1,595,335 |
| Other debtors | 56,253,410 | 52,037,021 | 179,767 | 4,036,622 |
| 133,158,521 | 126,273,785 | 1,252,779 | 5,631,957 | |
| Related undertakings | 100 | |||
| 133,158,621 |
The caption "Other debtors" includes:
18,556,454 euro (17,236,223 euro as at 31 December 2009) of attributed discounts not yet redeemed related to the loyalty card "Cartão Cliente";
8,277,581 euro (10,483,469 euro as at December 2009) related to, vouchers, gift cards and discount tickets owned by clients;
6,179,706 euro (5,973,902 euro as at December 2009) related to payable amounts to Sonae Distribuição Brasil, SA buyer as a result of responsibilities assumed with that entity.
As at 31 December 2010 and 2009, this caption includes payable amounts to other creditors and fixed assets suppliers that do not bear interests. The Board of Directors believes that the fair value of these payables is approximately its book value and the actualization effect is not material.
As at 31 December 2010 and 2009, "Other current liabilities" are made up as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Staff costs | 90,073,043 | 86,486,304 |
| Interest payable | 7,384,896 | 6,631,919 |
| Marketing expenses | 16,436,794 | 7,543,181 |
| Other external supplies and services | 33,794,793 | 27,026,280 |
| Accrued income - rents | 4,294,408 | 4,670,177 |
| Real Estate Municipality tax | 4,342,284 | 3,889,818 |
| Share based payments (Note 28) | 1,688,704 | 891,596 |
| Others | 8,580,909 | 7,396,212 |
| 166,595,831 | 144,535,487 |
The caption "Staff costs" refers mainly to payroll amounts to be paid during the next year as holiday and holiday pay.
Movements in Provisions and impairment losses over the period ended 31 December 2010 and 2009 are as follows:
| Caption | Balance as at 31 December 2009 |
Increase | Decrease | Changes in consolidation perimeter |
Balance as at 31 December 2010 |
|---|---|---|---|---|---|
| Accumulated impairment losses on investments (Note 7) | 64,029 | - | (41,691) | - | 22,338 |
| Accumulated impairment losses on goodwill (Note 12) | 8,191,583 | - | - | (6,817,356) | 1,374,227 |
| Accumulated impairment losses on trade accounts receivable (Note 16) |
8,540,926 | 1,274,394 | (3,553,160) | - | 6,262,160 |
| Accumulated impairment losses on other debtors (Note 17) | 16,488,257 | 5,479,790 | (3,085,794) | - | 18,882,253 |
| Accumulated impairment losses on inventories (Note 15) | 18,954,690 | 6,880,899 | (5,169,265) | - | 20,666,324 |
| Non current provisions Current provisions |
9,263,092 2,488,883 63,991,460 |
13,242,889 13,940 26,891,912 |
(1,010,418) (815,844) (13,676,172) |
- - (6,817,356) |
21,495,563 1,686,979 70,389,844 |
| Caption | Balance as at 31 December 2008 |
Increase | Decrease | Changes in consolidation perimeter |
Balance as at 31 December 2009 |
| Accumulated impairment losses on investments (Note 7) | 13,158 | 50,871 | - | - | 64,029 |
| Accumulated Impairment losses on goodwill (Note 12) | 8,191,583 | - | - | - | 8,191,583 |
| Accumulated impairment losses on trade accounts receivable (Note 16) |
12,717,269 | 1,390,904 | (5,857,980) | 290,733 | 8,540,926 |
| Accumulated impairment losses on other debtors (Note 17) | 12,140,408 | 4,915,875 | (568,026) | - | 16,488,257 |
| Accumulated impairment losses on inventories (Note 15) | 18,510,507 | 5,664,153 | (5,352,578) | 132,608 | 18,954,690 |
| Non current provisions | 12,953,754 | 1,548,043 | (5,238,705) | - | 9,263,092 |
| Current provisions | 2,314,563 | 829,995 | (655,675) | - | 2,488,883 |
As at 31 December 2010 and 2009 increases in provisions and impairment losses are as follows:
| 31 December 2010 31 December 2009 | ||
|---|---|---|
| Provisions and impairment losses | 18,953,842 | 6,867,019 |
| Exchange rate changes | 940,638 | 1,548,043 |
| Adjustments for inventories impairments recorded in cost of goods sold (Note 15) |
6,880,899 | 5,796,761 |
| Others | 116,533 | 188,018 |
| 26,891,912 | 14,399,841 |
The caption non-current provisions includes 10,856,969 euro (5,447,923 euro as at 31 December 2009) relating to noncurrent responsibilities assumed by the company, when selling the subsidiary Sonae Distribuição Brasil, S.A. in 2005. This provision is being used as costs are incurred, being made on base of current best estimate of costs to such liability and resulting in a significant number of civil lawsuits and labour and of limited value.
The caption non-current provisions and the movement in the period in this caption, also includes the estimated liabilities incurred by the Group on the sale of warranty extension programmes on products traded by the Specialized Retail operating segment in the amount of 7,833,843 euro . These extensions are granted for a period of one to three years after the legally binding warranty.
As at 31 December 2010 and 2009, the major Contingent liabilities were guarantees given, which are detailed as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Guarantees given: | ||
| on tax claims | 317,505,226 | 251,357,651 |
| on municipal claims | 7,011,523 | 8,998,481 |
| others | 32,115,117 | 27,298,016 |
During the period, retail based subsidiaries of the Company, granted guarantees in favour of the Portuguese Tax Administration, associated with tax claims for VAT, amounting to 96,500,000 euro, for which the Company has presented, or has the intention of presenting an impugnation. Portuguese tax authorities claim that the Company should have invoiced VAT related to promotional discounts invoiced to suppliers as these discounts depend on the acquisitions made by the Group during the year, and claim that the company should not have deducted VAT from discount vouchers used by its clients.
The increase in guarantees for tax claims is primarily associated with a guarantee granted by the Group of approximately 60 million euro, to tax authorities as a result of a claim over 2005 tax statements, as tax authorities challenged the tax loss recognized on the liquidation of a subsidiary, after covering losses in that same subsidiary.
A Retail segment company in Brazil granted a guarantee of approximately 33.4 million euro (74,078,784 Brazilian real), on a tax claim, which is being judged by tax court (72,755,267 Brazilian real as at 31 December 2009), and the difference refers to accruals.
As a consequence of the sale of a subsidiary company in Brazil, Sonae guaranteed the buyer all the losses incurred by that company arising on unfavourable decisions not open for appeal, concerning tax lawsuits on transactions that took place before the sale date (13 December 2005) and that exceed 40 million euro. As at 31 December 2010, the amount claimed by the Brazilian Tax Authorities concerning the tax lawsuits still in progress, which the company's lawyers assess as having a high probability of loss plus the amounts already paid (27.6 million euro) related to programmes for the Brazilian State of tax recovery amount to near 39.8 million euro.
Furthermore, there are other tax lawsuits totalling 54.7 million euro (42 million euro as at 31 December 2009) for which the Board of Directors, based on the lawyers' assessment, understands will not imply future losses to the old subsidiary.
No provision has been recognized to face up to risks arising from events related to guarantees given, as the Board of Directors considers that no liabilities will result to Sonae Investimentos.
As at 31 December 2010 an amount of 70,121,234 euro (57,739,171 euro as at 31 December 2009) was recorded as cost for the period concerning rents due to operational lease contacts, mainly referring to leased real estate.
Additionally, as at 31 December 2010, Sonae Investimentos had operational lease contracts, as lessee, whose minimum lease payments had the following payment schedule:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Due in: | ||
| N+1 automatically renewal | 21,274,127 | 15,466,049 |
| N+1 | 67,546,922 | 52,486,963 |
| N+2 | 62,690,275 | 47,808,715 |
| N+3 | 58,353,993 | 42,386,524 |
| N+4 | 52,891,783 | 36,643,951 |
| N+5 | 45,062,350 | 31,307,320 |
| After N+5 | 446,982,039 | 203,754,939 |
| 754,801,489 | 429,854,461 |
The increase in costs with operating leases, as well as the increase in the minimum lease payments that fall due in future periods can be explained primarily by the process of sale and leaseback of some of the operational properties of the Group, including logistics platforms and some of its retail stores. The increase is still associated with the opening of retail stores in Portugal and Spain.
During 2010, it was recognized as profit and loss the amount of 9,764,698 euro (8,894,422 euro as at 31 December 2009) related to rents received from operational leases, mainly related with shopping centres explored by others in Sonae Investimentos property stores.
Additionally, as at 31 December 2010, Sonae Investimentos had operational lease contracts, as lessor, who's minimum lease payments had the following payment schedule:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Due in: | ||
| N+1 automatically renewal | 2,893,603 | 3,920,950 |
| N+1 | 5,855,395 | 5,444,607 |
| N+2 | 4,771,562 | 4,322,828 |
| N+3 | 4,212,972 | 3,689,859 |
| N+4 | 2,806,917 | 3,189,790 |
| N+5 | 1,021,358 | 2,261,874 |
| After N+5 | 449,386 | 837,874 |
| 22,011,193 | 23,667,782 | |
As at 31 December 2010 and 2009, turnover is made up as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Sale of goods | 4,664,262,067 | 4,420,413,159 |
| Services rendered (a) | 136,903,890 | 125,452,037 |
| 4,801,165,957 | 4,545,865,196 |
a) Mainly corresponds to the contribution of business travel agencies, as well as rents charged under operational lease contracts.
As at 31 December 2010 and 2009, gains and losses on financial investments r is made up as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Dividends | 210,000 | 200,000 |
| Sale of 75 % of Modelo Continente seguros (Note 8) | 4,135,478 | - |
| Sale of Difusão (Note 8) | 5,816,838 | - |
| Sale of Sontaria (Note 8) | 2,417,301 | - |
| Others | 11,410 | 1,439,444 |
| Gains / (losses) on the sale of investments in subsidiaries |
12,381,027 | 1,439,444 |
| Impairment losses on investments in subsidiaries | - | - |
| Impairment losses on investments in associated companies | - | - |
| Impairment losses on investments available for sale | - | - |
| Impairment of reversal/(losses) on investments | - | - |
| 12,591,027 | 1,639,444 |
As at 31 December 2010 and 2009, Net financial expenses are as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Expenses | ||
| Interest payable | ||
| related with bank loans and overdrafts | (7,191,780) | (9,513,362) |
| related with non convertible bonds | (18,413,422) | (31,798,404) |
| related with financial leases | (176,410) | (277,187) |
| related with hedge derivatives | (4,626,579) | (3,283,100) |
| others | (5,736,955) | (946,881) |
| (36,145,146) | (45,818,934) | |
| Exchange losses | (7,143,433) | (4,038,339) |
| Up front fees and commissions related to loans | (4,820,373) | (3,203,245) |
| Others | (6,460,589) | (4,966,354) |
| (54,569,541) | (58,026,872) | |
| Income | ||
| Interest receivable | ||
| related with bank deposits | 374,506 | 356,940 |
| others | 1,518,309 | 2,798,840 |
| 1,892,815 | 3,155,780 | |
| Exchange gains | 1,288,268 | 5,088,189 |
| Payments discounts received | 100,787 | - |
| Other financial income | 66,964 | 25,509 |
| 3,348,834 | 8,269,478 | |
| Net financial expenses | (51,220,707) | (49,757,394) |
As at 31 December 2010 and 2009, "Other operational income" is as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Supplementary income | 371,970,888 | 358,939,003 |
| Exchange differences | 26,371,143 | 12,240,751 |
| Own work capitalised | 4,674,089 | 7,185,074 |
| Gains on sales of assets | 38,993,966 | 1,197,659 |
| Negative Goodwill | - | 343,359 |
| Impairment losses reversals | 4,978,347 | 1,693,355 |
| Benefits from contractual penalties | 1,303,134 | 1,256,096 |
| Subsidies | 197,013 | 694,906 |
| Others | 3,571,770 | 6,299,052 |
| 452,060,350 | 389,849,255 |
Supplementary income relates mainly to additional receipts from the suppliers of Sonae Investimentos, relating to: i) reimbursement of promotional campaigns carried out in the stores, ii) receipts from suppliers regarding product placement in preferred locations, and iii) discounts for prompt payment obtained.
Gains on disposal of assets are explained by the operational sale and leaseback transactions that the Group led during the period, generating a cash inflow in the process of over 71 million euro.
The caption "Own work capitalized" includes 4,674,089 euro (5,029,196 euro at December 31, 2009), relating to software development conducted by a Brazilian subsidiary.
As at 31 December 2010 and 2009, External supplies and services are as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Publicity | 119,700,405 | 106,348,696 |
| Rents | 106,903,363 | 93,462,388 |
| Subcontracts | 94,040,412 | 91,287,263 |
| Transports | 51,111,463 | 49,775,490 |
| Electricity | 48,177,568 | 41,403,606 |
| Services | 37,181,761 | 32,752,622 |
| Maintenance | 27,070,863 | 25,336,634 |
| Security | 25,056,631 | 24,473,170 |
| Cleaning up services | 24,008,522 | 23,646,962 |
| Communications | 13,303,739 | 12,036,824 |
| Travel expenses | 6,294,224 | 5,823,503 |
| Insurances | 4,813,253 | 4,605,479 |
| Others | 57,361,489 | 54,724,568 |
| 615,023,693 | 565,677,205 |
As at 31 December 2010 and 2009, Staff costs are as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Salaries | 420,511,222 | 399,758,361 |
| Social security contributions | 88,163,504 | 80,756,138 |
| Insurance | 7,020,491 | 7,758,545 |
| Welfare | 1,675,138 | 1,981,599 |
| Other staff costs | 21,706,942 | 13,888,981 |
| 539,077,297 | 504,143,624 |
As at 31 December 2010 and 2009, "Other operational expenses" are as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Costs with automatic payment terminals | 27,948,105 | 26,141,831 |
| Exchange differences | 25,154,367 | 11,802,053 |
| Donations | 6,456,507 | 6,790,252 |
| Losses on the disposal of assets (Note 38) | 7,398,764 | 6,060,675 |
| Impairment of tangible assets (Note 10) | 3,841,772 | |
| Municipal Property tax | 4,085,343 | 3,246,820 |
| Other taxes | 3,805,603 | 2,569,662 |
| Doubtful debts written-off | 483,137 | 816,037 |
| Others | 14,271,407 | 13,912,774 |
| 93,445,005 | 71,340,106 |
As at 31 December 2010 and 2009, Income tax is as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Current tax | 40,981,973 | 34,316,306 |
| Deferred tax (Note 20) | 2,669,308 | (9,981,265) |
| 43,651,281 | 24,335,041 |
The reconciliation between the profit before taxation and the tax charge for the periods ended 31 December 2010 and 2009 is summarized as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Profit before income tax | 212,017,000 | 161,077,484 |
| Difference between capital (losses)/gains for accounting and tax purposes |
(34,533,672) | (1,768,608) |
| Impairment of goodwill | - | - |
| Badwill | (343,360) | |
| Provisions and impairment losses not accepted for tax purposes | 8,639,076 | (6,519,356) |
| Taxable Profit | 186,122,404 | 152,446,160 |
| Use of tax losses that have not originated deferred tax assets | - | (18,976) |
| Recognition of tax losses that have not originated deferred tax assets | 8,785,347 | 2,305,143 |
| 194,907,751 | 154,732,327 | |
| Income tax rate in Portugal | 25.00% | 25.00% |
| 48,726,938 | 38,683,082 | |
| Effect of different income tax rates in other countries |
(6,208,112) | (5,470,586) |
| Effect of increases or decreases in deferred taxes | 1,316,575 | (8,271,601) |
| Under/(over) taxation estimates | (258,718) | 1,106,609 |
| Autonomous taxes and tax benefits | 1,090,265 | 975,546 |
| Municipality surcharge | 5,793,907 | 1,448,405 |
| Others | (6,809,574) | (4,136,414) |
| Income tax | 43,651,281 | 24,335,041 |
Balances and transactions with related parties during the periods ended 31 December 2010 and 2009 are as follows:
| Sales and services rendered | Purchases and services obtained | |||||
|---|---|---|---|---|---|---|
| Transactions | 31 December 2010 | 31 December 2009 | 31 December 2010 | 31 December 2009 | ||
| Parent company | 1,189,835 | 443,762 | 240,281 | 1,515,370 | ||
| Jointly controlled companies | 910,275 | 845,437 | 2,909,459 | 2,214,073 | ||
| Associated companies | 35,058,025 | 32,302,022 | 979,818 | 764,039 | ||
| Affiliated companies | 60,615,663 | 57,115,947 | - | - | ||
| Other related parties (1) | 14,507,678 | 8,986,966 | 90,205,222 | 89,541,209 | ||
| 112,281,476 | 99,694,134 | 94,334,780 | 94,034,691 | |||
| Interest income | Interest expenses | |||||
| Transactions | 31 December 2010 | 31 December 2009 | 31 December 2010 | 31 December 2009 | ||
| Parent company | 109,337 | 16,853 | 2,220,315 | 467,774 | ||
| Jointly controlled companies | 18 | 127,589 | 16 | 9,125 | ||
| Associated companies | - | - | - | - | ||
| Affiliated companies | - | - | - | - | ||
| Other related parties (1) | 141,938 | 41,436 | 3,845,351 | 387,421 | ||
| 251,293 | 185,878 | 6,065,682 | 864,320 |
| Accounts payable | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Accounts receivable Balances 31 December 2010 31 December 2009 Parent company 978,438 535,294 Jointly controlled companies 742,572 125,975 Associated companies 2,584,590 1,446,962 Affiliated companies 13,413,873 14,169,568 Other related parties (1) 22,293,532 10,493,463 40,013,005 26,771,262 Loans Obtained Balances 31 December 2010 31 December 2009 Parent company 453,000,000 - |
31 December 2010 | 31 December 2009 | |||||||
| 630,241 | 1,688,040 | ||||||||
| 675,795 | 202,093 | ||||||||
| 74,828 | 87,091 | ||||||||
| 54,571 | 40,932 | ||||||||
| 27,680,583 | 32,646,869 | ||||||||
| 29,116,018 | 34,665,025 | ||||||||
| Granted | |||||||||
| 31 December 2010 | 31 December 2009 | ||||||||
| - | - | ||||||||
| Jointly controlled companies | - | - | - | - | |||||
| Associated companies | - | - | 17,555,234 | 1,000,000 | |||||
| Affiliated companies | - | - | - | - | |||||
| Other related parties (1) | 17,902,648 | 10,802,648 | - | - | |||||
| 470,902,648 | 10,802,648 | 17,555,234 | 1,000,000 |
1) Other related parties are considered to be related party affiliates or companies under joint control of Efanor SGPS, SA that are not included in Sonae Investimentos, including companies belonging to the Sonae Group, Sonae Indústria and Sonae Capital.
The amounts recorded as loans granted from other relating parties represent borrowings from shareholders of subsidiary companies which bear interests at market rates.
Granted loans to associated companies, refer to values of loans granted to associates acquired during the period, Mundo VIP (1,000,000 euro) and MDS, SGPS, SA (16,555,234 euro).
During the period there were still a number of transactions of investments between related parties and which can be described as follows:
• During the second half of 2010, Sonae Investimentos SGPS, SA acquired to Sonae SGPS, SA 46.92% of MDS SGPS, SA (Note 6 and 45);
• Sonae Investimentos SGPS, SA also acquired to a related party of the Group, 33.34% of Mundo VIP – Operadores Turisticos (Note 6).
The remuneration of the members of the Board of Directors and strategic direction, in all companies within Sonae Investimentos perimeter, in the years ended December 31, 2010 and 2009, are as follows:
| 31 December 2010 | 31 December 2009 | |||||
|---|---|---|---|---|---|---|
| Board of Directors | Strategic direction (a) |
Board of Directors | Strategic direction (a) |
|||
| Fixed remuneration | 100,070 | 3,621,940 | 461,960 | 2,320,780 | ||
| Variable remuneration Short term | - | 1,379,400 | 190,900 | 1,050,500 | ||
| Variable remuneration Middle term | - | 1,451,600 | 290,200 | 864,200 | ||
| 100,070 | 6,452,940 | 943,060 | 4,235,480 |
(a) Includes employers with responsibility for strategic management of the main companies of Sonae Investimentos (excluding members of the Board of Directors of Sonae Investimentos).
Earnings per share for the periods ended 31 December 2010 and 2009, were calculated taking into consideration the following amounts:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Net profit | ||
| Net profit taken into consideration t o calculate basic earnings per share (consolidated profit for the period) |
168,595,954 | 138,171,091 |
| Effect of dilutive potential shares Interest related to convertible bonds (net of tax) |
- - |
- - |
| Net profit taken into consideration t o calculate diluted earnings per share |
168,595,954 | 138,171,091 |
| Number of shares | ||
| Weighted average number of shares used t o calculated basic earnings per share |
983,690,959 | 1,000,000,000 |
| Effect of dilutive potential ordinary shares from convertible bonds | - | - |
| Weighted average number of shares used t o calculated diluted earnings per share |
983,690,959 | 1,000,000,000 |
| Earnings per share (basic and diluted) | 0.171391 | 0.138171 |
On December 31, 2010 and 2009 there are no dilutive effects on the number of outstanding shares.
As at 31 December 2010 and 2009, cash receipts and cash payments related to investments are as follows:
| 31 December 2010 | 31 December 2009 | |
|---|---|---|
| Receipts | ||
| Disposal of Difusão | 32,850,303 | - |
| Disposal of Modelo Continente Seguros | 1,073,905 | - |
| Price adjustment of a subsidiary | - | 3,432,850 |
| Others | 7,789 | 1,000,031 |
| 33,931,997 | 4,432,881 | |
| 31 December 2010 | 31 December 2009 | |
| Payments | ||
| Acquisition of MDS SGPS | 51,000,000 | - |
| Imosede Capital Increase | - | 15,000,063 |
| Others | 3,857,023 | 6,516,031 |
| 54,857,023 | 21,516,094 | |
| Food based Retail |
Specialised Retail |
Investment Management |
Retail Real Estate |
Eliminations, adjustments and others |
Total | |
|---|---|---|---|---|---|---|
| 31 December 2010 | ||||||
| Turnover | 3,355,084,970 | 1,271,764,071 | 166,629,230 | 126,043,734 | (118,356,048) | 4,801,165,957 |
| Ex-Fuel | 3,275,139,951 | 1,271,764,071 | 166,629,230 | 126,043,734 | (118,356,048) | 4,721,220,938 |
| Fuel | 79,945,019 | - | - | - | - | 79,945,019 |
| EBITDA | 231,123,330 | 44,625,770 | 1,567,053 | 149,261,165 | 6,384,318 | 432,961,636 |
| EBIT | 146,843,314 | 493,102 | (2,435,370) | 117,340,679 | 995,994 | 263,237,719 |
| Invested capital | 416,300,745 | 337,037,521 | 76,583,764 | 1,418,165,276 | 67,775,199 | 2,315,862,505 |
| Sales area [000 m2 ] |
544 | 362 | 63 | - | - | 969 |
| Food based Retail |
Specialised Retail |
Investment Management |
Retail Real Estate |
Eliminations and adjustments |
Total | |
| 31 December 2009 | ||||||
| Turnover | 3,239,177,441 | 1,132,040,059 | 167,667,739 | 123,117,232 | (116,137,275) | 4,545,865,196 |
| Ex-Fuel | 3,106,023,672 | 1,132,040,059 | 167,667,739 | 123,117,232 | (116,137,275) | 4,412,711,427 |
| Fuel | 133,153,769 | - | - | - | - | 133,153,769 |
| EBITDA | 198,707,702 | 48,104,311 | (1,886,786) | 110,938,755 | - | 355,863,982 |
| EBIT | 124,026,421 | 9,873,941 | (7,123,026) | 83,071,313 | - | 209,848,649 |
| Invested capital | 421,066,190 | 249,684,220 | 79,907,454 | 1,523,249,390 | - | 2,273,907,254 |
| Sales area [000 m2 ] |
528 | 304 | 67 | - | - | 899 |
The contributions of the main segments identified in years 2010 and 2009 can be analysed as follows:
The caption Invested Capital as at 31 December 2010 in "Eliminations, adjustments and Others" includes the financial investment in associated MDS, SGPS, SA and respective value of supplies.
Includes the contribution of the Group's activity associated with the insignias of food retail (Continente, Modelo, Bom Bocado, Área Saúde and Book.it) and fuels (which is operated under the banner Continente).
Includes the contribution of Group activity associated with the insignia of non-food retail (Worten, Worten Mobile, Worten Gamer, Vobis, Sport Zone, Loop, Modalfa e Zippy).
Includes work of the Group's activity associated with Maxmat and travel agencies.
Includes work of real estate assets owned and managed by Sonae Investimentos, including commercial galleries attached to units Continente and Modelo.
Include consolidation adjustments and eliminations of intra-group balances. In the turnover caption, these values refer mainly to the elimination of rents invoiced by the Real Estate Segment to other Segments.
Turnover + Other income + Negative Goodwill – Reversion of impairment losses – Operational costs + profit/losses on disposals of subsidiaries - Provision for warranty extensions.
Turnover + Other income + Negative Goodwill – Operational costs - Provision for warranty extensions + profit/losses on disposals of subsidiaries – amortizations and impairment losses.
Gross real estate assets + other fixed assets (including Goodwill) - amortizations and impairment losses + financial investments + working capital
As at 31 December 2010, the Group paid, in respect of fees, to the statutory Auditor of the Group, Deloitte and its network of companies, the following amounts:
| 31 December 2010 | |
|---|---|
| Audit and Statutory Audit | 569,983 |
| Other assurance services | 11,907 |
| Tax consultancy | - |
| Other services | 607,464 |
| 1,189,354 | |
During the month of March, a subsidiary of the Group concluded the sale & leaseback of its Continente and Worten stores located in the Vasco da Gama Shopping centre to "Imofomento" a BPI real estate fund for a total consideration of 42.3million euro. The implied initial yield on this transaction on a triple net basis is 6.1 %, generating a book gain of 16.6 million euro.
The accompanying financial statements were approved by the Board of Directors on 15 March 2011; nevertheless they are still subject to approval at the Shareholders Annual General Meeting.
The Board of Directors
______________________________________ Duarte Paulo Teixeira de Azevedo (President)
______________________________________ Ângelo Gabriel Ribeirinho dos Santos Paupério
______________________________________
Nuno Manuel Moniz Trigoso Jordão
(Translation of individual financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
(Amounts expressed in euro)
| Notes | 31.December.2010 | 31.December.2009 | |
|---|---|---|---|
| NON-CURRENT ASSETS: | |||
| Tangible assets | 6 | 1,477 | 2,786 |
| Intangible assets | 6 | 5,260 | 7,160 |
| Investments | 5 | 2,712,242,717 | 2,349,634,766 |
| Deferred tax assets | 7 | 738,707 | 1,736,158 |
| Other non-current assets | 4 , 8 | 1,258,356,053 | 1,000,150,633 |
| Total non-current assets | 3,971,344,214 | 3,351,531,503 | |
| CURRENT ASSETS: | |||
| Trade accounts receivable | 4 , 9 | 1,834,227 | 1,319,180 |
| Other debtors | 4 , 10 | 448,790,326 | 316,362,233 |
| Taxes recoverable | 1 1 |
661,990 | 668,567 |
| Other current assets | 4 , 12 | 3,793,825 | 4,337,057 |
| Cash and cash equivalents | 4 , 13 | 127,421,554 | 51,973,423 |
| Total current assets | 582,501,922 | 374,660,460 | |
| TOTAL ASSETS | 4,553,846,136 | 3,726,191,963 | |
| EQUITY AND LIABILITIES | |||
| EQUITY: | |||
| Share capital | 1 4 |
1,000,000,000 | 1,000,000,000 |
| Legal reserve | 1 5 |
117,087,918 | 114,000,000 |
| Hedging res erves , fair value res erves and other res erves |
1 6 |
765,042,776 | 826,785,421 |
| Profit for the period | 450,539,262 | 61,758,365 | |
| TOTAL EQUITY | 2,332,669,956 | 2,002,543,786 | |
| LIABILITIES: | |||
| NON-CURRENT LIABILITIES: | |||
| Bank loans | 4 , 17 | 303,599,256 | 285,894,893 |
| Bonds | 4 , 17 | 899,337,511 | 987,483,025 |
| Other non-current liabilities | 4 , 18 | 400,456,179 | - |
| Deferred tax liabilities | 7 | 1,403 | 1,379 |
| Total non-current liabilities | 1,603,394,349 | 1,273,379,297 | |
| CURRENT LIABILITIES: | |||
| Bank loans | 4 , 17 | 3,325,667 | 3,787,425 |
| Bonds | 4 , 17 | 89,554,618 | 64,899,489 |
| Derivatives | 4 , 19 | 4,367,099 | 7,823,283 |
| Trade creditors | 4 , 20 | 126,157 | 261,857 |
| Other creditors | 4 , 21 | 488,521,784 | 342,979,333 |
| Taxes and contributions payable | 1 1 |
18,082,675 | 21,559,067 |
| Other current liabilities | 4 , 22 | 13,803,831 | 8,958,426 |
| Total current liabilities | 617,781,831 | 450,268,880 | |
| TOTAL EQUITY AND LIABILITIES | 4,553,846,136 | 3,726,191,963 | |
The accompanying notes are part of these individual financial statements.
(Translation of individual financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
| Notes | 31.December.2010 | 31.December.2009 | |
|---|---|---|---|
| Services rendered | 27 | 2,072,621 | 1,627,527 |
| Investment income | 28 | 458,713,522 | 55,438,308 |
| Financial income | 29 | 34,111,075 | 70,363,460 |
| Other income | 30 | 1,027,687 | 1,955,230 |
| External supplies and services | 31 | (856,911) | (1,373,406) |
| Staff costs | (346,043) | (1,184,259) | |
| Depreciation and amortisation | 6 | (3,536) | (4,469) |
| Provisions and impairment losses | - | (539,611) | |
| Financial expense | 29 | (45,610,004) | (59,330,458) |
| Other expenses | 32 | (1,995,092) | (2,303,261) |
| Profit/(Loss) before taxation | 447,113,319 | 64,649,061 | |
| Taxation | 33 | 3,425,943 | (2,890,696) |
| Profit/(Loss) after taxation | 450,539,262 | 61,758,365 | |
| Profit/(Loss) per share | 34 | 0.4580 | 0.0618 |
| Page 82 |
(Amounts expressed in euro) (Translation of individual financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
| Notes | 31.December.2010 31.December.2009 | ||
|---|---|---|---|
| Net Profit / (Loss) for the year | 450,539,262 | 61,758,365 | |
| Changes in hedging reserve | 3,519,601 | (1,900,004) | |
| Deferred tax relating to changes in hedging reserves | 7 | (932,693) | 775,121 |
| Total individual comprehensive income for the year | 453,126,170 | 60,633,482 | |
| The accompanying notes are part of these individual financial statements. | |||
| The Board of Directors | |||
| Page 83 |
| (Translation of individual financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (Amounts expressed in euro) | |||||||||
| Reserves and Retained Earnings | |||||||||
| Notes | Share Capital | Legal Reserve | Hedging Res erve |
Legal Reserves in accordance with article 342 of Commercial Companies Code |
Other Reserves and Retained Earnings |
Total Reserves and Retained Earnings |
Net Profit/(Loss) | Total | |
| Balance as at 1 January 2009 | 1,000,000,000 | 99,300,000 | (3,316,342) | - | 664,814,565 | 760,798,223 | 266,112,081 | 2,026,910,304 | |
| Total comprehensive income for the period | - | - | (1,124,883) | - | - | (1,124,883) | 61,758,365 | 60,633,482 | |
| Appropriation of profit of 2008: Transfer to legal reserves and retained earnings Dividends distributed Balance as at 31 December 2009 |
1 5 |
- - 1,000,000,000 |
14,700,000 - 114,000,000 |
- - (4,441,225) |
- - - |
251,412,081 (85,000,000) 831,226,646 |
266,112,081 (85,000,000) 940,785,421 |
(266,112,081) - 61,758,365 |
- (85,000,000) 2,002,543,786 |
| Balance as at 1 January 2010 | 1,000,000,000 | 114,000,000 | (4,441,225) | - | 831,226,646 | 940,785,421 | 61,758,365 | 2,002,543,786 | |
| Total comprehensive income for the period | - | - | 2,586,908 | - | - | 2,586,908 | 450,539,262 | 453,126,170 | |
| Appropriation of profit of 2009: Transfer to legal reserves and retained earnings Dividends distributed Distribution of free reserves Free reserves made unavailable |
1 5 1 5 |
- - - - |
3,087,918 - - - |
- - - - |
- - - 342,000,000 |
58,670,447 (70,000,000) (425,000,000) (342,000,000) |
61,758,365 (70,000,000) (425,000,000) - |
(61,758,365) - - - |
- (70,000,000) (425,000,000) |
| Supplementary capital Balance as at 31 December 2010 |
- 1,000,000,000 |
- 117,087,918 |
- (1,854,317) |
- 342,000,000 |
372,000,000 424,897,093 |
372,000,000 882,130,694 |
- 450,539,262 |
372,000,000 2,332,669,956 |
|
The accompanying notes are part of these individual financial statements.
(Translation of individual financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails) (Amounts expressed in euro)
| Notes | 31.December.2010 | 31.December.2009 | |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Cash receipts from trade debtors | 1,847,631 | 2,031,875 | |
| Cash paid to trade creditors | (711,180) | (1,213,249) | |
| Cash paid to employees | (502,589) | (863,494) | |
| Cash flow generated by operations | 633,862 | (44,868) | |
| Income taxes (paid) / received | (18,331,817) | 12,923,498 | |
| Other cash receipts and (payments) relating to operating activities | (1,176,997) | 151,041 | |
| Net cash flow from operating activities (1) | (18,874,952) | 13,029,671 | |
| INVESTMENT ACTIVITIES | |||
| Cash receipts arising from: | |||
| Investments | 3 5 |
1,247,045,244 | 25,471,000 |
| Tangible assets | 1 0 |
- | |
| Intangible assets | 160,389 | - | |
| Interest and similar income | 52,477,415 | 71,180,744 | |
| Dividends | 13,797,148 | 1,312,520 | |
| Others | 211,662 | - | |
| Loans granted | 2,182,483,965 | 2,838,115,811 | |
| 3,496,175,833 | 2,936,080,075 | ||
| Cash Payments arising from: | |||
| Investments | 3 5 |
(1,204,139,365) | (22,775,937) |
| Tangible assets | - | (257) | |
| Intangible assets | (366) | - | |
| Others | (1,000,530) | - | |
| Loans granted | (2,532,247,232) | (2,523,958,552) | |
| (3,737,387,493) | (2,546,734,746) | ||
| Net cash used in investment activities (2) | (241,211,660) | 389,345,329 | |
| FINANCING ACTIVITIES | |||
| Cash receipts arising from: | |||
| Loans obtained | 8,589,568,706 | 12,394,973,792 | |
| Supplementary capital | 372,000,000 | - | |
| 8,961,568,706 | 12,394,973,792 | ||
| Cash Payments arising from: | |||
| Loans obtained | (8,093,394,419) | (12,636,398,079) | |
| Interest and similar charges | (37,177,784) | (74,389,221) | |
| Dividends | 3 6 |
(495,000,000) | (85,000,000) |
| (8,625,572,203) | (12,795,787,300) | ||
| Net cash used in financing activities (3) | 335,996,503 | (400,813,508) | |
| Net increase in cash and cash equivalents (4) = (1) + (2) + (3) | 75,909,891 | 1,561,492 | |
| Cash and cash equivalents at the beginning of the period | 1 3 |
51,511,663 | 49,950,171 |
| Cash and cash equivalents at the end of the period | 1 3 |
127,421,554 | 51,511,663 |
The accompanying notes are part of these individual financial statements.
(Translation of individual financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
(Amounts expressed in euro)
SONAE INVESTIMENTOS, SGPS, SA, "the Company" or "Sonae Investimentos" it's a Portuguese Corporation, with headoffice in Rua João Mendonça nº 529, 4464-501 Senhora da Hora, Matosinhos, Portugal.
The Company's main activity is the management of shareholdings (Note 5).
The company financial statements are presented as required by Commercial Companies Code. According to Decree-Law 158/2009 of 13 July, the Company financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
The principal accounting policies adopted in preparing the accompanying individual financial statements are as follows:
The accompanying financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union. This standards were issued by the International Accounting Standards Board ("IASB") and interpretations issued by International Financial Reporting Interpretations Committee ("IFRIC") or by the previous Standing Interpretations Committee ("SIC"), that have been adopted by the European Union.
The accompanying financial statements have been prepared from the books and accounting records on a going concern basis and under the historical cost convention, except for financial instruments which are stated at fair value.
Up to the approval date of these financial statements, the European Union endorsed standards, interpretations, amendments and revisions, some of which have become effective during the year 2010. These changes are presented in Note 2 of the notes to the consolidated financial statements. The adoption, during 2010 of the mentioned standards did not produce impacts on the Company financial statements, since they aren't applicable to the Individual financial statements of the Company.
Additionally there are standards that have been approved for adoption in the periods started at or after 1 January 2011, which the company were not adopted by the Company in advance. No material impacts in the individual financial statements of the company will arise from the adoption of these standards.
Tangible assets are recorded at acquisition cost net of depreciation and accumulated impairment losses.
Depreciation charges for the year are calculated on a straight line basis over the useful life of each asset in the caption Depreciation and amortisation.
The impairment losses in the realisable value of tangible assets are recorded in the year they arise in the caption of the Income Statement - "Provisions and impairment losses".
Intangible assets are stated at acquisition cost, net of amortisation and accumulated impairment losses. Intangible assets are only recognised if it is probable that future economic benefits will flow from them, if they are controlled by the Company and if their cost can be reliably measured.
Depreciation charges for the year are calculated on a straight line basis over the useful life of each asset in the caption Depreciation and amortization.
Borrowing costs are usually recognised as an expense in the period in which they are incurred on an accruals basis in accordance with effective interest rate method.
The Company classifies the financial instruments in the categories presented and conciliated with the statement of financial position disclosed in Note 4.
Equity investments in subsidiaries and associates are accounted for accordingly with IAS 27, at acquisition cost net of impairment losses.
Investments are classified into the following categories:
Held to maturity investments are classified as non-current assets unless they mature within 12 months of the statement of financial position date. Investments classified as held to maturity have defined maturities and the Company has the intention and ability to hold them until the maturity date.
The investments measured at fair value through profit or loss include the investments held for trading that the company acquires for sale in a short period of time, and are classified in the statement of financial position as current assets.
The Company classifies as available for sale those investments that are neither included as investments measured at fair value through profit or loss nor as investments held to maturity. These assets are classified as non-current assets, except if the sale is expected to occur within 12 months from the date of classification.
All purchases and sales of investments are recognized on the trade date, independently of the settlement date.
Investments are initially recorded at acquisition cost, which is the fair value of the consideration paid for them. In the case of Investments held to maturity or Available for sale investments, transaction costs are included in the acquisition costs.
After its initial recording, investments measured at fair value through profit or loss and Available for sale investments are subsequently carried at fair values, by reference to their quoted market value at statement of financial position date, without any deduction for transaction costs which may be incurred on sale. Investments in equity instruments that do not have a quoted market price and whose fair value cannot be reliably measured are stated at cost, less impairment losses.
Gains or losses arising from a change in fair value of available for sale investments are recognised directly in equity, under Fair value reserve, in the caption Other reserves, until the investment is sold or otherwise disposed of, or until it is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is transferred to net profit or loss.
Gains or losses arising from a change in fair value of investments measured at fair value through profit or loss are recorded in the Income statement captions Financial expenses or Financial income.
Held to maturity investments are carried at amortised cost using the effective interest rate, net of capital reimbursements and interest income received.
Loans and accounts receivable are recorded at amortised cost using the effective rate method net of accumulated impairment losses, in order to reflect its realisable value.
Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
These financial instruments emerge when the Company provides money or services to its subsidiaries and associates with no intention of trading those assets.
Loans and receivables are recorded as current assets, except when its maturity is greater than 12 months from the statement of financial position date, situations when they are classified as non-current assets. Loans and receivables are included in the captions presented in Note 4.
Receivables are stated at net realisable value corresponding to their nominal value less impairment losses, recorded under the caption "Provisions and impairment losses" in accounts receivable.
Impairment is recognised if there is objective and measurable evidence that, as a result of one or more events that occurred, the balance will not be fully received.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate. If the receipt of the full amount is expected to be within one year the discount is considered null.
Financial liabilities and equity instruments are classified and accounted for based on their contractual substance, independently from the legal form they assume.
Loans are recorded as liabilities at their nominal value, net of up-front fees and commissions related to the issuance of those instruments. Financial expenses are calculated based on the effective interest rate and are recorded in the income statement on an accruals basis, in accordance with the accounting policy defined in Note 2.7. The portion of the effective interest charge relating to up-front fees and commissions, if not paid in the period, is added to the book value of the loan.
Trade accounts payable are stated at their nominal value. There is no discount, as it is immaterial.
The Company uses derivatives in the management of its financial risks to hedge such risks. Derivatives are not used for trading purposes.
Derivatives classified as cash flow hedge instruments are used by the Company mainly to hedge interest rate risks on loans obtained. Conditions established for these cash flow hedge instruments are identical to those of the corresponding loans in terms of base rates, calculation rules, rate setting dates and repayment schedules of the loans and for these reasons they qualify as perfect hedges. The gain or loss relating to the ineffective portion of the hedge, if any, is recorded in the Income Statement under Financial Income or Financial Expenses.
The Company's criteria for classifying a derivative instrument as a cash flow hedge instrument include:
Cash flow hedge instruments used by the Company to hedge the exposure to changes in interest of its loans are initially accounted for at cost, if any which corresponds to its fair value, and subsequently adjusted to their corresponding fair value. Changes in fair value of these cash flow hedge instruments are recorded in equity under the caption Hedging reserves, included in the caption Reserves and Retained Earnings, and then recognised in the income statement over the same period in which the hedged instrument affects profit or loss.
The fair value of these instruments is estimated by the Company using specific software based on the discounted cash flow of the difference between the fixed interest rate of the fixed leg and the indexed variable interest rate inherent to the variable leg, through the use of interest rate curves taken from Bloomberg.
Hedge accounting of derivative instruments is discontinued when the instrument matures or is sold. Whenever a derivative instrument can no longer be qualified as a hedging instrument, the fair value differences recorded in equity under the caption Hedging reserve included in the caption Reserves and Retained Earnings, are transferred to profit or loss of the period or to the carrying amount of the asset that resulted from the hedged forecast transaction. Subsequent changes in fair value are recorded in the income statement.
When embedded derivatives exist, they are accounted for as separate derivatives when the risks and the characteristics are not closely related to economic risks and characteristics of the host instruments, and this is not stated at fair value through profit or loss.
In specific situations, the Company hires exchange rate derivatives. In these circumstances, and although these derivatives are hired to hedge the risk associated with the variation of future cash flows, these derivatives are usually measured at fair value through the income statement.
Treasury shares are recorded at acquisition cost as a reduction to equity. Gains or losses arising from sales of treasury shares are directly recorded in other reserves.
Cash and cash equivalents include cash on hand, cash at bank, term deposits and other treasury applications which mature in less than three months and are subject to insignificant risk of change in value.
In the cash flows statement, cash and cash equivalents also include bank overdrafts, which are included in the statement of financial position caption of current bank loans.
The effective interest rate method is a method of calculating the amortised cost of a financial asset or liability and of allocating interest income or expense over the relevant period.
Financial assets, other than Investments measured at fair value through profit or loss, are assessed for indicators of impairment at each statement of financial position date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.
For non-quoted equity instruments determining whether the investment is impaired requires an estimation of the value in use of the investment. The value in use calculation requires the entity to estimate the future cash flows expected to arise for the entity and a suitable discount rate in order to calculate present value.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.
For investments in subsidiaries (equity investments and loans granted to subsidiaries, jointly controlled companies and associated companies) the impairment analysis is based on the fair value estimate of its net assets
The above mentioned estimate is based on the fair value computation of the value in use of its holdings by means of discounted cash flow models, whenever there is an indication that the asset might be impaired, namely from the distribution of dividends by the mentioned entities.
It is the Board of Directors understanding that the use of the above mentioned methodology is adequate to conclude on the eventual existence of financial investments impairment as it incorporates the best available information as at the date of the financial statements.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
In respect of equity available for sale securities, impairment losses previously recognised through profit or loss are not reversed. Any increase in fair value subsequent to an impairment loss is recognised directly in equity.
Contingent liabilities are not recorded in the financial statements. Instead they are disclosed in the notes to the financial statements, unless the probability of a cash outflow is remote, in which case, no disclosure is made.
Contingent assets are not recorded in the financial statements but disclosed when future economic benefits are probable.
Revenue from services rendered is recognised in the income statement in the period they are performed.
Dividends are recognised as income in the year they are attributed to the shareholders.
Income and expenses are recorded in the year to which they relate, independently of the date of the corresponding payment or receipt. Income and expenses for which their real amount is not known are estimated.
Other current assets and Other current liabilities include income and expenses of the reporting year which will only be invoiced in the future. Those captions also include receipts and payments that have already occurred but that correspond to income or expenses of future years, when they will be recognised in the income statement.
Events after the statement of financial position date that provide additional information about conditions that existed at the balance sheet date (adjusting events), are reflected in the financial statements. Events after the statement of financial position date that are non-adjusting events are disclosed in the notes when material.
The most significant accounting estimates reflected in the financial statements are as follows:
Estimates used are based on the best information available during the preparation of these financial statements and are based on the best knowledge of past and present events. Although future events, are not controlled by the Company are not foreseeable, some could occur and have impact on the estimates. Therefore and due to this uncertainty the outcome of the transactions being estimated may differ from the initial estimate. Changes to the estimates used by management that occur after the approval date of these consolidated financial statements, will be recognised in net income prospectively, in accordance with IAS 8.
The main estimates and assumptions in relation to future events included in the preparation of these financial statements are disclosed in the correspondent notes, if applicable.
Share-based payments result from deferred performance bonus plans that are referenced to the evolution of the Sonae, SGPS, S.A. shares' price (parent company of Sonae Investimentos, SGPS, SA).
The value of these responsibilities is determined at the time of assignment (usually in March of each year) and subsequently updated at the end of each reporting period depending on the number of shares allotted and the fair value of the reporting date. The responsibility is recorded on staff costs and other current liabilities, linearly between the date of assignment and expiration date, in proportion to the time between those dates.
Sonae Investimentos is taxed in accordance with Special Regime of Taxing Groups of Companies (Parent company). Each company included in this regime records income tax for the year in its individual accounts in the caption "Group companies". When a subsidiary contributes with a tax loss, it reflects, in its individual accounts, the amount of tax corresponding to the loss to be compensated by the profits of the other companies covered by this regime.
Deferred taxes are calculated using the statement of financial position liability method, reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are calculated and annually remeasured using the tax rates that have been enacted or substantively enacted and therefore expected to apply in the periods when the temporary differences are expected to reverse.
Deferred tax assets are recognized only when it is probable that sufficient taxable profits will be available against which the deferred tax assets can be used, or when taxable temporary differences are recognized and expected to reverse in the same period. At each statement of financial position date an assessment of the deferred tax assets recognized is made, being reduced whenever their future use is no longer probable.
Deferred tax assets and liabilities are recorded in the income statement, except if they relate to items directly recorded in equity. In these cases the corresponding deferred tax is recorded in Equity.
Risk management general principles are approved by the Board of Directors, and its implementation is supervised by group's finance department.
The interest and exchange rate risk have a decisive importance in the Company's market risk management.
Derivatives are used to hedge certain exposures related to its operating business and, as a rule, Sonae Investimentos does not enter into derivatives or other financial instruments that are unrelated to its operating business or for speculative purposes.
The group exposure to the interest rate risk arises mainly from the long term loans which bear interests indexed to Euribor.
The group aim is to limit the cash-flow and net income volatility having in mind their operational activity profile by the use of an adequate combination of variable and fix rate debt. Group's policy allows interest rate derivates usage in order to reduce Euribor's variability exposure and not for speculative purposes.
Derivatives used by the Company in interest rate risk management qualify as hedging instruments as they configure perfect hedging operations. Conditions established for these cash flow hedge instruments are identical to those of the corresponding loans in terms of base rates, calculation rules, rate setting dates and repayment schedules of the loans and for these reasons they qualify as perfect hedges.
The interest rate sensitivity analysis is based on the following assumptions:
Changes in market interest rates affect the interest income or expense of variable interest financial instruments (the interest payments of which are not designated as hedged items of cash flow hedges against interest rate risks). As a consequence, they are included in the calculation of income-related sensitivities;
Changes in market interest rates only affect interest income or expense in relation to financial instruments with fixed interest rates if these are recognised at their fair value. As such, all financial instruments with fixed interest rates that are carried at amortised cost are not subject to interest rate risk as defined in IFRS 7;
In the case of fair value hedges designed for hedging interest rate risks, when the changes in the fair values of the hedged item and the hedging instrument attributable to interest rate movements are offset almost completely in the income statement in the same period, these financial instruments are also not exposed to interest rate risk;
Changes in the market interest rate of financial instruments that were designated as hedging instruments in a cash flow hedge (to hedge payment fluctuations resulting from interest rate movements) affect the hedging reserve in equity and are therefore taken into consideration in the equity-related sensitivity calculations;
Changes in the fair values of derivative financial instruments and other financial assets and liabilities are estimated by discounting the future cash flows to net present values using appropriate market rates prevailing at the year end, and assuming a parallel shift in interest rate curves;
For the purposes of sensitivity analysis, such analysis is performed based on all financial instruments outstanding during the year.
Under the previously mentioned assumptions, if interest rates of euro denominated financial instruments had been 75 basis points higher, the company net profit before tax as at 31 December 2010 would decrease by approximately 1.1 million euro (at 31 December 2009 would decrease 1.3 million euro). Total equity, as at 31 December 2010, would increase by about 0.5 million euro (at 31 December 2009 would increase by about 1.6 million euro)., excluding the effect on Profit and loss for the period.
Sonae Investimentos does not have any material foreign exchange rate exposure, since almost all assets and liabilities are denominated in euro.
The purpose of liquidity risk management is to ensure, at all times, that the group has the financial capacity to fulfill its commitments as they become due and to carry on its business activities and strategy, through the management of the trade off cost and maturity of debt.
The Company follows an active policy of re-financing its debt by maintaining a high level of unused and available on demand resources to face short term needs and by increasing or maintaining an adequate debt maturity, according to the estimated cash-flows, and to the capability of leveraging its statement of financial position.
Negotiating contractual terms which reduce the possibility of the lenders being able to demand an early termination is also considered as an important mean of managing liquidity risk. The group also assures, in its relationship with financial institutions, a high level of diversification of financing sources and counterparties, in order to ease the ability of entering new loan agreement and to minimize the effects of any relationship discontinuance.
The liquidity analysis for financial instruments is presented next to each related liability class note.
The Company is mainly exposed to credit risk, as a result of the loans granted to participation Companies.
The Company is also exposed to credit risk in its relationship with financial institutions, in result of bank deposits, debt instruments available facilities, derivates, among others.
The credit risk is limited by risk concentration management, and by a selection of counterparties, which have a high national and international prestige, with at least a credit rating of BBB or an equivalent rating issued by other international agencies.
The accounting policies disclosed in Note 2.5 as at 31 December 2010, have been applied to the line items below:
| 31.December.2010 | |||||
|---|---|---|---|---|---|
| Financial assets | Notes | Loans and accounts receivable |
Subtotal | Total | |
| Non-current assets: | |||||
| Other non-current assets | 8 | 1,258,356,053 | 1,258,356,053 | - | 1,258,356,053 |
| 1,258,356,053 | 1,258,356,053 | - | 1,258,356,053 | ||
| Current assets: | |||||
| Trade accounts receivable | 9 | 1,834,227 | 1,834,227 | - | 1,834,227 |
| Other debtors | 10 | 448,790,326 | 448,790,326 | - | 448,790,326 |
| Other current assets | 12 | 1,854,930 | 1,854,930 | 1,938,895 | 3,793,825 |
| Cash and cash equivalents | 13 | 127,421,554 | 127,421,554 | - | 127,421,554 |
| 579,901,037 | 579,901,037 | 1,938,895 | 581,839,932 |
| 31.December.2010 | |||||||
|---|---|---|---|---|---|---|---|
| Financial liabilities | Notes | Loans and accounts payable |
Liabilities at fair value through the income statement |
Derivatives used for cash flow hedging |
Subtotal | Liabilities not w ithin IFRS 7 scope |
Total |
| Non-current liabilities: | |||||||
| Bank loans | 17 | 303,599,256 | - | - | 303,599,256 | - | 303,599,256 |
| Bonds | 17 | 899,337,511 | - | - | 899,337,511 | - | 899,337,511 |
| Other non-current liabilities | 18 | 400,000,000 | - | - | 400,000,000 | 456,179 | 400,456,179 |
| 1,602,936,767 | - | - | 1,602,936,767 | 456,179 | 1,603,392,946 | ||
| Current liabilities: | |||||||
| Bank loans | 17 | 3,325,667 | - | - | 3,325,667 | - | 3,325,667 |
| Bonds | 17 | 89,554,618 | - | - | 89,554,618 | - | 89,554,618 |
| Derivatives | 19 | - | 76,617 | 4,290,482 | 4,367,099 | - | 4,367,099 |
| Trade accounts payable | 20 | 126,157 | - | - | 126,157 | - | 126,157 |
| Other accounts payable | 21 | 488,521,784 | - | - | 488,521,784 | - | 488,521,784 |
| Other current liabilities | 22 | 13,555,051 | - | - | 13,555,051 | 248,780 | 13,803,831 |
| 595,083,277 | 76,617 | 4,290,482 | 599,450,376 | 248,780 | 599,699,156 |
The accounting policies disclosed in note 2.5 as at 31 December 2009, have been applied to the items below classified as follows:
| 31.December.2009 | |||||
|---|---|---|---|---|---|
| Financial assets | Notes | Loans and accounts receivable |
Subtotal | Assets not w ithin IFRS 7 scope |
Total |
| Non-current assets: | |||||
| Other non-current assets | 8 | 1,000,150,633 | 1,000,150,633 | - | 1,000,150,633 |
| 1,000,150,633 | 1,000,150,633 | - | 1,000,150,633 | ||
| Current assets: | |||||
| Trade accounts receivable | 9 | 1,319,180 | 1,319,180 | - | 1,319,180 |
| Other debtors | 10 | 316,362,233 | 316,362,233 | - | 316,362,233 |
| Other current assets | 12 | 1,625,756 | 1,625,756 | 2,711,301 | 4,337,057 |
| Cash and cash equivalents | 13 | 51,973,423 | 51,973,423 | - | 51,973,423 |
| 371,280,592 | 371,280,592 | 2,711,301 | 373,991,893 |
| 31.December.2009 | |||||||
|---|---|---|---|---|---|---|---|
| Financial liabilities | Notes | Loans and accounts payable |
Liabilities at fair value through the income statement |
Derivatives used for cash flow hedging |
Subtotal | Liabilities not w ithin IFRS 7 scope |
Total |
| Non-current liabilities: | |||||||
| Bank loans | 17 | 285,894,893 | - | - | 285,894,893 | - | 285,894,893 |
| Bonds | 17 | 987,483,025 | - | - | 987,483,025 | - | 987,483,025 |
| 1,273,377,918 | - | - | 1,273,377,918 | - | 1,273,377,918 | ||
| Current liabilities: | |||||||
| Bank loans | 17 | 3,787,425 | - | - | 3,787,425 | - | 3,787,425 |
| Bonds | 17 | 64,899,489 | - | - | 64,899,489 | - | 64,899,489 |
| Derivatives | 19 | - | - | 7,823,283 | 7,823,283 | - | 7,823,283 |
| Trade accounts payable | 20 | 261,857 | - | - | 261,857 | - | 261,857 |
| Other accounts payable | 21 | 342,979,333 | - | - | 342,979,333 | - | 342,979,333 |
| Other current liabilities | 22 | 8,102,661 | - | - | 8,102,661 | 855,765 | 8,958,426 |
| 420,030,765 | - | 7,823,283 | 427,854,048 | 855,765 | 428,709,813 |
As at 31 December 2010 and 2009, the only financial instruments recognised at fair value are derivatives which are measured according to valuation techniques which main inputs are observable in the market, namely interest rate curves, taken from Bloomberg.
Liabilities recorded at fair value through the income statement relate to exchange rate derivatives.
As at 31 December 2010 and 2009, the investments caption is made up as follows:
| 31.December.2010 | ||||||
|---|---|---|---|---|---|---|
| Company | % held | Opening balance | Increases | Decreases | Merger/Demerger | Final balance |
| Azulino - Imobiliária, SA | 100.00% | 498,025 | - | - | - | 498,025 |
| Bertimóvel - Sociedade Imobiliária, SA | 100.00% | 1,845,000 | - | - | - | 1,845,000 |
| Canasta - Empreendimentos Imobiliários, SA | 100.00% | 1,669,375 | - | - | - | 1,669,375 |
| Chão Verde - Sociedade de Gestão Imobiliária, SA | 100.00% | 2,244,591 | - | - | - | 2,244,591 |
| Citorres - Sociedade Imobiliária, SA | 100.00% | 477,848 | - | - | - | 477,848 |
| Contibomba - Comércio e Distribuição de Combustíveis, SA | - | 452,000 | - | 452,000 (7) | - | - |
| Contimobe - Imobiliária do Castelo de Paiva, SA | 100.00% | 231,318,722 | - | - | - | 231,318,722 |
| Cumulativa - Sociedade Imobiliária, SA | 100.00% | 2,285,191 | 30,000 (2) | - | - | 2,315,191 |
| Difusão - Sociedade Imobiliária, SA | - | 50,000 | - | 50,000 (9) | - | - |
| Edições Book.it - SA | - | 1,000,000 | - | 1,000,000 (8) | - | - |
| Farmácia Selecção, SA | - | 89,000 | - | 89,000 (7) | - | - |
| Fozimo - Sociedade Imobiliária, SA | 100.00% | 24,940 | - | - | - | 24,940 |
| Fozmassimo - Sociedade Imobiliária, SA | 100.00% | 6,264,902 | - | - | - | 6,264,902 |
| Fundo de Investimento Imobiliário Fechado Imosede | 54.55% | 64,415,021 | - | - | - | 64,415,021 |
| Fundo de Investimento Imobiliário Imosonae Dois | 100.00% | 158,410,389 | - | - | - | 158,410,389 |
| Igimo - Sociedade Imobiliária, SA | 100.00% | 220,000 | - | - | - | 220,000 |
| Iginha - Sociedade Imobiliária, SA | 100.00% | 959,000 | 300,000 (2) | - | - | 1,259,000 |
| Imoconti - Sociedade Imobiliária, SA | 100.00% | 380,000 | - | - | - | 380,000 |
| Imoestrutura - Sociedade Imobiliária,SA | 100.00% | 24,940 | - | - | - | 24,940 |
| Imomuro - Sociedade Imobiliária, SA | 100.00% | 799,940 | - | - | - | 799,940 |
| Imoresultado - Sociedade Imobiliária, SA | 100.00% | 109,736 | - | - | - | 109,736 |
| Imosistema - Sociedade Imobiliária, SA | 100.00% | 280,000 | - | - | - | 280,000 |
| MDS, SGPS, SA | 46.92% | - | 51,000,000 (4) | - | - | 51,000,000 |
| Marcas MC, ZRT | - | 72,784,761 | - | 72,784,761 (7) | - | - |
| MJLF - Empreendimentos Imobiliários, SA | 100.00% | 1,809,397 | - | - | - | 1,809,397 |
| Modelo - Distribuição de Materiais de Construção, SA | 50.00% | - | 9,790,614 (5) | - | - | 9,790,614 |
| Modelo Hiper Imobiliária, SA | 100.00% | - | 10,655,164 (5) | - | - | 10,655,164 |
| Modelo Continente Hipermercados, SA | - | 284,190,240 | 528,000,000 (2) (5) | 754,207,921 (7) | (57,982,319) (1) | - |
| Modelo Continente Seguros - Sociedade de Mediação, Lda | - | 3,161,250 | 2,987,250 (2) | 6,148,500 (8) | - | - |
| Modelo.Com - Vendas por Correspondência, SA | 100.00% | 12,637,016 | - | - | - | 12,637,016 |
| Mundo Vip - Operadores Turísticos, SA | 33.34% | - | 1,101,337 (6) | - | - | 1,101,337 |
| Predicomercial - Promoção Imobiliária, SA | 100.00% | 6,372,293 | - | - | - | 6,372,293 |
| Raso, SGPS, SA | 50.00% | 24,500,000 | - | - | - | 24,500,000 |
| Selifa - Sociedade de Empreendimentos Imobililiários, SA | 100.00% | 1,488,379 | 25,000 (2) | - | - | 1,513,379 |
| Sempre à Mão - Sociedade Imobiliária, SA | 100.00% | 1,530,558 | - | - | - | 1,530,558 |
| Sempre a Postos - Produtos Alimentares e Utilidades, Lda | - | 249,399 | - | 249,399 (7) | - | - |
| Sesagest - Projectos e Gestão Imobiliária, SA | 100.00% | 36,677,088 | - | - | - | 36,677,088 |
| Socijofra - Sociedade Imobiliária, SA | 100.00% | 550,000 | - | - | - | 550,000 |
| Sociloures - Sociedade Imobiliária, SA | 100.00% | 10,000,000 | - | - | - | 10,000,000 |
| Soflorin, BV | 100.00% | 257,309,037 | - | - | - | 257,309,037 |
| Sonae - Specialized Retail, SGPS, SA | 100.00% | 1,050,000,000 | - | - | - | 1,050,000,000 |
| Sonae Capital Brasil, SA | 37.00% | 23,334,858 | - | - | - | 23,334,858 |
| Sonae Center Serviços II, SA | 100.00% | 50,000 | - | - | 57,982,319 (1) | 58,032,319 |
| Sonae MC - Modelo Continente, SGPS, SA | 100.00% | 50,000 | 599,950,000 (3) | - | - | 600,000,000 |
| Sonae Retalho España, SA | - | 2,549,831 | - | 2,549,831 (7) | - | - |
| Sonaegest - Soc. Gest. de Fundos de Investimentos, SA | 20.00% | 159,615 | - | - | - | 159,615 |
| Sonaerp - Retail Properties, SA | 100.00% | 114,495,350 | - | - | - | 114,495,350 |
| Sondis Imobiliária, SA | 100.00% | 474,940 | - | - | - | 474,940 |
| Sontária - Empreendimentos Imobiliários, SA | - | 10,600,000 | - | 10,600,000 (8) | - | - |
| Sonvecap, BV | 100.00% | 3,000,000 | - | - | - | 3,000,000 |
| Tlantic Portugal - Sistemas de Informação, SA | 100.00% | 443,316 | 300,000 (2) | - | - | 743,316 |
| Todos os Dias - Comércio Ret. e Expl. de Centros Comerciais, SA | - | 1,180,000 | - | 1,180,000 (7) | - | - |
| Valor N, SA | 100.00% | 2,087,315 | - | - | - | 2,087,315 |
| Total | 2,395,503,263 | 1,204,139,365 | 849,311,412 | - | 2,750,331,214 | |
| Impairment of investments (Notes 24 and 28) | (45,868,497) | - | 7,780,000 (7)(9) | - | (38,088,497) | |
| Total | 2,349,634,766 | 1,204,139,365 | 857,091,412 | - | 2,712,242,717 | |
(1) During the year part of Modelo Continente Hipermercados, SA acquisition cost was allocated to Sonae Center Serviços II, SA following the demerger in these companies;
(2) Capital contribution in order to cover losses;
(3) Capital increase;
(4) Acquisition to Sonae, SGPS, SA;
(5) Acquisition of subsidiaries from companies directly or indirectly controlled by Sonae Investimentos, SGPS, SA;
(6) Acquisition from a related party;
(7) Disposal of subsidiaries companies directly or indirectly controlled by Sonae Investimentos, SGPS, SA;
(8) Disposal of a subsidiary to a company controlled by Sonae, SGPS, SA;
(9) Disposal of subsidiaries to an unrelated party.
| 31.December.2009 | ||||||
|---|---|---|---|---|---|---|
| Company | % held | Opening balance | Increases | Decreases | Merger/Demerger | Final balance |
| Azulino - Imobiliária, SA | 100.00% | 498,025 | - | - | - | 498,025 |
| Bertimóvel - Sociedade Imobiliária, SA | 100.00% | 1,375,000 | 470,000 (4) | - | - | 1,845,000 |
| Canasta - Empreendimentos Imobiliários, SA | 100.00% | 1,579,375 | 90,000 (4) | - | - | 1,669,375 |
| Chão Verde - Sociedade de Gestão Imobiliária, SA | 100.00% | 2,244,591 | - | - | - | 2,244,591 |
| Citorres - Sociedade Imobiliária, SA | 100.00% | 477,848 | - | - | - | 477,848 |
| Contibomba - Comércio e Distribuição de Combustíveis, SA | 100.00% | 372,000 | 80,000 (4) | - | - | 452,000 |
| Contimobe - Imobiliária do Castelo de Paiva, SA | 100.00% | 231,318,722 | - | - | - | 231,318,722 |
| Cumulativa - Sociedade Imobiliária, SA | 100.00% | 2,095,191 | 190,000 (4) | - | - | 2,285,191 |
| Difusão - Sociedade Imobiliária, SA | 100.00% | 50,000 | - | - | - | 50,000 |
| Edições Book.it - SA | 100.00% | 1,000,000 | - | - | - | 1,000,000 |
| Farmácia Selecção, SA | 89.00% | 100,000 | - | 11,000 (2) | - | 89,000 |
| Fozimo - Sociedade Imobiliária, SA | 100.00% | 24,940 | - | - | - | 24,940 |
| Fozmassimo - Sociedade Imobiliária, SA | 100.00% | 6,264,902 | - | - | - | 6,264,902 |
| Fundo de Investimento Imobiliário Fechado Imosede | 54.55% | 49,414,958 | 15,000,063 (3) | - | - | 64,415,021 |
| Fundo de Investimento Imobiliário Imosonae Dois | 100.00% | 158,410,389 | - | - | - | 158,410,389 |
| Igimo - Sociedade Imobiliária, SA | 100.00% | 220,000 | - | - | - | 220,000 |
| Iginha - Sociedade Imobiliária, SA | 100.00% | 109,000 | 850,000 (4) | - | - | 959,000 |
| Imoconti - Sociedade Imobiliária, SA | 100.00% | 50,000 | 330,000 (4) | - | - | 380,000 |
| Imoestrutura - Sociedade Imobiliária,SA | 100.00% | 24,940 | - | - | - | 24,940 |
| Imomuro - Sociedade Imobiliária, SA | 100.00% | 539,940 | 260,000 (4) | - | - | 799,940 |
| Imoresultado - Sociedade Imobiliária, SA | 100.00% | 109,736 | - | - | - | 109,736 |
| Imosistema - Sociedade Imobiliária, SA | 100.00% | 280,000 | - | - | - | 280,000 |
| Infofield - Informática, SA | - | 530,459 | 12,000 (4) | 542,459 (2) | - | - |
| Marcas MC, ZRT | 100.00% | 72,784,761 | - | - | - | 72,784,761 |
| MJLF - Empreendimentos Imobiliários, SA | 100.00% | 1,719,397 | 90,000 (4) | - | - | 1,809,397 |
| Modalfa - Comércio e Serviços, SA | - | 27,933 | - | 27,933 (2) | - | - |
| Modelo Continente Hipermercados, SA | 56.00% | 284,190,240 | - | - | - | 284,190,240 |
| Modelo Continente Seguros - Sociedade de Mediação, Lda | 75.00% | 161,250 | 3,000,000 (4) | - | - | 3,161,250 |
| Modelo.Com - Vendas por Correspondência, SA | 100.00% | 12,637,016 | - | - | - | 12,637,016 |
| Predicomercial - Promoção Imobiliária, SA | 100.00% | 6,372,293 | - | - | - | 6,372,293 |
| Raso, SGPS, SA | 50.00% | 24,500,000 | - | - | - | 24,500,000 |
| Selifa - Sociedade de Empreendimentos Imobililiários, SA | 100.00% | 1,408,379 | 80,000 (4) | - | - | 1,488,379 |
| Sempre à Mão - Sociedade Imobiliária, SA | 100.00% | 125,000 | 1,405,558 (4) | - | - | 1,530,558 |
| Sempre a Postos - Produtos Alimentares e Utilidades, Lda | 25.00% | 249,399 | - | - | - | 249,399 |
| Sesagest - Projectos e Gestão Imobiliária, SA | 100.00% | 36,677,088 | - | - | - | 36,677,088 |
| Socijofra - Sociedade Imobiliária, SA | 100.00% | 550,000 | - | - | - | 550,000 |
| Sociloures - Sociedade Imobiliária, SA | 100.00% | 10,000,000 | - | - | - | 10,000,000 |
| Soflorin, BV | 100.00% | 257,309,037 | - | - | - | 257,309,037 |
| Sonae - Specialized Retail, SGPS, SA | 100.00% | 1,050,000,000 | - | - | - | 1,050,000,000 |
| Sonae Capital Brasil, SA | 37.00% | 23,334,858 | - | - | - | 23,334,858 |
| Sonae Center Serviços II, SA | 100.00% | - | 50,000 (1) | - | - | 50,000 |
| Sonae MC - Modelo Continente, SGPS, SA | 100.00% | - | 50,000 (1) | - | - | 50,000 |
| Sonae Retalho España, SA | 100.00% | 2,549,831 | - | - | - | 2,549,831 |
| Sonaegest - Soc. Gest. de Fundos de Investimentos, SA | 20.00% | 159,615 | - | - | - | 159,615 |
| Sonaerp - Retail Properties, SA | 100.00% | 114,495,350 | - | - | - | 114,495,350 |
| Sondis Imobiliária, SA | 100.00% | 49,940 | 425,000 (4) | - | - | 474,940 |
| Sontária - Empreendimentos Imobiliários, SA | 100.00% | 10,600,000 | - | - | - | 10,600,000 |
| Sonvecap, BV | 100.00% | 3,000,000 | - | - | - | 3,000,000 |
| Sportzone - Comércio de Artigos de Desporto, SA | - | 706,326 | - | 706,326 (2) | - | - |
| Tlantic Portugal - Sistemas de Informação, SA | 100.00% | 50,000 | 393,316 (4) | - | - | 443,316 |
| Todos os Dias - Comércio Ret. e Expl. de Centros Comerciais, SA | 100.00% | 1,180,000 | - | - | - | 1,180,000 |
| Valor N, SA | 100.00% | 2,087,315 | - | - | - | 2,087,315 |
| Worten - Equipamentos para o Lar, SA | - | 462,494 | - | 462,494 (2) | - | - |
| Total | 2,374,477,538 | 22,775,937 | 1,750,212 | - | 2,395,503,263 | |
| Impairment of investments | (45,868,497) | - | - | - | (45,868,497) | |
| Total | 2,328,609,041 | 22,775,937 | 1,750,212 | - | 2,349,634,766 | |
(1) Subsidiaries created in the year;
(2) Disposal to companies directly or indirectly controlled by Sonae Investimentos, SGPS, SA;
(3) Capital increase;
(4) Capital contribution in order to cover losses.
During the years ended 31 December 2010 and 2009, movements in tangible assets as well as depreciation and accumulated impairment losses, are as follows:
| Tangible assets | ||||||
|---|---|---|---|---|---|---|
| Machinery and equipment |
Transport equipment |
Office equipment |
Other tangible asstes |
Total tangible asstes |
||
| Acquisition cost | ||||||
| Opening balance as at 1 January 2009 | 2,464 | 19,062 | 25,062 | 679 | 47,267 | |
| Opening balance as at 1 January 2010 | 2,464 | 19,062 | 25,062 | 679 | 47,267 | |
| Decreases | - | - | (203) | - | (203) | |
| Closing balance as at 31 December 2010 | 2,464 | 19,062 | 24,859 | 679 | 47,064 | |
| Accumulated depreciation | ||||||
| Opening balance as at 1 January 2009 | 903 | 19,062 | 21,600 | 679 | 42,244 | |
| Increases | 247 | - | 1,990 | - | 2,237 | |
| Opening balance as at 1 January 2010 | 1,150 | 19,062 | 23,590 | 679 | 44,481 | |
| Increases | 246 | - | 1,024 | - | 1,270 | |
| Decreases | - | - | (164) | - | (164) | |
| Closing balance as at 31 December 2010 | 1,396 | 19,062 | 24,450 | 679 | 45,587 | |
| Carrying amount | ||||||
| As at 31 December 2009 | 1,314 | - | 1,472 | - | 2,786 | |
| As at 31 December 2010 | 1,068 | - | 409 | - | 1,477 |
During the periods ended 31 December 2010 and 2009, movements in intangible assets as well as depreciation and accumulated impairment losses, are as follows:
| Intangibles assets | |||||
|---|---|---|---|---|---|
| Acquisition cost | Industrial property and other rights |
Softw are |
Intangible assets in progress |
Total intangible assets |
|
| Opening balance as at 1 January 2009 | 1,412,628 | 479 | - | 1,413,107 | |
| Opening balance as at 1 January 2010 | 1,412,628 | 479 | - | 1,413,107 | |
| Decreases | - | - | (160,389) | (160,389) | |
| Transfers/disposals | 366 | - | 160,389 | 160,755 | |
| Closing balance as at 31 December 2010 | 1,412,994 | 479 | - | 1,413,473 | |
| Accumulated depreciation | |||||
| Opening balance as at 1 January 2009 | 1,403,236 | 479 | - | 1,403,715 | |
| Increases | 2,232 | - | - | 2,232 | |
| Opening balance as at 1 January 2010 | 1,405,468 | 479 | - | 1,405,947 | |
| Increases | 2,266 | - | - | 2,266 | |
| Closing balance as at 31 December 2010 | 1,407,734 | 479 | - | 1,408,213 | |
| Carrying amount | |||||
| As at 31 December 2009 | 7,160 | - | - | 7,160 | |
| As at 31 December 2010 | 5,260 | - | - | 5,260 |
Deferred tax assets and liabilities as at 31 December 2010 and 2009 are as follows, split between the different types of temporary differences:
| Assets | |||
|---|---|---|---|
| 31.December.2010 | 31.December.2009 | ||
| Derivatives | 668,565 | 1,601,258 | |
| Impairment losses of assets not accepted for tax purposes | - | 134,900 | |
| Others | 70,142 | - | |
| 738,707 | 1,736,158 | ||
| Liabilities | |||
| 31.December.2010 | 31.December.2009 | ||
| Differences betw een amortisations for accounting and tax |
1,403 | 1,379 | |
| purposes | 1,403 | 1,379 |
During the periods ended 31 December 2010 and 2009, movements in deferred tax assets and liabilities are as follows:
| Assets | Liabilities | |||||
|---|---|---|---|---|---|---|
| 31.December.2010 | 31.December.2009 | 31.December.2010 | 31.December.2009 | |||
| Opening balance | 1,736,158 | 1,296,945 | 1,379 | 472,363 | ||
| Effects on income: | ||||||
| Impairment losses | (134,900) | 134,900 | - | - | ||
| Others | 70,142 | - | 24 | (176) | ||
| (64,758) | 134,900 | 24 | (176) | |||
| Effects on equity: | ||||||
| Financial instruments valuation | (932,693) | 304,313 | - | (470,808) | ||
| Final balance | 738,707 | 1,736,158 | 1,403 | 1,379 |
As at 31 December 2010 and 2009 the non-current assets were as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Loans granted | 1,256,170,741 | 1,000,150,633 |
| Other debtors | 2,185,312 | - |
| 1,258,356,053 | 1,000,150,633 |
These loans earn interests at market rates indexed to Euribor and their fair value is similar to their carrying amount. The loans refer to loans granted to subsidiaries with no defined maturity.
There are no past due or impaired receivable balances as at 31 December 2010 and 2009. The eventual impairment of loans granted to group companies is assessed in accordance with note 2.5.l). The fair value of loans granted to group companies is considered to be similar to its carrying amount.
The caption "Other debtors" relates essentially to the amount yet to be received from the sale of a subsidiary.
The amount of trade accounts receivable refers to Management Fee's, invoiced to Sonae Investimentos, SGPS, SA group companies.
Up to the statement of financial position date there are no due accounts receivable and there were no impairment losses recorded, as there are no indications that clients will not fulfill their obligations.
As at 31 December 2010 and 2009, this caption is as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Short term loans (Note 38) | 304,032,000 | 157,125,888 |
| Interests charged but not received | 26,449,063 | 44,472,734 |
| Taxes - Special Regime for taxation of groups of companies |
42,406,410 | 21,753,472 |
| Special regime for payment of tax and social securaty debts (DL 248-A) |
5,113,681 | 5,214,780 |
| Others | 70,789,172 | 88,334,970 |
| 448,790,326 | 316,901,844 | |
| Accumulated impairment losses (Note 24) | - | (539,611) |
| 448,790,326 | 316,362,233 |
Loans granted to group companies return interest at variable market rates indexed to Euribor and have a maturity less than one year.
The amount of 42,406,210 euro recorded in the caption "Taxes - Special Regime for taxation of groups of companies" relates to amounts to be received from subsidiaries (included in the above mentioned taxation regime), related to income tax for the period.
The amount disclosed as 'Special regime for payment of tax and social security debts' relates to taxes claimed from tax authorities, being an understanding of Sonae Investimentos that the result of such claims will favour the Company. Therefore, there was no impairment losses recognized.
The amounts recorded under the caption "Others" relate to amounts to be received for the disposal of subsidiaries.
There were no past due assets thus no impairment loss was recognized as at 31 December 2010 and 2009. The fair value of loans granted is similar to its carrying amount.
As at 31 December 2010 and 2009, taxes recoverable and taxes and contributions payable are made up as follows:
| Assets | ||||
|---|---|---|---|---|
| 31.December.2010 | 31.December.2009 | |||
| Income tax | 661,990 | 668,567 | ||
| 661,990 | 668,567 | |||
| Liabilities | ||||
| 31.December.2010 | 31.December.2009 | |||
| Income tax | 17,790,828 | 21,035,091 | ||
| VAT | 282,653 | 221,068 | ||
| Social security | 1,495 | 2,189 | ||
| Withholding tax - Capital gains | 7,699 | 19,119 | ||
| Others | - | 281,600 | ||
| 18,082,675 | 21,559,067 |
As at 31 December 2010 and 2009, the caption other current assets can be detailed as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Interests receivable | 442,145 | 241,250 |
| Indemnity interests | 1,337,970 | 1,337,970 |
| Management fees | 74,815 | 46,536 |
| Accrued income | 1,854,930 | 1,625,756 |
| Insurances | 183,649 | 196,216 |
| Interests | 10,166 | 195,581 |
| Costs w ith credit facilities |
1,745,080 | 2,319,504 |
| Prepayments | 1,938,895 | 2,711,301 |
| 3,793,825 | 4,337,057 |
As at 31 December 2010 and 2009, cash and cash equivalents can be detailed as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Cash | 550 | 813 |
| Bank deposits | 127,421,004 | 51,972,610 |
| Cash and cash equivalents on the balance sheet | 127,421,554 | 51,973,423 |
| Bank overdrafts (Note 17) | - | (461,760) |
| Cash and cash equivalents on the cash flow s |
||
| statement | 127,421,554 | 51,511,663 |
Bank overdrafts are disclosed in the statement of financial position under the caption short term bank loans.
As at 31 December 2010, the share capital, which is fully subscribed and paid for, is made up by 1,000,000,000 ordinary shares (1,000,000,000 as at 31 December 2009), with a nominal value of 1 euro each.
During the period, a subsidiary company (Sonae – Specialized Retail, SGPS, SA) acquired 100,000,000 shares of Sonae Investimentos at a price of 3.20 euro per share. These shares are considered as treasury shares under the Commercial Companies Code, reason why the underlying rights to these shares are suspended.
As at 31 December 2010 and 2009, the subscribed share capital was held as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Sonae, SGPS, SA | 76.86% | 82.48% |
| Sonae Investments BV | 13.14% | 17.52% |
| Sonae - Specialized Retail, SGPS, SA | 10.00% | - |
As at 31 December 2010 and 2009 Efanor Investimentos, SGPS, SA and affiliated companies held 52.98% of Sonae's share capital.
The company has set up legal reserves in accordance with Commercial Companies Code. In 2010 and 2009, respectively, 3,087,918 euro and 14,700,000 euro was transferred from profit for the year to legal reserves.
As at 31 December 2010 and 2009, the other reserves detail is as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Legal Reserves in accordance w ith article |
- | |
| 342 of Commercial Companies Code | 320,000,000 | |
| Supplementary capital | 372,000,000 | - |
| Hedging reserves | (1,854,318) | (4,441,225) |
| Other reserves | 74,897,094 | 831,226,646 |
| 765,042,776 | 826,785,421 |
Following the acquisition of Sonae Investimentos SGPS, SA shares by a subsidiary company, free reserves amounting to the cost of the above mentioned shares were made unavailable, under article 324 of the Commercial Companies Code. The distribution of this reserve depends on the termination or disposal of the treasury shares.
In the General Meeting held on 29 December 2010 it was approved the distribution to shareholders of free reserves amounting to 425 million euro.
During the year, Supplementary capital entries were made by the shareholders Sonae, SGPS, SA and Sonae Investments BV, amounting to 372,000,000 euro.
The movements in these reserves for the years ended at 31 December 2010 and 2009 are detailed in the individual statement of comprehensive income and in the individual statement of changes in equity.
Hedging Reserves corresponds to the effective portion of changes in fair value of derivatives that qualify for cash flows hedge accounting.
As at 31 December 20010 and 2009, this caption included the following loans:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Nominal value of bond loans | 902,000,000 | 992,000,000 |
| Up-front fees not yet charged to income statement | (2,662,489) | (4,516,975) |
| Bond loans | 899,337,511 | 987,483,025 |
| Commercial paper | 292,000,000 | 271,000,000 |
| Other bank loans | 11,666,665 | 15,000,000 |
| Up-front fees not yet charged to income statement | (67,409) | (105,107) |
| Bank loans | 303,599,256 | 285,894,893 |
| Non-current loans | 1,202,936,767 | 1,273,377,918 |
| Nominal value of bond loans | 90,000,000 | 64,925,000 |
| Up-front fees not yet charged to income statement | (445,382) | (25,511) |
| Bond loans | 89,554,618 | 64,899,489 |
| Other bank loans | 3,333,334 | 3,333,333 |
| Up-front fees not yet charged to income statement | (7,667) | (7,668) |
| Bank overdrafts (Note 13) | - | 461,760 |
| Bank loans | 3,325,667 | 3,787,425 |
| Current loans | 92,880,285 | 68,686,914 |
Loans and interests shall be reimbursed as follows:
| 31.December.2010 | 31.December.2009 | |||
|---|---|---|---|---|
| Capital | Interests | Capital | Interests | |
| 2010 | - | - | 68,720,093 | 22,675,378 |
| 2011 | 93,333,334 | 24,304,593 | 93,333,334 | 17,482,871 |
| 2012 | 369,333,334 | 20,654,694 | 369,333,334 | 13,975,680 |
| 2013 | 174,333,334 | 14,805,812 | 204,333,334 | 10,596,713 |
| 2014 | 305,333,334 | 11,372,826 | 254,333,334 | 14,762,155 |
| 2015 | 356,666,663 | 6,334,608 | 356,666,663 | 5,445,730 |
| 1,298,999,999 | 77,472,533 | 1,346,720,092 | 84,938,526 |
Bonds Modelo Continente 2005/2012 amounting to 150,000,000 euro, repayable after 7 years, in one installment, on 2 August 2012. Interest rate is variable, indexed to Euribor 6 months, with interest paid half-yearly. The company has the option to make whole or partial reimbursements, with no extra cost, on the date of the 10th , 11 th , 12 th and 13th coupons.
Bonds Modelo Continente 2007/2012 amounting to 200,000,000 euro, repayable after 5 years, in one installment, on 30 April 2012. Interest rate is variable, indexed to Euribor 6 months, with interest paid half-yearly.
Bonds Sonae Distribuição 2007/2015 amounting to 200,000,000 euro, repayable after 8 years, in one installment, on 10 August 2015. Interest rate is variable, indexed to Euribor 6 months, with interest paid half-yearly. The company has the option to make whole or partial reimbursements, with no extra cost, on the date of the 10th , 12 th and 14th coupons.
Bonds Sonae Distribuição September 2007/2015 amounting to 310,000,000 euro, repayable in two installments of 50% each, on 10 September 2013 and 10 September 2015. Interest rate is variable, indexed to Euribor 6 months, with interest paid half-yearly. The company has the option to make whole or partial reimbursements, with no extra cost, on the date of the 10th , 11 th , 12 th , 13 th , 14 th and 15th coupons.
Bonds Sonae Distribuição 2009/2014 amounting to 50,000,000 euro, repayable in 6 half yearly successive according to the redemption plan as follows: i) 8,000,000 euro, on the 5th, 6th , 7 th, 8th and 9th interest payment date; ii) 10,000,000 euro, on the 10th interest payment date. Interest rate is variable, indexed to Euribor 6 months, with interest paid half-yearly.
Commercial paper programs are committed by financial institutions for a period of 4 years.
As the Company intends to keep these loans for a period superior to one year, those were classified as non-current.
The caption Bank loans includes a loan contracted during March 2009, in total amount of 11,666,665 euro.
On 3 August 2010 Modelo Continente 2005/2010 bond loan of 64,925,000 euro, was totally repaid.
Bonds Modelo Continente 2003 amounting to 82,000,000 euro, repayable after 8 years, in one installment, on 15 October 2011. Interest rate is variable, indexed to Euribor 6 months, with interest paid half-yearly.
Bonds Sonae Distribuição 2009/2014 amounting to 50,000,000 euro, of which 8,000,000 euro will be repayable on the 5th interest payment date, on 18 September 2011, according conditions of issue.
The caption Bank loans includes a loan contracted during March 2009, in total amount of 3,333,334 euro.
As at 31 December 2010 and 2009 the amount of the available credit facilities in order to manage liquidity risk, can be summarized as follows:
| 31.December.2010 | 31.December.2009 | |||
|---|---|---|---|---|
| Commitments of less than one year |
Commitments of more than one year |
Commitments of less than one year |
Commitments of more than one year |
|
| Agreed credit facilities amounts | 270,120,074 | 490,000,000 | 332,870,074 | 475,000,000 |
| Available credit facilities amounts | 270,120,074 | 198,000,000 | 322,219,603 | 204,000,000 |
The interest rate as at 31 December 2010 of the bonds and bank loans was, on average, 1.83% (1.65% as at 31 December 2009).
As at 31 December 2010 this caption includes a subordinate bond loan, repayable in 10 years issued by Sonae Investimentos at market conditions. This loan was fully subscribed and paid for Sonae SGPS, SA on 28 December 2010 amounting to 400,000,000 euro, relating 8,000 bonds with nominal value of 50,000 euro each. As at 31 December 2010 it's estimated that the carrying amount of other non-current liabilities is estimated to be approximately its fair value.
As at 31 December 2010 and 2009, the fair value of the derivatives, estimated taking into consideration present market value of equivalent financial instruments, is estimated as 4,290,482 euro and as 7,823,283 euro respectively.
The derivatives recorded as liabilities are interest rate zero cost collars, with a notional amount of 150,000,000 euro (150,000,000 euro in 31 December 2009) and have the purpose to hedge the volatility of interest rates from the obtained loans.
These interest rate derivatives are valued at fair value, at the statement of financial position date, based on valuations using specific software. The fair value of these financial instruments was calculated, as at the statement of financial position date, based on the discounted cash flow of the difference between the fixed interest rate of the fixed leg and the indexed variable interest rate inherent to the variable leg.
As at 31 December 2010 and 2009, derivatives have the following estimated cash flows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| 2010 | - | 4,494,758 |
| 2011 | 4,276,713 | 3,408,054 |
As at 31 December 2010 the fair value of the derivatives, calculated taking into consideration present market value of equivalent financial instruments, is estimated in 76,617 euro.
The derivatives recorded as liabilities relate to a contract over a fixed exchange rate for the Brazilian Real (BRL) with notional value of 22,862,789 BRL (10,276,416 euro). The mentioned derivative is valued at fair value through profit and loss. This derivative was engaged with the purpose to decrease volatility from a highly probable cash flow from a Brazilian based subsidiary. This derivative was repaid at beginning of 2011.
As at 31 December 2010 and 2009 the trade accounts payable caption presents amounts payable within 90 days, arising on the normal course of activity.
As at 31 December 2010 and 2009, this caption is as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Short term loans (Note 37) | 481,511,000 | 338,078,379 |
| Taxes - Special Regime for taxation of groups of companies |
6,961,236 | 4,892,803 |
| Others | 49,548 | 8,151 |
| 488,521,784 | 342,979,333 |
The amount of 6,961,236 euro recorded in the caption "Taxes-Special Regime for taxation of groups of companies" relates to the amounts to be paid to subsidiaries, included in the mentioned taxation regime, for the calculated income tax of the period.
As at 31 December 2010 and 2009 other current liabilities were made up as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Staff costs | - | 320,833 |
| Deferred performance bonuses (Note 23) | 248,780 | 534,932 |
| Accrued interests | 13,253,817 | 8,073,177 |
| Others | 301,234 | 29,484 |
| Accruals | 13,803,831 | 8,958,426 |
In 2010 and in previous years, the Company granted deferred performance bonuses to the Board of Directors and eligible employees. These are based on shares to be acquired at nil cost, three years after they were attributed to the employee. The company has the choice to settle its responsibilities in cash rather than through shares. These rights can only be exercised if the employee still works for Sonae on the vesting date. These responsibilities are measured as described in Note 2.10.
As at 31 December 2010, the outstanding plans were as follows:
| Vesting period | ||||
|---|---|---|---|---|
| Year of grant | Vesting year | Number of participants |
Number of shares |
|
| Plan 2007 | 2008 | 2011 | 1 | 304,828 |
| Plan 2008 | 2009 | 2012 | 1 | 659,028 |
| Plan 2009 | 2010 | 2013 | 1 | 381,340 |
The measurement of the Share-Based Plans referred above is referenced to the evaluation of Sonae, SGPS, SA shares price as at 31 December 2010. The current plans are considered cash settled.
Movements in provisions and accumulated impairment losses for the year ended as at 31 December 2010 are as follows:
| Opening balance | Increases | Closing balance | |
|---|---|---|---|
| Investments impairment (Note 5 and 28) | 45,868,497 | (7,780,000) | 38,088,497 |
| Other debtors impairment losses (Note 10 and 30) | 539,611 | (539,611) | - |
As at 31 December 2010 and 2009 the contingent liabilities were detailed as follows:
| 31.December.2010 | 31.December.2009 | ||
|---|---|---|---|
| Guarantees rendered: | |||
| related to tax claims aw aiting outcome |
(a) | 166,834,471 | 95,643,815 |
| related to local and municipal claims aw aiting outcome |
289,380 | 289,380 | |
| others | 10,761,324 | 10,761,324 | |
| Guarantees given in favour of subsidiaries | (b) | 47,369,533 | 46,893,361 |
a) Includes the amount of 164,849,085 euro (93,656,343 euro as at 31 December 2009) referring to corporate income tax claims awaiting outcome and the amount of 1,985,386 euro (same amount as at 31 December 2009) relating to stamp duty claims.
b) Guarantees given to Tax Authorities in favour of subsidiaries to suspend claims from tax authorities.
No provision has been recognized for these tax additional assessments, to which some guarantees were made, as the Board of Directors expects their outcome to be favorable to the Company with no additional liability.
Following the disposal of a Brazilian subsidiary company, the group guaranteed to that subsidiary company buyer all the losses it will have as consequence of tax additional assessments as it is described in the Note of Contingent Assets and Liabilities in the Consolidated financial statements.
Main balances and transactions with related parties as at 31 December 2010 and 2009 are detailed as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Balance: | ||
| Parent company | 59,115 | 15,837 |
| Subsidiaries | 132,253,215 | 154,762,925 |
| Jointly controlled companies | 66,585 | 111,531 |
| Associated companies | 2,934,930 | 165,716 |
| Other related parties | 8,860,483 | 192 |
| Accounts receivable | 144,174,328 | 155,056,201 |
| Parent company | 428,731 | 447,617 |
| Subsidiaries | 12,935,340 | 6,597,394 |
| Jointly controlled companies | 600 | 9,678 |
| Associated companies | 34,951 | - |
| Other related parties | 872 | 142 |
| Accounts payable | 13,400,494 | 7,054,831 |
| Subsidiaries | 1,536,547,507 | 1,151,916,978 |
| Jointly controlled companies | 6,100,000 | 5,359,543 |
| Associated companies | 17,555,234 | - |
| Loans granted | 1,560,202,741 | 1,157,276,521 |
| Parent company | 453,000,000 | - |
| Subsidiaries | 428,511,000 | 338,040,379 |
| Jointly controlled companies | - | 38,000 |
| Loans obtained | 881,511,000 | 338,078,379 |
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Transactions: | ||
| Subsidiaries | 1,000,000 | 1,000,000 |
| Associated companies | 1,072,621 | 627,527 |
| Services rended | 2,072,621 | 1,627,527 |
| Parent company | 50,000 | 50,000 |
| Subsidiaries | 10,000 | 10,618 |
| Jointly controlled companies | - | 6,180 |
| Associated companies | 8,121 | - |
| Other related parties | 3,033 | 40,334 |
| Purchases and services obtained | 71,154 | 107,132 |
| Parent company | 3,677 | - |
| Subsidiaries | 444,495 | 1,648,641 |
| Other income | 448,172 | 1,648,641 |
| Parent company | 107,128 | 15,837 |
| Subsidiaries | 33,356,913 | 69,262,911 |
| Jointly controlled companies | 154,921 | 255,178 |
| Associated companies | 210,022 | - |
| Interest income | 33,828,984 | 69,533,926 |
| Parent company | 1,528,006 | 446,080 |
| Subsidiaries | 8,738,200 | 11,830,371 |
| Jointly controlled companies | 34 | 18,250 |
| Interest expenses | 10,266,240 | 12,294,701 |
| Subsidiaries | 12,900,246 | 1,050,860 |
| Associated companies | 896,902 | 261,660 |
| Dividend income | 13,797,148 | 1,312,520 |
| Subsidiaries | 1,090,768,437 | 55,416,000 |
| Associated companies | 3,525,000 | - |
| Other related parties | 6,120,239 | - |
| Investments disposal | 1,100,413,676 | 55,416,000 |
| Parent company | 51,000,000 | - |
| Subsidiaries | 471,445,768 | - |
| Other related parties | 1,101,337 | - |
| Investments acquisition | 523,547,105 | - |
All Sonae, SGPS, S.A. and Efanor Investimentos SGPS, SA subsidiaries, associates and joint ventures are considered related parties and are identified in Consolidated Financial Statements.
During the period, the Company obtained loans from Sonae, SGPS, SA amounting to 876,984,614 euro (443,340,000 euro as at 31 December 2009) was repaid 823,984,614 euro during the year (443,340,000 euro as at 31 December 2009).
In 2010 and 2009 did not occur any transactions including granted loans with the Company's Directors.
The remuneration of the Board of Directors for the years ended 31 December 2010 and 2009 is detailed as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Fixed | 100,070 | 461,960 |
| Variable - short term | - | 190,900 |
| Variable - medium term | - | 290,200 |
| 100,070 | 943,060 |
As at 31 December 2010 and 2009 there were no balances with Company's Directors.
The amount of services rendered refers to invoiced services rendered to Sonae Investimentos group companies in Portugal.
As at 31 December 2010 and 2009 investment income is as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Dividends | 13,797,148 | 1,312,520 |
| Gains on the sale of investments | 444,864,481 | 54,125,788 |
| Impairment losses on investments (Note 24) | 7,780,000 | - |
| Losses on the sale of investments | (7,728,107) | - |
| 458,713,522 | 55,438,308 |
As at 31 December 2010 and 2009, net financial expenses are as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Interest receivable | ||
| related to bank deposits | 55,104 | 52,216 |
| related to loans granted (Note 26) | 33,828,984 | 62,728,447 |
| related to hedge derivatives | - | 762,600 |
| others | 15,324 | 6,820,197 |
| Other financial income | 211,663 | - |
| Financial income | 34,111,075 | 70,363,460 |
| Interest payable | ||
| related to bank deposits and overdrats | (6,495,999) | (8,561,485) |
| related to non convertible bonds | (18,057,866) | (31,798,404) |
| related to hedge derivatives | (4,626,579) | (3,283,100) |
| related to loans obtained (Note 26) | (9,634,653) | (12,294,701) |
| Others (Note 26) | (631,587) | (16) |
| Other financial expenses | ||
| up front fees and comissions related to loans | (4,814,748) | (3,195,746) |
| others | (1,348,572) | (197,006) |
| Financial expense | (45,610,004) | (59,330,458) |
As at 31 December 2010, the amount of other financial expenses and other financial income includes the amounts of approximately 1,000,000 euro and 211,000 euro, respectively, corresponding to losses and gains arising as a result of the exchange rate derivatives, including the effect of fair value described on Note 19.
As at 31 December 2010 and 2009, other income is as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Recovery of charges (a) | 477,238 | 1,683,427 |
| Reversal of impairment losses | 539,611 | - |
| Other income | 10,838 | 271,803 |
| 1,027,687 | 1,955,230 |
a) Income related to costs assumed by the Company, which were re-charged to participated companies.
As at 31 December 2010 and 2009, external supplies and services are as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Insurance | 630,521 | 749,644 |
| Services | 182,538 | 546,173 |
| Others services | 43,852 | 77,589 |
| 856,911 | 1,373,406 |
As at 31 December 2010 and 2009, other expenses are as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Indirect tax | 898,546 | 1,930,856 |
| Expenses/(gains) in non financial investments |
239,646 | - |
| Bank services | 550,833 | 353,769 |
| Others | 306,067 | 18,636 |
| 1,995,092 | 2,303,261 |
Indirect tax as at 31 December 2010 and 2009 mainly refers to costs of retail stores openings, which were then re-charged to Group companies, which own those new stores.
Income tax charge for the year ended 31 December 2010 and 2009 is made up as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Current tax | 3,361,161 | (3,025,772) |
| Deferred tax | 64,782 | 135,076 |
| Total | 3,425,943 | (2,890,696) |
The reconciliation between the profit before taxation and the tax charge for the periods ended 31 December 2010 and 2009 is as follows:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Profit before income tax | 447,113,319 | 64,649,061 |
| Income tax rate | 25.00% | 25.00% |
| 111,778,330 | 16,162,265 | |
| Impairment losses not accepted for tax purposes | (1,945,000) | - |
| Under/(over) taxation estimates | 52,617 | 484,936 |
| Difference betw een capital (losses)/gains for accounting and tax purposes |
(109,355,837) | (13,531,447) |
| Effect of non-tributable dividends | (3,449,287) | (328,130) |
| Others | (506,766) | 103,072 |
| Income tax | (3,425,943) | 2,890,696 |
Earnings per share for the periods ended 31 December 2010 and 2009, were calculated taking into consideration the following amounts:
| 31.December.2010 | 31.December.2009 | |
|---|---|---|
| Net Profit | ||
| Net profit taken into consideration to calculate basic earnings per share (Net profit foor the period) |
450,539,262 | 61,758,365 |
| Net profit taken into consideration to calculate diluted earnings per share |
450,539,262 | 61,758,365 |
| Number of shares | ||
| Weighted average number of shares used to calculate basic earnings per share |
983,690,959 | 1,000,000,000 |
| Weighted average number of shares used to calculate diluted earnings per share |
983,690,959 | 1,000,000,000 |
| Earnings per share (basic and diluted) | 0.4580 | 0.0618 |
The average number of shares for the year ended as at 31 December 2010 reflects the weighted effect of the 100,000,000 number of treasury shares acquired by a subsidiary during the period (Note 14).
During 2010 and 2009, the following receipts and payments occurred:
| 31.December.2010 | ||||
|---|---|---|---|---|
| Receipts | Payments | |||
| Price | Amount received | Price | Amount paid | |
| Contibomba - Comércio e Distribuição de Combustíveis, SA | 144,109 | 144,109 | - | - |
| Cumulativa - Sociedade Imobiliária, SA | - | - | 30,000 | 30,000 |
| Difusão - Sociedade Imobiliária, SA | 7,566,570 | 7,566,570 | - | - |
| Edições Book.it - SA | 2,800,000 | 2,800,000 | - | - |
| Farmácia Selecção, SA | 51,272 | 51,272 | - | - |
| Iginha - Sociedade Imobiliária, SA | - | - | 300,000 | 300,000 |
| Marcas MC, ZRT | 146,943,000 | 85,426,466 | - | - |
| MDS, SGPS, SA | - | - | 51,000,000 | 51,000,000 |
| Modelo - Distribuição de Materiais de Construção, SA | - | - | 9,790,614 | 9,790,614 |
| Modelo Continente Hipermercados, SA | 1,106,725,000 | 1,106,725,000 | 528,000,000 | 528,000,000 |
| Modelo Continente Seguros - Sociedade de Mediação, Lda | 3,525,000 | 1,075,000 | 2,987,250 | 2,987,250 |
| Modelo Hiper Imobiliária, SA | - | - | 10,655,164 | 10,655,164 |
| Mundo Vip - Operadores Turísticos, SA | - | - | 1,101,337 | 1,101,337 |
| Selifa - Sociedade de Empreendimentos Imobililiários, SA | - | - | 25,000 | 25,000 |
| Sempre a Postos - Produtos Alimentares e Utilidades, Lda | 5,361,500 | 5,361,500 | - | - |
| Sonae MC - Modelo Continente, SGPS, SA | - | - | 599,950,000 | 599,950,000 |
| Sonae Retalho España, SA | 5,748,452 | 5,748,452 | - | - |
| Sontária - Empreendimentos Imobiliários, SA | 6,120,239 | - | - | - |
| Tlantic Portugal - Sistemas de Informação, SA | - | - | 300,000 | 300,000 |
| Todos os Dias - Comércio Ret. e Expl. de Centros Comerciais, SA | 1,741,875 | 1,741,875 | - | - |
| 1,286,727,017 | 1,216,640,244 | 1,204,139,365 | 1,204,139,365 |
As at 31 December 2010 the amounts under the caption "Financial investments" on the statements of cash flows includes 30,405,000 euro related with the disposal of subsidiaries that took place in 2009.
| 31.December.2009 | ||||
|---|---|---|---|---|
| Receipts | Payments | |||
| Price | Amount received | Price | Amount paid | |
| Bertimóvel - Sociedade Imobiliária, SA | - | - | 470,000 | 470,000 |
| Canasta - Empreendimentos Imobiliários, SA | - | - | 90,000 | 90,000 |
| Contibomba - Comércio e Distribuição de Combustíveis, SA | - | - | 80,000 | 80,000 |
| Cumulativa - Sociedade Imobiliária, SA | - | - | 190,000 | 190,000 |
| Farmácia Selecção, SA | 11,000 | 11,000 | - | - |
| Fundo de Investimento Imobiliário Fechado Imosede | - | - | 15,000,063 | 15,000,063 |
| Iginha - Sociedade Imobiliária, SA | - | - | 850,000 | 850,000 |
| Imoconti - Sociedade Imobiliária, SA | - | - | 330,000 | 330,000 |
| Imomuro - Sociedade Imobiliária, SA | - | - | 260,000 | 260,000 |
| Infofield - Informática, SA | 1,405,000 | - | 12,000 | 12,000 |
| MJLF - Empreendimentos Imobiliários, SA | - | - | 90,000 | 90,000 |
| Modalfa - Comércio e Serviços, SA | 13,000,000 | - | - | - |
| Modelo Continente Seguros - Sociedade de Mediação, Lda | - | - | 3,000,000 | 3,000,000 |
| Selifa - Sociedade de Empreendimentos Imobililiários, SA | - | - | 80,000 | 80,000 |
| Sempre à Mão - Sociedade Imobiliária, SA | - | - | 1,405,558 | 1,405,558 |
| Sonae Center Serviços II, SA | - | - | 50,000 | 50,000 |
| Sonae MC - Modelo Continente, SGPS, SA | - | - | 50,000 | 50,000 |
| Sondis Imobiliária, SA | - | - | 425,000 | 425,000 |
| Sportzone - Comércio de Artigos de Desporto, SA | 16,000,000 | - | - | - |
| Tlantic Portugal - Sistemas de Informação, SA | - | - | 393,316 | 393,316 |
| Worten - Equipamentos para o Lar, SA | 25,460,000 | 25,460,000 | - | - |
| 55,876,000 | 25,471,000 | 22,775,937 | 22,775,937 |
In the annual General Meeting held on 26 April 2010, have been attributed gross dividends of 0.07 euro per share (0.085 euro per share in 2009), corresponding to a total of 70,000,000 euro (85,000,000 euro in 2009).
In the General Meeting held on 29 December 2010 it was approved the distribution to shareholders of free reserves amounting to 425 million euro.
The accompanying financial statements were approved by the Board of Directors and authorized for issue on 15 March 2011. These financial statements will be presented to the Shareholders' General Meeting for final approval.
During the period ended as at 31 December 2010 shareholders' loan contracts were signed with the following companies:
Azulino Imobiliária, SA
Bertimóvel – Sociedade Imobiliária, SA
Citorres - Sociedade Imobiliária, SA
Contimobe – Imobiliária do Castelo de Paiva, SA
Fozimo – Sociedade Imobiliária, SA
Igimo - Sociedade Imobiliária, SA
Iginha – Sociedade Imobiliária, SA
Imomuro – Sociedade Imobiliária, SA
Imoconti – Sociedade Imobiliária, SA
Imoresultado – Sociedade Imobiliária, SA
Imosistema – Sociedade Imobiliária, SA
Imoestrutura – Sociedade Imobiliária, SA
MJLF – Empreendimentos Imobiliários, SA
Predicomercial – Promoção Imobiliária, SA
Sempre à Mão – Sociedade Imobiliária, SA
Sociloures – Sociedade Imobiliária, SA
Socijofra – Sociedade Imobiliária, SA
| Soflorin, BV |
|---|
| Sonae MC – Modelo Continente, SGPS, SA |
| Sondis Imobiliária, SA |
| Sontária – Empreendimentos Imobiliários, SA |
| Valor N, SA |
| During the period ended as at 31 December 2010, treasury application agreements were signed with the following companies: |
| Azulino Imobiliária, SA |
| Bertimóvel – Sociedade Imobiliária, SA |
| Canasta - Empreendimentos Imobiliários, SA |
| Citorres – Sociedade Imobiliária, SA |
| Contimobe – Imobiliária do Castelo de Paiva, SA |
| Continente Hipermercados, SA |
| Cumulativa - Sociedade Imobiliária, SA |
| Edições Book.it, SA |
| Estevão Neves – Hipermercados da Madeira, SA |
| Farmácia Selecção, SA |
| Fozimo – Sociedade Imobiliária, SA |
| Global S – Hipermercados, SA |
| Good and Cheap - Comércio Retalhista, SA |
| Hipotética - Comércio Retalhista, SA |
| Igimo – Sociedade Imobiliária, SA |
| Iginha – Sociedade Imobiliária, SA |
| Imoconti – Sociedade Imobiliária, SA |
| Imoestrutura – Sociedade Imobiliária, SA |
| Imomuro - Sociedade Imobiliária, SA |
| MJLF - Empreendimentos Imobiliários, SA |
| Modaloop - Vestuário e Calçado, SA |
| NA – Comércio e artigos de Desporto, SA |
| NA – Equipamentos para o Lar, SA |
| Pharmaconcept Actividades em Saúde, SA |
Pharmacontinente – Saúde e Higiene, SA Predicomercial – Promoção Imobiliária, SA Raso, SGPS, SA Selifa - Sociedade de Empreendimentos Imobiliários, SA Sempre à Mão – Sociedade Imobiliária, SA Sesagest – Projectos e Gestão Imobiliária, SA Socijofra – Sociedade Imobiliária, SA Sociloures – Sociedade Imobiliária, SA Sonae MC – Modelo Continente, SGPS, SA Sonae - Retail Properties, SA Sonae Center Serviços II, SA Sondis - Sociedade Imobiliária, SA Textil do Marco, SA Valor N, SA
Well W - Electrodomésticos e Equipamentos, SA
As at 31 December 2010 amounts owed by subsidiaries can be detailed as follows:
| Company | 31.December.2010 |
|---|---|
| Azulino - Imobiliária, SA | 4,100,388 |
| Bertimóvel - Sociedade Imobiliária, SA | 18,852,000 |
| Canasta - Empreendimentos Imobiliários, SA | 2,463,000 |
| Chão Verde - Sociedade de Gestão Imobiliária, SA | 64,000 |
| Citorres - Sociedade Imobiliária, SA | 3,237,000 |
| Contimobe - Imobiliária do Castelo de Paiva, SA | 56,813,000 |
| Continente Hipermercados, SA | 96,224,000 |
| Cumulativa - Sociedade Imobiliária, SA | 2,633,000 |
| Edições Book.it, SA | 3,161,000 |
| Farmácia Selecção, SA | 3,609,000 |
| Fozimo – Sociedade Imobiliária, SA | 1,741,252 |
| Global S - Hipermercado, Lda | 2,269,000 |
| Good and Cheap - Comércio Retalhista, SA | 23,477,000 |
| Hipotética - Comércio Retalhista, SA | 16,036,000 |
| Igimo – Sociedade Imobiliária, SA | 656,000 |
| Iginha – Sociedade Imobiliária, SA | 12,136,886 |
| Imoconti – Sociedade Imobiliária, SA | 15,237,389 |
| Imoestrutura - Sociedade Imobiliária, SA | 356,078 |
| Imomuro - Sociedade Imobiliária, SA | 4,050,897 |
| Imoresultado – Sociedade Imobiliária, SA | 435,000 |
| Imosistema - Sociedade Imobiliária, SA | 4,196,592 |
| MJLF - Empreendimentos Imobiliários, SA | 3,350,000 |
| Modelo - Distribuição de Materiais de Construção, SA | 17,902,648 |
| Mundo Vip - Operadores Turísticos, SA | 1,000,000 |
| MDS SGPS, SA | 16,555,234 |
| Pharmacontinente - Saúde e Higiene, SA | 11,939,000 |
| Predicomercial - Promoção Imobiliária, SA | 9,099,340 |
| Raso, SGPS, SA | 6,100,000 |
| Selifa - Sociedade de Empreendimentos Imobiliários, SA | 3,476,926 |
| Sempre à Mão - Sociedade Imobiliária, SA | 49,475,444 |
| Sesagest - Projectos e Gestão Imobiliária, SA | 193,000 |
| Socijofra - Sociedade Imobiliária, SA | 7,124,145 |
| Sociloures - Sociedade Imobiliária, SA | 25,813,514 |
| Soflorin, BV | 299,312,812 |
| Sonae Center Serviços II, SA | 6,037,000 |
| Sonae MC - Modelo Continente, SGPS, SA | 611,991,000 |
| Sonaerp - Retail Properties, SA | 199,300,931 |
| Sondis Imobiliária, SA | 15,886,265 |
| Valor N, SA | 3,897,000 |
| 1,560,202,741 |
The amounts due to group companies as at 31 December 2010 related to the mentioned contracts were the following:
| Company | 31.December.2010 |
|---|---|
| BB Food Service, SA | 1,261,000 |
| Best Offer - Prestação de Informações pela Internet, SA | 2,812,000 |
| Bikini - Portal de Mulheres, SA | 2,651,000 |
| Bom Momento - Comercio Retalhista, SA | 43,000 |
| Carnes Continente - Indústria e Distribuição de Carnes, SA | 8,314,000 |
| Contibomba - Comércio e Distribuição de Combustíveis, SA | 245,000 |
| Chão Verde - Sociedade de Gestão Imobiliária, SA | 2,927,000 |
| Estevão Neves - Hipermercados da Madeira, SA | 8,245,000 |
| Fozmassimo - Sociedade Imobliária, SA | 140,000 |
| Modelo Continente Hipermercados, SA | 132,046,000 |
| Modelo Hiper - Imobiliária, SA | 2,310,000 |
| Modelo.Com - Vendas por Correspondência, SA | 9,121,000 |
| Pharmaconcept - Actividades em Saúde, SA | 197,000 |
| Peixes Continente - Indústria e Distribuição de Peixes, SA | 208,000 |
| Solaris - Supermercados, SA | 2,239,000 |
| Sonae - Specialized Retail, SGPS, SA | 254,128,000 |
| Sonae, SGPS, SA | 53,000,000 |
| Tlantic Portugal - Sistemas de Informação, SA | 126,000 |
| Todos os Dias - Comércio Ret. e Expl. de Centros Comerciais, SA | 1,498,000 |
| 481,511,000 |
As at 31 December 2010, fees Statutory Auditor amounted to 30,282 euro fully related with audit fees.
The Board of Directors,
Duarte Paulo Teixeira de Azevedo; (President of the Board of Directors)
Ângelo Gabriel Ribeirinho dos Santos Paupério;
Nuno Manuel Moniz Trigoso Jordão;
(Translation of a report originally issued in Portuguese. In the event of discrepancies, the Portuguese language version prevails.)
Page 2 of 2
Lisbon, 15 March 2011
Deloitte & Associados, SROC S.A. Represented by António Manuel Martins Amaral
(Translation of a Report and Opinion originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
In compliance with the applicable legislation and its mandate, the Statutory Audit Board issues its report on the supervisory action carried out as well as its opinion on the Management Report and remaining consolidated and individual financial statements for the year ended 31 December 2010.
During the year under analysis, the Statutory Audit Board accompanied, within the scope of its competencies, the management of the Company and its subsidiaries, oversaw, with the scope considered adequate under the circumstances, the evolution of the operations, the regularity of its accounting records, the quality of the financial reporting process, the disclosure of financial information, accounting policies and valuation criteria, the efficiency of the risk management and internal control systems, as well as the compliance with legal and statutory requirements.
For that purpose, the Statutory Board met, with the periodicity considered adequate, with the managers responsible for planning and control, administrative and accounting, tax issues, internal audit and risk management departments, as well as with the External Auditor who is also the Statutory Auditor of the Company.
The Statutory Audit Board examined, with special attention the accounting treatment of operations that had material economic or financial impacts in the development of operations reflected in the financial statements under analysis. The Statutory Audit Board exercised its duties in what relates to the qualification and independence of the External Auditor and Statutory Auditor, and reviewed the planning and results of the internal and external auditors.
In furtherance of its functions, the Statutory Audit Board examined the management report, including the corporate governance report and remaining documents of individual and consolidated accounts, prepared by the Board of Directors, considering that the information disclosed complies with the legal and statutory requirements in place and that it is appropriate for the understanding of the financial position and the results of the operations of the Company and consolidation perimeter. Additionally, the Statutory Audit Board examined Statutory Audit and Auditors' Report issued by the Statutory Auditor and agreed with their content.
Considering the above, in the opinion of the Statutory Audit Board, all the necessary conditions are fulfilled in order for the Shareholders' General Meeting to approve:
In accordance with paragraph a), number 1 of article 8º of the Regulation of CMVM nr. 5/2008 and with paragraph c), number 1 of article 245º of the Portuguese Securities Market Code, the members of the Statutory Audit Board inform that, to their knowledge, the information contained in the Management Report and the financial statements were prepared in accordance with applicable accounting standards, giving a true and fair view of the assets and liabilities, financial position and the results of Sonae Investimentos, SGPS, S.A. and companies included in the consolidation perimeter. Also it is their understanding that the Management Report faithfully describes the business evolution, performance and financial position of Sonae Investimentos, SGPS, S.A. and of the companies included in the consolidation perimeter and contains a description of the major risks and uncertainties that they face. It is declared also that the corporate governance report, complies with article 245º-A of the Portuguese Securities Market Code.
Maia, 25 March 2011
The Statutory Audit Board
UHY & Associados, SROC, Lda. represented by António Francisco Barbosa dos Santos
Arlindo Dias Duarte Silva
Óscar José Alçada da Quinta
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