Earnings Release • Nov 30, 2020
Earnings Release
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26 August 2020
The second quarter of 2020 was certainly one of the toughest quarters in Sonae's history. After a good start to the year, we were all hit by the Covid-19 pandemic in mid-March and it was during the second quarter that we felt most of the impacts to date of this unprecedented and challenging situation. As I have stated multiple times, our main concern since day one has been the health and safety of our people, customers and partners, while we continue to provide essential services to society and to support our communities. All our businesses have been severely impacted by this situation, but I am proud to say that our collective response has been quite outstanding. I feel truly honoured and privileged to lead such a resilient and generous team. These past few months have shown not only the cohesion and coordination of the top management team at Sonae, but also the strong commitment of our people to serve our customers and take great care of all our stakeholders.
Our portfolio showed a very resilient performance throughout the last few weeks. I would like to highlight the exceptional performances of both Sonae MC and Worten, which, in such a challenging context, were able to strengthen their leadership positions in the Portuguese market and grow turnover by more than 9% and 6% yoy in this second quarter of the year, respectively. But I would also like to stress the resilience of the remaining businesses in our portfolio, especially the ones which were forced to shut down during most of 2Q. Sonae Sierra faced a particularly challenging situation, namely in Portugal, with all shopping centres practically closed during the quarter and high uncertainty regarding rent collection driven by unprecedented legislation (despite the agreements that had already been reached with the vast majority of tenants). Overall, Sonae grew 5% yoy in the quarter and underlying EBITDA was practically stable vs last year in comparable terms. This is a remarkable performance considering that many of our operations were shut down for many weeks.
Under these challenging times, maintaining a solid financial position is essential to face the future with confidence. Since the beginning of 2020, we have been able to further reinforce our capital structure with several refinancing operations totalling more than €650 M and extensive cash preservation initiatives. This has enabled us to keep a healthy liquidity position and maintain our commitments to all stakeholders. Currently, all the companies in our portfolio hold conservative balance sheets, which will be important to face the upcoming months.
While we remained deeply committed to protecting our businesses and serving our customers, we have not lost sight of our environmental and social sustainability priorities. In the past few months, we have continued to reinforce our social responsibility initiatives in a number of areas, namely food donations and government support initiatives related to the fight against Covid-19, and we have continued to make significant progress towards our CO2 emissions and plastics consumption goals.
The next few months will bring different types of challenges for our teams, and I am confident that Sonae will overcome these challenges. We have a resilient portfolio of businesses and a strong financial position, but most importantly the right people and the right values embedded across the organisation.
Cláudia Azevedo
CEO, Sonae
Sonae continues to monitor all the developments related to the Covid-19 outbreak and to adapt all its actions to the current circumstances, according to each business context and to the recommendations and rules established by the competent authorities. Since the beginning of the pandemic, and given the existing risks, a specific governance model was implemented early on to manage this crisis and prevention/contingency plans were developed to cover the entire organisation, from the operational areas to the central structures, across all of the Group's businesses.
Below is a summary of the main initiatives and impacts in several areas during the last months:
Sonae continued to reinforce its social responsibility initiatives in the quarter, in particular:
Food retail | Sonae MC
In compliance with its internal policies and given the current high uncertainty context, Sonae has privileged the increase of the group's liquidity, the reduction of debt amortizations in the coming years and the expansion of maturities. Therefore, since the beginning of 2020, more than €650 M in debt facilities were reinforced, and as of the end of June, Sonae had €614 M of available credit lines and €595 M of cash. In this context, we do not foresee any significant financing needs in the short term and we believe we have the adequate liquidity levels, even under more adverse scenarios. In addition, we do not foresee any situation of debt covenant breach in the short term, either at Sonae MC or at Sonae SGPS.
At this stage, it is not possible to provide accurate estimates of the future economic, operational and financial impacts of this pandemic, as these depend on the economy relaunch, which in turn depends on the evolution of the pandemic contagion and the economic stimulus measures that are being implemented. However, Sonae has been directing all efforts to minimise the effects of this crisis, in line with the recommendations of the competent entities and in the best interest of all its stakeholders.
In the 1Q20, Sonae Sierra created Sierra Prime, a leading retail real estate JV with APG, Allianz and Elo, resulting in a dilution of its stake on a portfolio of leading Iberian assets (down to 25%), whilst maintaining the management of these assets.
In the 2Q20, Sonae acquired the remaining 50% in Salsa.
Already in the 3Q20, Sonae announced the agreement to terminate the partnership at ZOPT and the acquisition of a 7.38% stake in NOS.
| Sonae corporate structure | ||
|---|---|---|
| Stake Consolidation method | ||
| Sonae MC | 100% | Full consolidation |
| Sonae Sierra | 70% | Full consolidation |
| NOS | 23% | Equity method |
| Worten | 100% | Full consolidation |
| ISRG | 30% | Equity method |
| Sonae Fashion | 100% | Full consolidation |
| Sonae FS | 100% | Full consolidation |
| Sonae IM | 90% | Full consolidation |
Sonae's consolidated performance in 2Q20 was marked by two different moments:
From a statutory point of view, Sonae's consolidated turnover grew 5% yoy, to €1,584 M in the 2Q20, mainly driven by the strong contribution from Sonae MC, leading to a 6% yoy growth
| Sonae consolidated results | ||||||
|---|---|---|---|---|---|---|
| Million euros | 1H19 | 1H20 | yoy | 2Q19 | 2Q20 | yoy |
| Turnover | 2,960 | 3,136 | 5.9% | 1,511 | 1,584 | 4.8% |
| Underlying EBITDA | 241 | 229 | -5.3% | 139 | 129 | -7.5% |
| margin | 8.2% | 7.3% -0.9 p.p. | 9.2% | 8.1% -1.1 p.p. | ||
| Equity method results (1) | 49 | 13 | -73.2% | 23 | 6 | -73.5% |
| Non-recurrent items | -11 | 14 | - | -18 | -7 | 59.5% |
| EBITDA | 279 | 256 | -8.3% | 145 | 128 | -11.7% |
| margin | 9.4% | 8.2% -1.3 p.p. | 9.6% | 8.1% -1.5 p.p. | ||
| D&A | -103 | -107 | -3.7% | -52 | -54 | -2.8% |
| D&A - RoU | -60 | -64 | -6.2% | -34 | -32 | 5.6% |
| Provisions and impairments | -3 | -53 | - | -2 | -7 | - |
| EBIT | 114 | 32 | - | 56 | 35 | - |
| Net financial results - lease liabilities | -36 | -37 | -3.4% | -17 | -18 | -5.6% |
| Net financial results - financing | -21 | -18 | 14.6% | -11 | -7 | 33.4% |
| EBT | 57 | -23 | - | 29 | 9 | - |
| Taxes | -1 | 4 | - | -5 | -3 | - |
| Direct results | 56 | -19 | - | 24 | 6 | - |
| Indirect results | 8 | -65 | - | 9 | -45 | - |
| Net income | 64 | -84 | - | 32 | -39 | - |
| Non-controlling interests | -26 | 10 | - | -13 | 23 | - |
| Net income group share | 38 | -75 | - | 20 | -16 | - |
(1) Equity method results: includes direct income by equity method results from Sonae Sierra statutory accounts, income related to investments consolidated by the equity method (mainly NOS/Zopt and ISRG) and discountinued operations results.
in the 1H to €3,136 M. In terms of underlying EBITDA, Sonae ended the 2Q20 with €129 M and €229 M in the 1H20, 7% and 5% below last year's figure, respectively, mainly explained by the deconsolidation of two core shopping centres (consequence of the Prime transaction) in Sonae Sierra's statutory accounts and the lockdown period's negative impact in Sonae Sierra and Sonae Fashion. Excluding the impact of Sierra Prime, 1H20 Sonae's consolidated underlying EBITDA would have stayed flat yoy.
2Q20 consolidated EBITDA, decreased 12% yoy to €128 M, due to the lower equity method results from Sonae Sierra and ISRG. Consequently, in the 1H20, consolidated EBITDA fell 8% yoy to €256 M, despite the capital gain registered in the 1Q20 resulting from the Prime transaction at Sonae Sierra. Sonae's Indirect Results were mainly impacted by Sonae Sierra's asset revaluations as a result of the pandemic, which pushed Sonae's Net Result to a negative value of €16 M in the 2Q. All in all, at the end of 1H20, Sonae's Net result (group share) stood at -€75 M, highly influenced by total non-cash contingencies of €76 M already in the 1Q and Sonae Sierra's portfolio valuation decrease in the 2Q, both directly related to Covid-19.
In what concerns Sonae's capital structure, total net debt reduced €498 M yoy to €1,257 M, underpinned by the cash-in from Sonae Sierra's Prime transaction in the 1Q20 (€188 M, net of dividends paid to Grosvenor), and the consequent debt deconsolidation of these assets from Sonae's balance sheet.
The group's gearing at book value stood at 0.4x and market value gearing at 0.9x, as the negative share price performance during the last 12 months offset the decrease in average net debt during the same period.
Sonae's financing conditions sustained a low cost of debt of 1.2% during 1H20 (c.1.0% excluding Sonae Sierra), and the average maturity profile surpassed 4 years.
Moreover, and since the end of 2019, Sonae has already refinanced more than €650 M in long term facilities. As already stated in the 1Q20 release, with these operations, Sonae has increased the average debt maturity, the diversification of relationship banks and significantly reinforced its capital structure. The increased resilience of the balance sheet in the current adverse context allows Sonae to face the coming months with greater confidence and to pursue the group's strategic objectives in better conditions.
Moreover, all the companies in the portfolio continued to hold conservative and solid balance sheets. Both Sonae MC and NOS were able to post comfortable ratios of net debt to EBITDA (post-IFRS16), Sonae MC with 3.3x and NOS with 1.8x. Sonae Sierra's loan-to-value decreased to 25% and at the holding level, loan-tovalue stood at 11%.
In terms of capex and in a quarter mainly characterized by lockdown, Sonae's companies spent €52 M, 28% below 2Q19, reaching €113 M at the end of 1H20. The deviation in 1H also reflects Arenal's acquisition by Sonae MC in 2019.
| Sonae net invested capital | |||
|---|---|---|---|
| Million euros | 1H19 | 1H20 | yoy |
| Net invested capital | 5,956 | 4,839 | -18.7% |
| Shareholders funds | 3,008 | 2,401 | -20.2% |
| Net debt (exc. lease liabilities) | 1,755 | 1,257 | -28.4% |
| Lease liabilities | 1,193 | 1,182 | -1.0% |
NOS Net Debt/ EBITDA (post IFRS16)
| Sonae Capex | |||
|---|---|---|---|
| Million euros | 1H19 | 1H20 | yoy |
| Capex | 189 | 113 | -40.4% |
| Sonae MC | 155 | 89 | -42.5% |
| Sonae Sierra | 5 | 2 | - |
| Worten | 10 | 8 | -20.5% |
| Sonae Fashion | 6 | 6 | 4.8% |
| Sonae FS | <1 | <1 | 51.3% |
| Sonae IM | 15 | 6 | -62.8% |
For Sonae MC, the 2Q20 showed the same trends witnessed at the end of the 1Q20. Under such a challenging environment, Sonae MC was able to deliver strong sales growth, good momentum in the ecommerce operation and a strengthened leadership position. In the 2Q20, turnover grew by 9% yoy to €1,237 M, with a LfL sales growth above 6% and a very good performance in the i) hypers due to their broad offering, wide spaces and perceived safe environment, ii) proximity supermarkets, as customers are closer to home for their everyday needs and iii) the online business that
continued to post double-digit growth during the 2Q and remained at high levels even after the end of the lockdown. New growth businesses, after a challenging start to the 2Q with most of the stores closed, have started to recover in June but still with lower footfall when compared to last year's figures, as people are still cautious over going out to acquire non-essential goods and services.
This 2Q top line performance led to a turnover of €2,431 M at the end of the 1H20, implying a 11.5% yoy growth and a LfL of 8.3%, in an environment of accelerating food inflation (2% in the 1H20). These figures reflect an extraordinary impact of the Covid-19 clearly showing the superior value proposition of Sonae MC's food retail formats, especially important in a sector where the limit of 5 customers per 100 sqm in stores continues.
Regarding underlying operating profitability, the incremental impact from Covid-19 on the costs side, particularly in the 2Q, led to a slightly lower margin when compared to last year. The direct and indirect costs related with the pandemic, were namely the costs with hygiene, safety measures and staff bonuses to reward exceptional work in the frontline during the lockdown period coupled with the changes in channel and product mix that weighed down on gross margins. All in all, underlying EBITDA margin stood at 9.3% vs 9.5% in the 1H19.
Covid-19 had a material impact in the commercial real estate sector during the 2Q, particularly in shopping centres, thereby negatively impacting all of Sonae Sierra's business units.
From an operational point of view, Sierra's European portfolio, which today has a significant bias towards core / dominant assets, recorded (i) a decrease of c.70% of footfall when compared to the 2Q19 figures, reflecting the lockdown period which covered most of Q2 for almost all assets of Sierra's portfolio; and (ii) an average
occupancy rate of 96.6% at the end of June, only slightly below last year's figure (97.4%).
On a proportional accounting basis, Sonae Sierra's 2Q20 net result was -€56 M, split between Direct results of -€3 M and Indirect results of -€53 M, the latter mainly related with property revaluations during the quarter, as asset values saw an
1 For more information please see Sonae MC 1H20 results report in www.sonae.pt.
increase in yields and operational impacts from the pandemic. All in all, the 2Q20 net loss more than offset the net result of 1Q20, leading to a 1H20 net loss of €8 M.
Regarding NAV, Sonae Sierra ended the 2Q20 with €947 M, 7% down when compared to the end of 1Q20, mainly reflecting the decrease in investment property values, asset impairments and FX losses from Brazil.
NOS published its 2Q20 results on July 22nd. This 2Q was a quarter with a stronger operational and financial impact from Covid-19 when compared to 1Q20, as a result of the more extensive period under lockdown, with all business segments being significantly affected.
NOS turnover in the 2Q20 declined 12% yoy to €321 M, leading to a 1H20 turnover of €667 M, -7.6% yoy. This performance in the 2Q reflected the cinema theatre closures, a significant decline in roaming revenues, the suspension of premium sports channel billing (in April and May) and the more challenging B2B environment. The Cinema and Audiovisuals business was the most impacted on a
Turnover and EBITDA margin (€M)
relative basis (more than 40% yoy) given the complete closure of theatres since March 16th . EBITDA followed the same trend and decreased by 7.8% in the 2Q to €158 M and 6.3% versus 1H19 to €311 M in the 1H20. All in all, 2Q20 net result declined 5% yoy to €45 M in the 2Q20, as a result of the decline in EBITDA that more than offset the accounting capital gain of €6 M resulting from the sale of NOS International Carrier Services and at the end of 1H20, net result stood at €35 M, strongly impacted by the non-recurrent items linked to Covid-19 already registered in the 1Q20.
Nevertheless, NOS' financial balance sheet remains solid, having ended the 1H20 with a net financial debt to EBITDA of 1.8x. This position will be further strengthened with the sale of NOS Towering to Cellnex, which was already approved by the Portuguese Competition Authority in the 3Q20.
Worten had a strong 2Q both in terms of top line and profitability in spite of the very different business contexts in Portugal and Spain.
As already stated in the 1Q release, during the lockdown period, in Portugal, all stores remained open except Worten Mobile and iServices stores located in shopping centres – and then gradually reopened in May. Due to more restrictive confinement rules and a more acute impact of the outbreak, in Spain mainland all stores were temporarily closed, although still supporting the online
operation, while in the Canary Islands 6 stores were closed, 2 of which were adapted to serve online orders – in both regions, stores opened in the beginning of June. The online demand continued to deliver double-digit sales growth, being the main driver of the top line performance.
Turnover and underlying EBITDA margin (€M)
In this context, despite closures in Spain and as a result of the online surge, turnover grew 6% yoy (9% in like-for-like stores), reaching €250 M in the 2Q20 and €482 M in the 1H20.
Highlight to the categories of IT and entertainment that registered a strong growth, easily understood in view of the current situation. Regarding profitability, Worten's underlying EBITDA improved yoy from €7 M (3.0% margin) to €12 M (4.7% margin) in the 2Q, boosted by the top line performance, namely in Portugal, and the closure of 14 loss-making stores in Spain over the last 12 months. Already in July, three more loss-making stores were closed in Spain Mainland.
After a strong performance in 2019, the first months of ISRG's fiscal year were severely impacted by the Covid-19 outbreak as sales started to slow down since the beginning of March and, from mid-March onwards, all the company's stores were closed both in Portugal and in Spain (representing a shutdown period in half of the quarter2 ). In what concerns profitability and following the negative sales trend, 1Q EBITDA decreased to negative ground and implied that the company's equity method contribution to Sonae's results was negative at €6 M in the quarter.
The reopening performance of ISRG stores since June in both geographies has been quite positive and encouraging.
For Sonae Fashion, the 2Q was atypical and severely hit by the closure of all stores as the lockdown measures were in place for the most part of the quarter. Since mid-May, stores began to reopen but continued to be impacted by legal requirements and by limited footfall in shopping centres.
In spite of the adverse context and during the lockdown, Sonae Fashion implemented a comprehensive set of measures to find alternative ways to sell and to increase brand engagement across all
of its brands. Part of the severe impact in top line was offset by a very positive performance of the online business that more than doubled last year's figures in the 2Q. Zippy and MO are worth highlighting with 5x and 6x increases in online sales, respectively, having reached the FY19 online sales figure in just one quarter. In addition, performance since reopening has delivered encouraging results to face the rest of the year.
Overall, Sonae Fashion turnover in the 2Q20 stood at €53 M, decreasing 32% yoy, leading to a 25% yoy decline in the 1H to €131 M. Regarding profitability, following the sales trend, and considering that the stores were closed for more than 2.5
2 1Q of ISRG refers to the period from the 2nd of February to the 2nd of May.
months and the extra costs directly related with the Covid-19, underlying EBITDA was down by €24 M yoy to negative ground and stood at -€11 M at the end of 1H20.
Although not being among the most affected businesses in our portfolio, Sonae FS' activity slowed down in the months of the lockdown, namely concerning new credit cards and personal loans approvals. Nevertheless, since mid-May Sonae FS' operational performance already showed signs of recovery and its activity has returned to historical levels, especially in Universo purchases, coupled with the recovery of activity in Spain with the reopening of retail stores.
In spite of the deceleration of the credit card payments market as a whole (-15% yoy until the end of June), the Universo card was able
to register an estimated record market share of 18.1% in April, 16.4% in May and 14.2% at the end of June, guaranteeing an average of 14.7% for 1H20 compared to 12.5% in 1H19. This represents a record market share since its creation and in the lockdown period, fuelled by the strong boost of online purchases in sectors like grocery, clothing and home appliances, significantly above historical figures. At the end of June, there were 886k active Universo cards, +85k vs last year.
All in all, Sonae FS turnover fell €1.6 M yoy to €7.6 M in the 2Q20, being able to remain flat yoy in the 1H20 with a turnover of €17 M. The underlying EBITDA followed the same top line trend, decreasing less than €1 M both in the 2Q and in the 1H, when compared to the same period of last year and reaching €1.3 M in the 2Q20 and €3.4 M in the 1H20.
Within Sonae IM's portfolio companies, a positive note to cybersecurity companies which have proven to be more resilient to the Covid-19 crisis and increased their top line by double digit in the semester.
As for the investment activity, the main priority has been monitoring and supporting portfolio companies and some follow-on investments have been done. Despite a slowdown in M&A activity in the months of March and April, as travel bans and event cancellations prevented the maintenance of deal generation
activities, the end of the 2Q20 showed some encouraging signs with the M&A activity starting to pick up. During the 2Q20, Sonae IM made an early stage investment in a company with a distinctive short video technology.
Sonae IM's 1H turnover reached €63 M, 5.2% below the value registered in 1H19 and 1H underlying EBITDA stood in negative ground but with a significant improvement in relation to last year. In the 2Q20, turnover improved 4% yoy and underlying EBITDA was positive.
Sonae informed about bond issue and refinancing of medium and long-term debt.
Sonae announced that Wonder Investments SGPS informed that it has executed the contractual right to sell its 50% stake in IVN – Serviços Partilhados SA which trades under the trademark "Salsa" to Sonae Fashion.
Sonae informed on transaction by person discharging managerial responsibilities.
Sonae informed on Resolutions taken at Sonae's Shareholders' Annual General Meeting.
Sonae informed on dividend payment.
Sonae informed on qualified shareholding.
Sonae informed on refinancing of medium and long-term debt.
Sonae informed about notification from PriceWaterhouseCoopers, Sociedade de Revisores Oficiais de Contas, Lda.
Sonae informed about bond issue and refinancing of medium and long-term debt.
Sonae informed about sale and leaseback operation.
Sonae informed about an agreement to dissolve the partnership at ZOPT and a shareholding in NOS SGPS, SA
| Sonae statement of financial position | |||
|---|---|---|---|
| Million euros | 1H19 | 1H20 | yoy |
| TOTAL ASSETS | 8,699 | 7,806 | -10.3% |
| Non current assets | 7,091 | 6,176 | -12.9% |
| Net fixed assets | 2,050 | 2,084 | 1.6% |
| Net Rights of Use | 1,082 | 1,043 | -3.6% |
| Goodwill | 822 | 675 | -17.9% |
| Investment properties | 975 | 336 | -65.6% |
| Other investments | 2,015 | 1,642 | -18.5% |
| Deferred tax assets | 83 | 343 | - |
| Others | 64 | 53 | -16.9% |
| Current assets | 1,608 | 1,631 | 1.4% |
| Stocks | 670 | 567 | -15.4% |
| Trade debtors | 132 | 121 | -9.0% |
| Liquidity | 525 | 597 | 13.6% |
| Others | 280 | 346 | 23.7% |
| SHAREHOLDERS' FUNDS | 3,008 | 2,401 | - -20.2% |
| Equity holders | 2,006 | 1,921 | -4.2% |
| Attributable to minority interests | 1,002 | 479 | -52.2% |
| LIABILITIES | 5,690 | 5,405 | -5.0% |
| Non-current liabilities | 3,570 | 3,307 | -7.4% |
| Bank loans | 1,474 | 1,079 | -26.8% |
| Lease liabilities | 1,099 | 1,077 | -2.0% |
| Other loans | 565 | 550 | -2.7% |
| Deferred tax liabilities | 290 | 464 | 60.2% |
| Provisions | 40 | 42 | 4.3% |
| Others | 102 | 94 | -8.0% |
| Current liabilities | 2,120 | 2,098 | -1.0% |
| Bank loans | 279 | 238 | -14.7% |
| Lease liabilities | 95 | 104 | 10.5% |
| Other loans | 6 | 15 | 147.9% |
| Trade creditors | 1,122 | 1,132 | 0.9% |
| Others | 619 | 610 | -1.5% |
| SHAREHOLDERS' FUNDS + LIABILITIES | 8,699 | 7,806 | -10.3% |
The consolidated financial information contained in this report was prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union. The financial information regarding quarterly and semi-annual figures was not subject to audit procedures.
Note: Sonae implemented the following changes in its reporting structure:
(i) Adoption of the IFRS16 accounting standard in 2019;
(ii) Discontinued operations: Saphety and WeDo following the sale from Sonae IM in 1Q19 and 3Q19, respectively; Temasa following the sale from Sonae Fashion and Deeply as an asset available for sale.
| 8.2. | Sonae Sierra statutory accounts | |||
|---|---|---|---|---|
| ------ | -- | -- | -- | --------------------------------- |
| Sonae Sierra consolidated results | ||
|---|---|---|
| Million euros | 2Q20 | 1H20 |
| Turnover | 23 | 50 |
| Underlying EBITDA | 3 | 7 |
| margin | 11% | 14% |
| Equity method results | 1 | 10 |
| Non-recurrent items | -2 | 57 |
| EBITDA | 2 | 75 |
| Provisions and impairment losses | -5 | -5 |
| D&A | -1 | -1 |
| EBIT | -4 | 68 |
| Net financial results | -1 | -4 |
| EBT | -5 | 64 |
| Taxes | 0 | -1 |
| Direct results | -6 | 63 |
| Indirect results | -52 | -72 |
| Net income | -58 | -9 |
| Non-controlling interests | 2 | 1 |
| Net income group share | -56 | -8 |
| Capex | Investments in tangible and intangible assets and investments in acquisitions. For NOS it includes right of use. |
|---|---|
| Direct results | Results before non-controlling interests excluding contributions to indirect results. |
| (Direct) EBIT | Direct EBT - financial results. |
| EBITDA | Underlying EBITDA + equity method results + non-recurrent items. |
| EBITDA margin | EBITDA / turnover. |
| (Direct) EBT | Direct results before taxes. |
| EoP | End of period. |
| Financial net debt | Net debt excluding shareholders' loans. |
| Gearing (book value) | Average of the last four quarters considering, for each quarter, total net debt (EoP) / total shareholders' funds (EoP). |
| Gearing (market value) | Average of the last four quarters considering, for each quarter, total net debt (EoP) / equity value considering the closing price of Sonae shares on the last day of each quarter. |
| Indirect results | Includes Sonae Sierra's results, net of taxes, arising from: (i) investment property valuations; (ii) capital gains (losses) on the sale of financial investments, joint ventures or associates; (iii) impairment losses of non-current assets (including goodwill) and (iv) provision for assets at risk. Additionally and concerning Sonae's portfolio, it incorporates: (i) impairments in retail real estate properties; (ii) reductions in goodwill; (iii) provisions (net of taxes) for possible future liabilities and impairments related with non-core financial investments, businesses, assets that were discontinued (or in the process of being discontinued/repositioned); (iv) results from mark to market methodology of other current investments that will be sold or exchanged in the near future; and (v) other non-relevant issues. |
| Investment properties | Shopping centres in operation owned and co-owned by Sonae Sierra. |
| Lease Liabilities | Net present value of payments to use the asset. |
| Like for Like sales (LfL) | Sales made by stores that operated in both periods under the same conditions. Excludes stores opened, closed or which suffered major upgrade works in one of the periods. |
| Loan to Value (LTV) - Holding |
Holding net debt (average) / NAV of the investment portfolio plus Holding net debt (average). |
| Loan to Value (LTV) – Sonae Sierra |
Net debt / (Investment properties + properties under development), on a proportional basis. |
| INREV Net asset value (NAV) Sonae Sierra |
Open market value attributable to Sonae Sierra - net debt - minorities + deferred tax liabilities. |
| Net debt | Bonds + bank loans + other loans + financial leases + shareholder loans - cash - bank deposits - current investments - other long-term financial applications. |
| Net invested capital | Total net debt + total shareholders' funds. |
| Online sales | Total e-commerce sales, including online marketplaces. |
| Open Market Value (OMV) | Fair value of properties in operation (% of ownership), provided by independent international entities and book value of development properties (% of ownership). |
| Other loans | Bonds, leasing and derivatives. |
| Right of use (RoU) | Lease liability at the beginning of the lease adjusted for, initial direct costs, advance rent payments and possible lease discounts. |
| RoIC | Return on invested capital. |
| Underlying EBITDA | Recurrent EBITDA from the businesses consolidated using the full consolidation method. |
| Underlying EBITDA margin | Underlying EBITDA / turnover. |
(Amounts expressed in euro)
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.)
| ASSETS | Notes | 30 Jun 20 | 30 Jun 19 | 31 Dec 2019 |
|---|---|---|---|---|
| NON-CURRENT ASSETS: | ||||
| Property, plant and equipment | 7 | 1,688,337,971 | 1,688,351,702 | 1,688,284,139 |
| Intangible assets | 8 | 395,322,518 | 362,085,975 | 401,667,381 |
| Right of use assets | 9 | 1,042,756,597 | 1,081,541,819 | 1,060,191,250 |
| Investment properties | 335,678,952 | 974,850,481 | 347,859,459 | |
| Goodwill | 674,547,683 | 821,982,555 | 678,895,512 | |
| Investments in joint ventures and associates | 10 | 1,560,464,212 | 1,954,852,534 | 1,607,581,376 |
| Other investments | 11 | 81,908,222 | 60,181,633 | 79,248,786 |
| Deferred tax assets | 12 | 343,490,149 | 83,046,154 | 331,385,376 |
| Other non-current assets | 53,044,417 | 63,857,988 | 53,982,880 | |
| Total Non-Current Assets | 6,175,550,721 | 7,090,750,841 | 6,249,096,159 | |
| CURRENT ASSETS: | ||||
| Inventories | 567,167,216 | 670,325,555 | 663,919,735 | |
| Trade receivables and other current assets | 353,524,815 | 335,668,647 | 309,556,149 | |
| Income tax assets | 44,125,906 | 43,235,071 | 42,283,336 | |
| Other tax assets | 39,258,704 | 33,478,041 | 42,600,020 | |
| Investments | 11 | 1,835,624 | 726,237 | 665,213 |
| Cash and bank balances | 594,771,902 | 524,381,568 | 609,830,153 | |
| Total Current Assets | 1,600,684,167 | 1,607,815,119 | 1,668,854,606 | |
| Assets classified as held for sale | 5 | 29,826,424 | - | 1,126,364,434 |
| TOTAL ASSETS | 7,806,061,312 | 8,698,565,960 | 9,044,315,199 | |
| EQUITY AND LIABILITIES | ||||
| EQUITY: | ||||
| Share capital | 2,000,000,000 | 2,000,000,000 | 2,000,000,000 | |
| Own shares | (93,340,758) | (99,861,142) | (99,806,645) | |
| Legal reserve | 277,452,299 | 268,028,145 | 268,028,145 | |
| Reserves and retained earnings | (188,065,073) | (200,025,062) | (201,594,204) | |
| Profit/(Loss) for the period attributable to the equity holders of the Parent Company | (74,756,306) | 37,975,148 | 165,221,904 | |
| Equity attributable to the equity holders of the Parent Company | 1,921,290,162 | 2,006,117,089 | 2,131,849,200 | |
| Equity attributable to non-controlling interests | 13 | 479,474,197 | 1,002,181,940 | 974,714,342 |
| TOTAL EQUITY | 2,400,764,359 | 3,008,299,029 | 3,106,563,542 | |
| LIABILITIES: | ||||
| NON-CURRENT LIABILITIES: | ||||
| Loans | 14 | 1,629,212,413 | 2,039,342,248 | 1,592,307,452 |
| Lease liabilities | 9 | 1,077,086,722 | 1,098,513,515 | 1,088,290,449 |
| Other non-current liabilities | 94,269,448 | 102,451,279 | 89,970,758 | |
| Deferred tax liabilities | 12 | 464,138,462 | 289,705,452 | 472,289,494 |
| Provisions | 15 | 42,112,466 | 40,393,875 | 42,652,254 |
| Total Non-Current Liabilities | 3,306,819,511 | 3,570,406,369 | 3,285,510,407 | |
| CURRENT LIABILITIES: | ||||
| Loans | 14 | 252,238,129 | 284,512,030 | 196,268,470 |
| Lease liabilities | 9 | 104,468,931 | 94,530,215 | 102,781,525 |
| Trade payables and other current liabilities | 1,602,119,650 | 1,624,800,230 | 1,847,952,492 | |
| Income tax liabilities | 26,780,646 | 29,536,936 | 13,464,954 | |
| Other tax liabilities | 84,923,051 | 79,498,982 | 100,751,716 | |
| Provisions | 15 | 26,331,674 | 6,982,169 | 4,405,596 |
| Total Current Liabilities | 2,096,862,081 | 2,119,860,562 | 2,265,624,753 | |
| Liabilities directly associated with assets classified as held for sale | 5 | 1,615,361 | - | 386,616,497 |
| TOTAL LIABILITIES | 5,405,296,953 | 5,690,266,931 | 5,937,751,657 |
TOTAL EQUITY AND LIABILITIES 7,806,061,312 8,698,565,960 9,044,315,199
The accompanying notes are part of these condensed consolidated financial statements.
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.)
| (Amounts expressed in euro) | nd Quarter 2020 2 |
nd Quarter 2019 2 Restated |
30 Jun 20 | 30 Jun 19 Restated Note 4 |
|
|---|---|---|---|---|---|
| Sales | 6 | 1,518,934,410 | 1,418,602,910 | 2,990,207,331 | 2,773,592,545 |
| Services rendered | 6 | 65,154,214 | 92,718,547 | 145,615,280 | 186,726,574 |
| Changes in value of investment properties | (12,015,453) | 6,461,135 | (12,015,453) | 6,461,135 | |
| Income or expense rela>ng to investments | 16 | 99,019 | (16,946,682) | 21,939,256 | (17,054,347) |
| Financial income | 14,301,132 | 2,640,187 | 17,460,752 | 5,965,712 | |
| Other income | 25,566,822 | 27,696,042 | 49,868,357 | 50,870,940 | |
| Cost of goods sold and materials consumed | (1,110,705,112) | (1,012,719,733) | (2,230,745,574) | (1,994,785,457) | |
| (Increase) /Decrease in prodution | 880,276 | 476,124 | 1,302,199 | (1,717,334) | |
| External supplies and services | (149,822,470) | (153,812,143) | (310,334,715) | (307,318,770) | |
| Employee benefits expense | (213,085,583) | (217,761,707) | (437,462,262) | (430,455,734) | |
| Depreciation and amortisation expenses | 6, 7, 8 and 9 | (86,072,121) | (86,527,346) | (170,441,601) | (162,956,522) |
| Impairment losses | (8,118,650) | (614,880) | (8,968,101) | (1,339,022) | |
| Provisions | 15 | (7,817,509) | (2,167,699) | (26,997,774) | (2,214,845) |
| Financial expense | (31,645,267) | (30,627,065) | (64,160,800) | (62,649,774) | |
| Other expenses | (13,278,328) | (15,764,656) | (29,844,982) | (33,646,135) | |
| Share of results of joint ventures and associates | 10.2 | (31,189,697) | 29,530,347 | (23,696,231) | 56,888,557 |
| Profit/(Loss) before taxation from continuing operations | (38,814,317) | 41,183,381 | (88,274,318) | 66,367,523 | |
| Income tax expense Profit/(Loss) after taxation from continuing operations |
271,395 (38,542,922) |
(6,425,816) 34,757,565 |
6,049,057 (82,225,261) |
(3,924,650) 62,442,873 |
|
| Profit/(Loss) from discontinued operations after taxation | 4 | (255,563) | (2,318,907) | (2,033,879) | 1,722,066 |
| Consolidated profit/(Loss) for the period | (38,798,485) | 32,438,658 | (84,259,140) | 64,164,939 | |
| Attributable to equity holders of the Parent Company: | |||||
| Continuing operations | (15,768,680) | 21,864,569 | (72,722,427) | 36,633,692 | |
| Discontinued operations | (255,563) | (2,193,242) | (2,033,879) | 1,341,456 | |
| (16,024,243) | 19,671,327 | (74,756,306) | 37,975,148 | ||
| Attributable to non-controlling interests | |||||
| Continuing operations | (22,774,242) | 12,892,996 | (9,502,834) | 25,809,181 | |
| Discontinued operations | - | (125,665) | - | 380,610 | |
| 13 | (22,774,242) | 12,767,331 | (9,502,834) | 26,189,791 | |
| Profit/(Loss) per share | |||||
| From continuing operations | |||||
| Basic | 18 | (0.008157) | 0.011449 | (0.038070) | 0.019241 |
| Diluted | 18 | (0.007514) | 0.011486 | (0.035499) | 0.019770 |
| From discontinued operations | |||||
| Basic | 18 | (0.000131) | (0.001160) | (0.001065) | 0.000705 |
| Diluted | 18 | (0.000123) | (0.001081) | (0.000996) | 0.000657 |
The accompanying notes are part of these condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE PERIODS ENDED 30 JUNE 2020 AND 2019
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails.)
| (Amounts expressed in euro) | Notes | 2nd Quarter 2020 | 2nd Quarter 2019 Restated |
30 Jun 20 | 30 Jun 19 Restated Note 4 |
|---|---|---|---|---|---|
| Net Profit / (Loss) for the period | (38,798,485) | 32,438,658 | (84,259,140) | 64,164,939 | |
| Items that may be reclassified subsequently to profit or loss: | |||||
| Exchange differences on translation of foreign operations | 2,039,159 | (3,408,888) | 10,230,834 | 318,207 | |
| Share of other comprehensive income of joint ventures and associates | 10.2 | (15,305,021) | 1,143,774 | (79,402,415) | 1,328,569 |
| Changes in cash flow hedging reserve | (492,832) | (809,870) | (94,754) | (378,526) | |
| Income tax relating to items that may be reclassified subsequently to profit or loss | 187,182 | 61,247 | (41,232) | 61,247 | |
| Others | (202,890) (13,774,402) |
489,231 (2,524,506) |
(76,237) (69,383,804) |
266,309 1,595,806 |
|
| Items that were reclassified subsequently to profit or loss: | - | - | - | - | |
| Items that won´t be reclassified subsequently to profit or loss: | |||||
| Changes value of financial assets at fair value | 11 | (2,058,885) | - | (2,058,885) | - |
| (2,058,885) | - | (2,058,885) | - | ||
| Total other comprehensive income for the period | (15,833,287) | (2,524,506) | (71,442,689) | 1,595,806 | |
| Total comprehensive income for the period | (54,631,772) | 29,914,152 | (155,701,829) | 65,760,745 | |
| Attributable to: | |||||
| Equity holders of parent company | (28,197,676) | 15,401,757 | (125,306,577) | 36,792,259 | |
| Non controlling interests | (26,434,096) | 14,512,395 | (30,395,252) | 28,968,486 | |
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.)
| and Rese Ret rves |
aine d Ea rning s |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Am sed in eu ro) ount s ex pres |
Note s |
Shar e Capi tal |
Own Shar es |
l Rese Lega rve |
Curr ency Tran slati on Rese rve |
Inve nts Fair stme Valu e Rese rve |
Cash -flow Hedg ing Rese rve |
Opti on Prem ium Conv ertib le Bond s |
Othe r Res erve s and Reta ined Earn ings |
Tota l Res erve s and Reta ined Earn ings |
Net it/(L Prof oss) |
Tota l |
Non troll ing con Inte rests (Not e 13 ) |
l Tota Equi ty |
| Attr ibut able to E |
quit y Ho lder s of |
Pare nt Co mpa ny |
||||||||||||
| Bala 1 Jan 201 9 s at nce a uary |
2,00 0,00 0,00 0 |
(104 ) ,204 ,112 |
251 ,937 ,767 |
4,16 0,38 5 |
2,14 6,50 0 |
123 ,615 |
22,3 13,0 00 |
(236 ,806 ,688 |
) (208 ) ,063 ,188 |
221 ,653 ,131 |
2,16 1,32 3,59 8 |
1,12 7,49 3,09 0 |
3,28 8,81 6,68 8 |
|
| ct of Impa IFRS 16 a pplic ation |
- | - | - | - | - | - | - | (90,2 49) 11,6 |
(90,2 49) 11,6 |
(14,0 81) 97,1 |
(104 ) ,308 ,830 |
(2,04 6) 0,96 |
(106 ) ,349 ,796 |
|
| Bala 1 Jan 201 9 - R ed s at estat nce a uary |
2,00 0,00 0,00 0 |
(104 ,204 ,112 ) |
251 ,937 ,767 |
4,16 0,38 5 |
2,14 6,50 0 |
123 ,615 |
22,3 13,0 00 |
(327 ,018 ,337 |
) (298 ,274 ,837 ) |
207 ,555 ,950 |
2,05 7,01 4,76 8 |
1,12 5,45 2,12 4 |
3,18 2,46 6,89 2 |
|
| l com preh ensiv e inc for t he p eriod Tota ome |
- | - | - | (1,20 5) 2,15 |
- | (309 ) ,214 |
- | 328 ,480 |
(1,18 9) 2,88 |
37,9 75,1 48 |
36,7 92,2 59 |
28,9 68,4 86 |
65,7 60,7 45 |
|
| App iatio n of olida ted n ofit o f 201 8 et pr ropr cons sfer to le gal r nd re taine d ea rning Tran eser ves a s |
- | - | 16,0 90,3 78 |
- | - | - | - | 191 ,465 ,572 |
191 ,465 ,572 |
(207 ) ,555 ,950 |
- | - | - | |
| Divid ends dist ribut ed Inco me d istrib ution from inve nt fu nds stme |
- - |
- - |
- - |
- - |
- - |
- - |
- - |
(83,9 64,8 92) - |
(83,9 64,8 92) - |
- - |
(83,9 64,8 92) - |
(156 ,805 ,803 ) (94,0 82) |
(240 ,770 ,695 ) (94,0 82) |
|
| Oblig ation fulfi eld b y sh ttrib ution mplo to e are a yees |
- | - | - | - | - | - | - | (962 ,430 ) |
(962 ,430 ) |
- | (962 ,430 ) |
(12,4 58) |
(974 ,888 ) |
|
| Part ial ca ncell ation of C ash S ettle d Eq uity Swa p |
24 | - | 4,34 2,97 0 |
- | - | - | - | - | 3,74 2,90 8 |
3,74 2,90 8 |
- | 8,08 5,87 8 |
- | 8,08 5,87 8 |
| Aqu isitio ns of affil iated pani com es |
- | - | - | - | - | - | - | - | - | - | - | 5,23 6,67 0 |
5,23 6,67 0 |
|
| Capi tal in crea se |
- | - | - | - | - | - | - | - | - | - | - | 1,07 5,00 6 |
1,07 5,00 6 |
|
| Impa ct of IFRS 16 a pplic ation Othe rs |
- - |
- | - | - | - | - | - | (13,7 67,4 60) 8,96 6 |
(13,7 67,4 60) 8,96 6 |
- | (13,7 67,4 60) 8,96 6 |
(650 ,859 ) (987 ) ,144 |
(14,4 18,3 19) 1,82 2 |
|
| - | - | - | - | - | - | 2,91 | 2,91 | - | 2,91 | 1,93 | ||||
| Bala s at 30 Ju ne 2 019 nce a |
2,00 0,00 0,00 0 |
(99,8 42) 61,1 |
268 ,028 ,145 |
2,95 8,23 0 |
2,14 6,50 0 |
(185 ) ,599 |
22,3 13,0 00 |
(227 ,257 ,193 |
) (200 ) ,025 ,062 |
37,9 75,1 48 |
2,00 6,11 7,08 9 |
1,00 2,18 1,94 0 |
3,00 8,29 9,02 9 |
|
| Bala s at 1 Jan 202 0 nce a uary |
2,00 0,00 0,00 0 |
(99,8 45) 06,6 |
268 ,028 ,145 |
(7,40 7) 0,43 |
4,13 7,94 2 |
(673 ) ,747 |
- | (197 ,657 ,962 |
) (201 ) ,594 ,204 |
165 ,221 ,904 |
2,13 1,84 9,20 0 |
974 ,714 ,342 |
3,10 6,56 3,54 2 |
|
| Tota l com preh ensiv e inc for t he p eriod ome |
- | - | - | 8,67 8,35 1 |
(2,07 1,25 9) |
(6,27 3) |
- | (57,1 51,0 90) |
(50,5 50,2 71) |
(74,7 56,3 06) |
(125 ,306 ,577 ) |
(30,3 95,2 52) |
(155 ,701 ,829 ) |
|
| App iatio n of olida ted n ofit o f 201 9 et pr ropr cons |
||||||||||||||
| Tran sfer to le gal r nd re taine d ea rning eser ves a s |
- | - | 9,42 4,15 4 |
- | - | - | - | 155 ,797 ,750 |
155 ,797 ,750 |
(165 ,221 ,904 ) |
- | - | - | |
| Divid ends dist ribut ed |
13 | - | - | - | - | - | - | - | (88,4 85,1 83) |
(88,4 85,1 83) |
- | (88,4 85,1 83) |
(82,4 75,0 10) |
(170 ,960 ,193 ) |
| Oblig ation fulfi eld b y sh ttrib ution mplo to e are a yees |
- | - | - | - | - | - | - | (540 ,773 ) |
(540 ,773 ) |
- | (540 ,773 ) |
1,50 2 |
(539 ,271 ) |
|
| Part ial ca ncell ation of C ash S ettle d Eq uity Swa p |
- | 6,46 5,88 7 |
- | - | - | - | - | (2,80 0,31 9) |
(2,80 0,31 9) |
- | 3,66 5,56 8 |
- | 3,66 5,56 8 |
|
| Capi tal d ecre ase Lose of c ol of sub sidia ries |
13 5 |
- | - | - | - | - | - | - | - | - | - | - | (25,9 84) 52,8 |
(25,9 84) 52,8 |
| ontr Othe rs |
- - |
- | - | - | - | - | - | - ,927 |
- ,927 |
- | - ,927 |
(356 ,522 ,582 ) ,081 |
(356 ,522 ,582 ) ,008 |
|
| - | - | - | - | - | - | 107 | 107 | - | 107 | 104 | 212 | |||
| Bala 30 Ju ne 2 020 s at nce a |
2,00 0,00 0,00 0 |
(93,3 40,7 58) |
277 ,452 ,299 |
1,27 7,91 4 |
2,06 6,68 3 |
(680 ,020 ) |
- | (190 ,729 ,650 |
) (188 ,065 ,073 ) |
(74,7 56,3 06) |
1,92 1,29 0,16 2 |
479 ,474 ,197 |
2,40 0,76 4,35 9 |
The accompanying notes are part of these consolidated financial statements.
| CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED 30 JUNE 2020 AND 2019 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails) | |||||||||
| (Amounts expressed in euro) | Notes | 2nd Quarter 2020 | 2nd Quarter 2019 | 30 jun 2020 | 30 jun 2019 | ||||
| OPERATING ACTIVITIES | |||||||||
| Net cash generated from operating activities (1) | 169,441,611 | 143,292,296 | (9,153,444) | 36,479,736 | |||||
| INVESTMENT ACTIVITIES | |||||||||
| Receipts arising from: Investments Property, plant and equipment and intangible assets Interests and similar income Loans granted Dividends |
5 | 1,007,143 788,325 439,725 - 1,144,354 |
14,631,365 2,946,568 782,091 655,472 84,679,900 |
269,703,299 8,371,760 942,418 2,368,303 5,091,371 |
34,710,076 3,879,592 1,340,120 655,472 85,489,900 |
||||
| Others | 23,828,998 | 11,240,924 | 23,828,998 | 24,067,898 | |||||
| 27,208,545 | 114,936,320 | 310,306,149 | 150,143,058 | ||||||
| Payments arising from: Investments Property, plant and equipment and intangible assets Loans granted Others |
(1,433,623) (57,762,744) (218,835) (16,493,582) (75,908,783) |
(16,716,254) (69,254,183) (741,753) (11,794,798) (98,506,988) |
(7,844,372) (128,435,988) (2,383,044) (36,143,732) (174,807,136) |
(83,576,353) (160,709,910) (1,603,006) (16,335,228) (262,224,497) |
|||||
| Net cash used in/ generated by investment activities (2) | (48,700,238) | 16,429,332 | 135,499,013 | (112,081,439) | |||||
| FINANCING ACTIVITIES Receipts arising from: Loans, bonds and finance leases |
14 | 1,801,098,465 | 2,173,668,254 | 3,430,685,363 | 4,427,722,037 | ||||
| Capital increases, additional paid in capital and share premiums | - | 127,506 | 19,050,000 | 3,956,767 | |||||
| 1,801,098,465 | 2,173,795,760 | 3,449,735,363 | 4,431,678,804 | ||||||
| Payments arising from: Lease contracts Loans, bonds and finance leases Interests and similar charges Dividends |
14 13 |
(33,921,059) (1,802,005,467) (9,013,006) (100,524,936) (1,947,464,468) |
(35,229,317) (2,120,711,294) (12,815,676) (154,882,665) (2,323,638,952) |
(80,660,691) (3,335,109,241) (14,669,765) (175,047,024) (3,607,835,519) |
(62,939,785) (4,200,241,629) (20,075,692) (244,762,717) (4,528,019,823) |
||||
| Net cash used in financing activities (3) | (146,366,003) | (149,843,192) | (158,100,156) | (96,341,019) | |||||
| Net increase (decrease) in cash and cash equivalents (4) = (1) + (2) + (3) Effect of exchange rate changes on the balance of cash held in foreign currencies Effect of discontinued operations Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period |
(25,624,631) (4,539) - 616,840,941 591,220,849 |
9,878,436 43,068 - 514,015,773 523,851,141 |
(31,754,587) 162,519 (131,653) 623,269,608 591,220,849 |
(171,942,722) (172,623) (676,276) 696,297,516 523,851,141 |
|||||
The accompanying notes are part of these financial statements.
(Translation of consolidated financial statements originally issued in Portuguese. In case of discrepancy the Portuguese version prevails)
(Amounts stated in euro)
SONAE, SGPS, SA ("Sonae Holding") has its head-office at Lugar do Espido, Via Norte, Apartado 1011, 4470-909 Maia, Portugal, and is the parent company of a group of companies. Sonae´s operations and operating segments are described in Note 6.
Sonae continues to monitor all the developments related to the Covid-19 outbreak and to adapt all its actions to the current circumstances, according to each business context and to the recommendations and rules established by the competent authorities. Since the beginning of the pandemic, and given the existing risks, a specific governance model was implemented early on to manage this crisis and prevention/contingency plans were developed to cover the entire organisation, from the operational areas to the central structures, across all of the Group's businesses.
Below is a summary of the main initiatives and impacts in several areas during the last months:
Sonae continued to reinforce its social responsibility initiatives in the quarter, in particular:
institutions (e.g. hospitals). At the same time, portfolio companies participated in several fundraising initiatives amounting to a total of €1.2 M, with Sonae having donated more than 150 tons of essential products.
In compliance with its internal policies and given the current high uncertainty context, Sonae has privileged the increase of the group's liquidity, the reduction of debt amortizations in the coming years and the expansion of maturities. Therefore, since the beginning of 2020, more than €650 M in debt facilities were reinforced, and as of the end of June, Sonae had €614 M of available credit lines and €595 M of cash. In this context, we do not foresee any significant financing needs in the short term and we believe we have the adequate liquidity levels, even under more adverse scenarios. In addition, we do not foresee any situation of debt covenant breach in the short term, either at Sonae MC or at Sonae SGPS. At this stage, it is not possible to provide accurate estimates of the future economic, operational and financial impacts of this pandemic, as these depend on the economy relaunch, which in turn depends on the evolution of the pandemic contagion and the economic stimulus measures that are being implemented. However, Sonae has been directing all efforts to minimise the effects of this crisis, in line with the recommendations of the competent entities and in the best interest of all its stakeholders.
The impacts on ZOPT through participation in NOS were already felt in the results of the first semester of 2020, with a drop-in revenues, consolidated EBITDA and operational cash-flows of - 7.6% (-54.9 million euro); - 6.3% (- 20.8 million euro) and - 6.6% (-7.5 million euro), respectively, which shows a reduction in activity in:
(i) Cinemas and Audiovisuals: complete closure of NOS' theatres on 16 March and postponement of a number of movie premieres, slightly offset by cinema rentals negotiations;
NOS is committed to support their customers during the current COVID-19 public health crisis. At a time when many Portugueses are changing their habits and routines and working remotely, keeping customers connected is the main objective of NOS. To this end, NOS facilitate access to services, through data offers, suspension of monthly payment of premium sports channels, reinforcement of the ability to implement business services and guaranteeing a safe and secure service in our stores, in order to safeguard customers, employees and partners. The NOS Telecommunications Network supports a set of basic services of our society, which include our National Health System. In this context of global health emergency, the maintenance of Portuguese communications is a fundamental task.
On the other hand, the projections made for the Portuguese economy, led to a reassessment of projections and estimates, resulted in the following impacts recognised in the first semester of 2020:
The principal accounting policies adopted in preparing the accompanying consolidated financial statements are described below. These policies have been consistently applied in comparative periods.
The accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, issued by the International Accounting Standards Board ("IASB"), and interpretations issued by the IFRS Interpretations Committee ("IFRIC") or by the previous Standing Interpretations Committee ("SIC"), as adopted by the European Union as from the consolidated financial statements issuance date.
Interim financial statements are presented quarterly, in accordance with IAS 34 – "Interim Financial Reporting". As such, they do not include all the information to be disclosed in the annual consolidated financial statements and should therefore be read in conjunction with the consolidated financial statements for the previous year.
The accompanying condensed consolidated financial statements have been prepared from the books and accounting records of the company and subsidiaries, adjusted in the consolidation process, on a going concern basis and under the historical cost convention, except for some financial instruments and properties investments which are stated at fair value.
Up to the date of approval of these consolidated financial statements, the European Union endorsed the following standards, interpretations, amendments and revisions some of which become mandatory during the year 2020:
| With mandatory application during the year 2020: | Effective date (for financial years beginning on or after) |
|
|---|---|---|
| IFRS 3 (amendment) | Business combinations (Change of business definition) | 01 Jan 2020 |
| IFRS 9, IAS 39 and IFRS 7 (amendment) |
Reform of reference interest rates (Introduction of exemptions from hedge accounting so that the reform of reference interest rates does not lead to the termination of hedge accounting) |
01 Jan 2020 |
| IAS 1 and IAS 8 (amendment) |
Presentation of financial statements and accounting policies, changes in accounting estimates and errors (Update of material definition in the application of the standards to the financial statements as a whole) |
01 Jan 2020 |
| Concetual structure - Changes in the reference to other IFRS (Amendment to some IFRS regarding cross references and clarifications on the application of the new definitions of assets / liabilities and expenses / income) |
01 Jan 2020 |
These standards were first applied by the Group in 2020, however there were no significant impacts on these financial statements.
The following standards, interpretations, amendments and revisions were not at to the date of approval of these consolidated financial statements endorsed by the European Union:
| With mandatory application after 2020 | Effective date (for financial years beginning on or after) |
|
|---|---|---|
| IFRS 17 | Insurance contracts (New accounting for insurance contracts, reinsurance contracts and investment contracts with discretionary participation features). |
01 Jan 2023 |
| IAS 1 (amendment) | Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current | 01 Jan 2022 |
| IAS 3 (amendment) | Business activity concentrations: References for the conceptual framework | 01 Jan 2022 |
| IAS 16 (amendment) | Property, Plant and Equipment: Previous earnings to expected usage | 01 Jan 2022 |
| IAS 37 (amendment) | Provisions, Contingent Liabilities and Contingent Assets: Compliance costs of onerous contracts | 01 Jan 2022 |
| Annual improvments 2018- 2020 | 01 Jan 2022 | |
| IFRS 16 (amendment) | Leases: Rent Concessions related with Covid-19 | Q3/ Q4 2020 |
| IFRS 4 (amendment) | Insurance contracts- deferral of IFRS 9 | 01 Jan 2021 |
The Group did not proceed with the early implementation of any of these standards in the financial statements for the year ended 30 June 2020 since their application is not mandatory, lying in the process of analysing expected effects of those standards.
In 2019, the Group disposed of the We Do Group and Saphety and considered as discontinued activities some operations that are in the process of liquidation. To maintain the comparability of the financial statements and as required by IFRS 5, changes to the consolidated income statements by nature for the period ended 30 June 2019 were made to reflect in a single caption (Consolidated net profit for the period from discontinued operations), on the income statement face, the post-tax profit or loss from discontinued operations.
The impacts on the consolidated financial statements at 30 June 2019 are as follows:
| 30 Jun 2019 | |||
|---|---|---|---|
| Amounts in euro | Before the restatement |
Discontinued operations |
After the restatement |
| Sales | 2,774,313,127 | (720,582) | 2,773,592,545 |
| Services rendered | 210,950,147 | (24,223,573) | 186,726,574 |
| Changes in value of investment properties | 6,461,135 | - | 6,461,135 |
| Income or expenses related to investments | (17,054,358) | 11 | (17,054,347) |
| Other income and financial income | 6,791,779 | (826,067) | 5,965,712 |
| Other income | 51,999,950 | (1,129,010) | 50,870,940 |
| Cost of good sold and materials consumed | (1,994,010,721) | (774,736) | (1,994,785,457) |
| (Increase) /Decrease in prodution | (1,582,269) | (135,065) | (1,717,334) |
| External supplies and service | (316,365,525) | 9,046,755 | (307,318,770) |
| Employee benefits expense | (446,420,464) | 15,964,730 | (430,455,734) |
| Depreciation and amortisation expenses | (166,479,106) | 3,522,584 | (162,956,522) |
| Provisions and impairment losses | (3,715,745) | 161,878 | (3,553,867) |
| Financial expenses | (63,909,187) | 1,259,413 | (62,649,774) |
| Other expenses | (33,858,938) | 212,803 | (33,646,135) |
| Share of results of joint ventures and associates | 56,888,557 | - | 56,888,557 |
| Profit (loss) from continuing operations, before tax | 64,008,382 | 2,359,141 | 66,367,523 |
| Income tax expense | (4,362,293) | 437,643 | (3,924,650) |
| Consolidated profit (loss) for the period from continuing operations | 59,646,089 | 2,796,784 | 62,442,873 |
| Profit/(Loss) from discountinuing operations, after tax | 4,518,850 | (2,796,784) | 1,722,066 |
| Consolidated profit /(loss) for the period from continuing operations | 64,164,939 | - | 64,164,939 |
In February 2020, Sonae Sierra diluted its stake in its subsidiary Sierra B.V. from 50.1% to 25.1%. Sierra B.V. participates in the companies that own 4 assets in Portugal (Colombo, Vasco da Gama, Cascaishopping and Norteshopping) and two assets in Spain (Plaza Mayor and, the asset inaugurated in February 2020, Designer Outlet, both in Malaga). These entities were classified as held for sale in 2019. Sonae Sierra maintained the management service contracts for all assets.
The effects of these transactions on the consolidated financial statements can be analysed as follows:
| Amounts in euro | At the disposal date |
|---|---|
| Non-current assets and liabilities held for sale | 1,097,147,948 |
| Other assets/liabilities with movements after 31 December 2019 | (18,026,817) |
| Capital decrease after 31 December 2019 | (47,287,831) |
| Dividends distributed after 31 December 2019 | 8,062,901 |
| Transfer to joint ventures and associates (Note 10.2) | (69,591,682) |
| Non-controlling interests | (356,522,582) |
| Liabilities directly related to assets classified as held for sale | (385,591,820) |
| Total net assets disposed | 228,190,118 |
| Gain/(Loss) on disposal (Note 16) | 34,542,798 |
| Disposal price | 262,732,916 |
| Expenses incurred with the disposal (Note 16) | (14,080,734) |
| Net receipt | 248,652,182 |
| Effective receipts | 248,917,737 |
| Amounts receivable in future | (265,555) |
| 248,652,182 |
The change in the period ended 30 June 2020 in the assets and non-current liabilities held for sale is related to this operation.
Sonae has in its portfolio 8 business segments:
These operating segments have been identified taking into consideration that each of these segments have separate identifiable revenues and costs, separate financial information is produced, and its operating results are reviewed by management on which it makes decisions.
The main operating segment information as at 30 June 2020 and 2019 can be detailed as follows:
| 30 Jun 2020 | Turnover | Depreciation and amortisation (3) |
Provisions and impairment losses (3)(4) |
EBIT (3) | Financial results (3) |
Income tax (3) |
|---|---|---|---|---|---|---|
| Sonae MC | 2,430,833,247 | (123,069,189) | (601,303) | 95,116,051 | (39,689,912) | (11,595,369) |
| Worten | 481,850,693 | (20,053,494) | (2,230,226) | (27,136,888) | (3,211,539) | 4,455,616 |
| Sonae Fashion | 130,553,349 | (18,429,156) | (604,847) | (58,548,207) | (2,641,000) | 9,958,792 |
| Sonae Sierra | 49,610,910 | (1,540,994) | (5,182,994) | 30,885,149 | (4,284,801) | (454,721) |
| NOS | - | - | - | 10,555,528 | - | - |
| ISRG | - | - | - | (3,321,634) | - | - |
| Sonae IM | 62,870,853 | (3,736,301) | (275,163) | (5,346,038) | (453,854) | 1,075,048 |
| Sonae FS | 16,922,308 | (423,774) | - | (466,090) | 125,867 | 194,740 |
| Other, eliminations and adjustments (1) | (36,818,749) | (3,188,693) | (1,250) | (9,561,562) | (4,659,716) | (123,187) |
| Total consolidated - Direct | 3,135,822,611 | (170,441,601) | (8,895,783) | 32,176,309 | (54,814,955) | 3,510,919 |
| 30 Jun 2019 - Restated | Turnover | Depreciation and amortisation (3) |
Provisions and impairment losses (3) |
EBIT (3) | Financial results (3) | Income tax (3) |
|---|---|---|---|---|---|---|
| Sonae MC | 2,179,817,902 | (117,098,487) | (270,881) | 86,852,047 | (37,343,623) | (4,366,151) |
| Worten | 473,192,143 | (19,160,182) | (144,641) | (10,385,062) | (3,471,171) | (305,490) |
| Sonae Fashion | 173,581,529 | (17,941,924) | (2,141,704) | (12,160,783) | (2,763,273) | 2,879,082 |
| Sonae Sierra | 85,977,097 | (1,525,032) | (706,275) | 40,537,118 | (5,944,471) | (3,385,662) |
| NOS | - | - | - | 20,656,000 | - | - |
| ISRG | - | - | - | 2,884,854 | - | - |
| Sonae IM | 66,306,182 | (3,663,114) | (226,150) | (3,318,382) | 79,916 | 899,499 |
| Sonae FS | 17,354,969 | (633,365) | - | 3,183,280 | 53,267 | 328,530 |
| Other, eliminations and adjustments (1) | (35,910,703) | (2,934,418) | - | (14,489,302) | (7,294,707) | 3,214,542 |
| Total consolidated - Direct | 2,960,319,119 | (162,956,522) | (3,489,651) | 113,759,770 | (56,684,062) | (735,650) |
| 30 June 2020 | 30 June 2019 Restated | |||||
|---|---|---|---|---|---|---|
| Investment (CAPEX) |
Invested capital | Financial net debt (2) |
Investment (CAPEX) |
Invested capital | Financial net debt (2) |
|
| Sonae MC | 89,221,961 | 2,444,940,022 | 1,652,606,044 | 155,268,322 | 2,420,527,938 | 1,728,500,000 |
| Worten | 8,097,690 | 117,409,447 | - | 10,189,296 | 166,033,301 | - |
| Sonae Fashion | 6,490,229 | 342,096,244 | - | 6,186,652 | 364,450,543 | - |
| Sonae Sierra | 1,694,124 | 945,943,306 | 23,699,078 | 5,152,355 | 2,017,018,361 | 299,878,549 |
| NOS | - | 649,434,463 | - | - | 657,491,188 | - |
| ISRG | - | 78,389,885 | - | - | 77,465,385 | - |
| Sonae IM | 5,739,060 | 190,891,338 | 17,354,915 | 15,413,893 | 212,160,104 | 46,582,123 |
| Sonae FS | 484,305 | 7,728,372 | - | 320,125 | 16,354,088 | - |
| Other, eliminations and adjustments (1) | 889,616 | 62,647,793 | 745,056,454 | (3,442,315) | 24,614,063 | 872,855,250 |
| Total consolidated | 112,616,985 | 4,839,480,870 | 2,438,716,491 | 189,088,328 | 5,956,114,971 | 2,947,815,922 |
1) Include Sonae individual accounts;
2) These captions are accompanied by management in more aggregated form, and not allocated to individual operating segments identified above;
3) Reconciled information in note 19;
4) These provisions do not include the provisions related to Covid-19 mentioned in note 19.
The caption "Others, eliminations and adjustments" can be analyzed as follows:
| Investment | Invested capital | |||
|---|---|---|---|---|
| 30 Jun 2020 | 30 Jun 2019 Restated |
30 Jun 2020 | 30 Jun 2019 Restated |
|
| Inter-segment intra-groups and contributions of entities non individualized entities as segments |
889,616 | (3,442,315) | 122,879,230 | 106,195,113 |
| Cash settled equity swap | - | - | (60,231,437) | (81,581,050) |
| 889,616 | (3,442,315) | 62,647,793 | 24,614,063 |
All performance measures are reconciled to the financial statements in Note 19.
Net Invested capital = Net debt + Shareholder funds;
Net Financial Debt = Bonds + bank loans + other loans + financial leases - cash, bank deposits, current investments, excluding other long-term investments + lease liabilities;
Others, eliminations and adjustments = Intra-groups + consolidation adjustments + contributions from other companies not included in the disclosed segments by do not fit in any reportable segment, i.e., companies other than Sonae SGPS are included in the consolidated financial statements as of 31 December 2019;
Investments (CAPEX) = Gross investments in Property, Plant and equipment and intangible assets and investments in acquisitions.
During the six months period ended 30 June 2020, the movements in Property, plant and equipment as well accumulated depreciation and impairment losses are made up as follows:
| Others | Tangible | Total | |||
|---|---|---|---|---|---|
| Land and | Plant and | tangibles | assets | tangible | |
| Buildings | Machinery | assets | in progress | assets | |
| Gross costs: | |||||
| Opening balance as at 1 January 2020 | 1,348,619,669 | 1,648,025,471 | 260,385,129 | 28,714,268 | 3,285,744,537 |
| Investment | 1,693,109 | 3,627,265 | 1,675,778 | 80,345,604 | 87,341,756 |
| Disposals | (566,886) | (16,109,993) | (5,257,519) | (420,612) | (22,355,010) |
| Exchange rate effect | (349) | (9,571) | (64,801) | - | (74,721) |
| Assets available for sale | (14,022) | (358,026) | (186,706) | (18,733) | (577,487) |
| Transfers | 6,685,851 | 65,141,047 | 7,621,722 | (82,068,026) | (2,619,406) |
| Closing balance as at 30 June 2020 | 1,356,417,372 | 1,700,316,193 | 264,173,603 | 26,552,501 | 3,347,459,669 |
| Accumulated depreciation and impairment losses | |||||
| Opening balance as at 1 January 2020 | 431,417,270 | 977,594,714 | 188,271,095 | 177,319 | 1,597,460,398 |
| Depreciation of the period | 11,583,125 | 59,768,179 | 11,332,259 | - | 82,683,563 |
| Impairment losses of the period | 7,682 | 99,954 | - | - | 107,636 |
| Disposals | (217,405) | (14,530,586) | (5,091,447) | - | (19,839,438) |
| Exchange rate effect | (99) | (6,050) | (45,517) | - | (51,666) |
| Depreciation of assets available for sale | - | (263,269) | (131,613) | - | (394,882) |
| Transfers | (107,451) | (531,200) | (205,262) | - | (843,913) |
| Closing balance as at 30 June 2020 | 442,683,122 | 1,022,131,742 | 194,129,515 | 177,319 | 1,659,121,698 |
| Carrying amount as at 30 June 2020 | 913,734,250 | 678,184,451 | 70,044,088 | 26,375,182 | 1,688,337,971 |
The investment includes the acquisition of assets of approximately 80 million euro (93 million euro in 2019), associated with the opening and remodelling of stores of Sonae retail operating segments.
During the six months period ended 30 June 2020, the movement occurred in intangible assets and in the corresponding accumulated amortisation and impairment losses, was as follows:
| Patents | Other | Intangible | Total | ||
|---|---|---|---|---|---|
| and other | intangible | assets | intangible | ||
| similar rights | Software | assets | in progress | assets | |
| Gross assets: | |||||
| Opening balance as at 1 January 2020 | 241,856,153 | 466,224,251 | 77,751,740 | 32,889,599 | 818,721,743 |
| Investment | - | 1,021,371 | 332,460 | 18,293,887 | 19,647,718 |
| Disposals | (15,146) | (4,378,476) | (5,872) | (298,495) | (4,697,989) |
| Exchange rate effect | (136,380) | (6,070) | (1,032) | - | (143,482) |
| Assets available for sale | (313,954) | (919,434) | - | (79,544) | (1,312,932) |
| Transfers | 20,951 | 21,741,713 | 7,891 | (21,920,802) | (150,247) |
| Closing balance as at 30 June 2020 | 241,411,624 | 483,683,355 | 78,085,187 | 28,884,645 | 832,064,811 |
| Accumulated depreciation and impairment losses | |||||
| Opening balance as at 1 January 2020 | 50,033,645 | 323,803,172 | 43,217,545 | - | 417,054,362 |
| Depreciation of the period | 1,257,267 | 20,220,512 | 2,484,741 | - | 23,962,520 |
| Impairment losses of the period | - | 213,135 | - | - | 213,135 |
| Disposals | (12,622) | (3,902,876) | - | - | (3,915,498) |
| Exchange rate effect | (136,380) | (4,683) | (562) | - | (141,625) |
| Depreciation of assets available for sale | (297,127) | (588,342) | - | - | (885,469) |
| Transfers | 20,650 | 434,228 | (10) | - | 454,868 |
| Closing balance as at 30 June 2020 | 50,865,433 | 340,175,146 | 45,701,714 | - | 436,742,293 |
| Carrying amount as at 30 June 2020 | 190,546,191 | 143,508,209 | 32,383,473 | 28,884,645 | 395,322,518 |
As at 30 June 2020 the Investment related to intangible assets in progress includes 18.3 million euro related to IT projects and development software. Within that amount it is included 7.6 million euro of capitalizations of personnel costs related to own work.
During the period of three months ended on 30 June 2020, the detail and the movement in the value of the rights of use, as well as in the respective depreciations, was as follows:
| Land and Buildings | Vehicles | Others tangible assets |
Total tangible assets | |
|---|---|---|---|---|
| Cost | ||||
| Opening balance as at 1 January 2020 | 1,435,043,433 | 99,076,538 | 1,072,141 | 1,535,192,112 |
| Additions | 43,283,789 | 3,409,744 | 1,042,068 | 47,735,601 |
| Effect of foreign currency exchange differences | (134,333) | (12,148) | (3,943) | (150,424) |
| Write-offs and decreases | (7,546,328) | (3,909,192) | (352,096) | (11,807,616) |
| Closing balance as at 30 June 2020 | 1,470,646,561 | 98,564,942 | 1,758,170 | 1,570,969,673 |
| Accumulated depreciation and impairment | ||||
| Opening balance as at 1 January 2020 | 441,004,350 | 33,252,081 | 744,431 | 475,000,862 |
| Depreciation of the period | 51,773,555 | 11,856,011 | 204,747 | 63,834,313 |
| Effect of foreign currency exchange differences | (98,638) | (8,348) | (986) | (107,972) |
| Write-offs and tranfers | (7,340,223) | (3,109,016) | (64,888) | (10,514,127) |
| Closing balance as at 30 June 2020 | 485,339,044 | 41,990,728 | 883,304 | 528,213,076 |
| Carrying amount as at 30 June 2020 | 985,307,517 | 56,574,214 | 874,866 | 1,042,756,597 |
Liabilities related to rights of use are recorded under non-current and current lease liabilities of 1.077 million euro and 104 million euro respectively (1.088 million euro and 103 million euro at 31 December 2019).
In the consolidated income statement, 63.8 million euro were recognised for depreciation of the period (61.1 million euro in 30 June 2019) and 36.9 million of euro of interest relating to the adjusted debt (35.8 million in 30 June 2019).
The value of investments in joint ventures and associates can be analysed as follows:
| Investments in joint ventures and associates | 30 Jun 2020 | 31 Dec 2019 |
|---|---|---|
| Investments in joint ventures | 797,214,925 | 976,280,761 |
| Investments in associates | 763,249,287 | 631,300,615 |
| Total | 1,560,464,212 | 1,607,581,376 |
The detail per company of investments in joint ventures is as follows:
| COMPANY | 30 Jun 2020 | 31 Dec 2019 |
|---|---|---|
| Sonae MC | ||
| Sohi Meat Solutions - Distribuição de Carnes, SA | 3,645,281 | 3,356,985 |
| Maremor Beauty & Fragances, S.L. | 126,460 | 120,649 |
| Sonae Sierra | ||
| Arrábidashopping- Centro Comercial, S.A. | 27,605,265 | 29,991,113 |
| 1) DOC Malaga Holdings S.L | - | 2,070,074 |
| Gaiashopping I- Centro Comercial, S.A. | 28,717,538 | 35,358,528 |
| Madeirashopping- Centro Comercial, S.A. | 15,491,288 | 15,670,288 |
| 1) Norte Shopping Retail and Leisure Centre B.V. | - | 32,206,931 |
| Pantheon Plaza B.V. | 5,078,712 | 4,994,201 |
| Park Avenue Development of Shopping Centres S.A. | (447,149) | (461,277) |
| Parque Atlântico Shopping - Centro Comercial, S.A. | 15,856,677 | 17,754,571 |
| Proyecto Cúcuta S.A.S. | 5,445,273 | 8,467,686 |
| Pud Srl | 5,682,267 | 5,695,813 |
| SC Aegean B.V. | 4,890,604 | 4,907,766 |
| 1) Shopping Centre Colombo Holding B.V. | - | 63,277,363 |
| Sierra Central S.A.S. | 93,593 | 57,222 |
| Sierra Balmain Asset Management sp. zo.o. | (267,344) | 1,708,766 |
| Sierra LM, SGPS, S.A. | 777,670 | 774,000 |
| 1) VdG Holding BV | - | 28,429,747 |
| Via Catarina- Centro Comercial, S.A. | 9,791,671 | 10,043,274 |
| L.C. Malheiro II, SGPS, SA | 1,825,775 | 1,818,083 |
| 2) North Tower B.V. |
(1,484) | - |
| 1) Goodwill related to assets available for sale that will be recognized as associates |
- | 38,550,000 |
| NOS | ||
| ZOPT, SGPS, SA (consolidated) | 649,434,463 | 642,224,343 |
| Sonae IM | ||
| Unipress - Centro Gráfico, Lda | 586,462 | 604,053 |
| Sonae FS | ||
| MDS SGPS, S.A. (consolidated) | 21,317,104 | 25,936,780 |
| Sonae SGPS | ||
| Mktplace- Comércio Eletronico, SA | 1,564,799 | 2,723,802 |
| Investments in joint ventures | 797,214,925 | 976,280,761 |
1) Joint Venture "Sierra Prime" resulting from the dilution of the percentage of Sierra BV (Nota 5);
2) Joint venture constituted in the period.
The value on the income statement related to Zopt results from net income of NOS, the net income of Zopt and the impact on results of the process of allocating the fair value to the assets and liabilities acquired by Zopt.
With regard to ZOPT's financial participations in Finstar and ZAP Media (Finstar consolidated), the Board of Directors of ZOPT is certain that the patrimony seizure to Mrs. Isabel dos Santos, in the specific case of the shares held by her in Finstar and ZAP Media (where she holds 70% of the capital), does not change the control profile, in this case joint control as defined in IFRS 11, it is not expected to have relevant consequences for the operational management of companies, in addition to restrictions on the distribution of dividends in these companies
At 4 April 2020, SONAECOM, was informed by its subsidiary ZOPT of the communication received from the Lisbon Central Criminal Instruction Court ('Court') to proceed to the preventive arrest of 26.075% of NOS' share capital, corresponding to half the shareholding in NOS held by ZOPT and, indirectly, by the companies Unitel International Holdings, BV and Kento Holding Limited, controlled by Mrs. Isabel dos Santos. Under the terms of the communication, the arrested shares (134,322,268.5 shares) are deprived of the right to vote and the right to receive dividends, which must be deposited with Caixa Geral de Depósitos, S.A. at the order of the court. The other half of ZOPT's participation in NOS' share capital, corresponding to an identical percentage of 26.075% - and which, at least in line with the criterion used by the Court, embodies the 50% held in ZOPT by SONAECOM - was not subject to arrest, nor the rights attached to it were subject to any limitation.
Although ZOPT has not been notified of the grounds for preventive arrest, based on the preliminary information they have, it is the understanding of the board of directors of ZOPT and SONAECOM that the measure of arrest imposed is illegitimate and offends several fundamental rights of ZOPT, no being legally liable to determine the deprivation of voting rights, not even to inhibit the holder of the arrested shares from continuing to exercise those rights, which deprivation we understand for this reason, be null and without any effect. At 12 June 2020, ZOPT was notified of the order issued by the Lisbon Central Criminal Investigation Court, which authorizes it to exercise the voting right corresponding to the 26.075% of NOS share capital preventively seized under the aforementioned Court order. For this reason, the boards of directors of ZOPT and SONAECOM consider that the conditions of control of ZOPT over NOS are met, and the measure does not have material effects on the control of this company.
In the beginning of April, NOS announced that it had entered into an agreement with Tofane Global, SAS for the sale of the entire share capital of NOS International Carrier Services SA to iBasis, a wholly-owned subsidiary of Tofane and another, for the provision of Group companies. NOS for international voice and SMS wholesale services, which were previously provided by NOS ICS. The conclusion of this agreement was subject to non-opposition by the Competition Authority. Completion of this agreement occurred on 29 June 2020. The sale price amounts to 9.6 million euro and the receipt of 5.5 million euro will take place over 5 years.
During the period ended at 30 June 2020, resulting from the sale of NOS ICS and the respective classification of the company as a discontinued operating unit, the comparative periods, in the consolidated income statement, were restated.
The evolution in provisions occurred during the first semester of 2020 compared to 31 December 2019 was as follows:
At the beginning of March 2020, the parties were notified of the scheduled judicial due diligence for 17 April 2020, with a view to scheduling the acts to be carried out at the final hearing, establishing the number of sessions and their likely duration, as well as the designation of the respective dates and, also, attempted conciliation. However, in view of the contingency period in which we find ourselves, this judicial process was cancelled. It is the understanding of the Board of Directors, corroborated by the attorneys accompanying the process, that it is, in formal and substantive terms, likely that NOS SA will be able to win the lawsuit, due to MEO already having been convicted for the same offences by ANACOM, however, it is not possible to determine the outcome of the action.
The process has already been redistributed and the previous hearing was scheduled for April 2020. However, in view of the contingency period in which we find ourselves, the above-mentioned judicial procedure was cancelled and and rescheduled for September 2020. The Board of Directors is convinced that the arguments used by the author are not justified, which is why it is believed that the outcome of the proceeding should not result in significant impacts for the Group's financial statements.
In 2020, due to the foreseeable sharp reduction in the collection of these penalties, as a direct consequence of the slowdown in the Portuguese economy due to the measures adopted to combat the new coronavirus COVID-19, NOS recognised expected credits losses to all penalties billed to customers and not provisioned, in the amount of approximately 7 million euro.
At 30 June 2020, the amounts billed and to be received from these indemnities amount to 110.7 million euro.
At 14 April 2020, NOS Comunicações, SA and Cellnex Telecom, SA entered into an agreement whose purpose is to transfer to Cellnex the shares representing the entire share capital of NOS Towering, SA, encompassing the disposal of approximately 2,000 sites (towers and rooftops).
On the same date, the parties entered into a long-term agreement to whereby Cellnex will provide the NOS Group with active network hosting over the passive infrastructure acquired, for a period of 15 years, automatically renewed for equal periods. In addition, this agreement foresees a perimeter increase of up to 400 additional sites over the next 6 years.
The execution of these agreements is subject to the verification of the usual conditions in this type of transaction, notably, if applicable, the non-opposition by the Competition Authority.
The potential value of the agreements to be reached over a 6-year period is 550 million euro, with an upfront payment of approximately 375 million euro. The expected impact on pro forma operating cash flow for NOS in year 1 is approximately 22 million euro.
This agreement will enable NOS to continuously optimize and expand its state-of-the-art mobile network, while reinforcing its ability to invest in the long-term value of the company. By joining forces with Cellnex in Portugal, through this strategic partnership, NOS ensures the supply of current and future needs of its passive mobile infrastructure. In addition to this agreement, NOS will continue to pursue other investment efficiency opportunities.
The approval of this transaction, which constitutes a sale and lease back.
Prudent liquidity risk management implies maintaining an adequate level of cash and cash equivalents to meet assumed liabilities, associated with the negotiation of credit lines with financial institutions.
For this reason, during the first quarter of 2020, NOS contracted 280 million euro in new credit lines, of which 100 million euro were used to settle credit lines that were due in 2020, subsequently refinanced, and 180 million euro reinforced the availability of liquidity.
At 30 June 2020, the average maturity of the group's financing is 2.7 years, with no non-compliance with the covenants due to the reduction in results projected for this year, being expected.
Credit risk is essentially related to credit for services provided to customers, monitored on a regular business basis and for which expected credit losses are determined considering: i) the customer's risk profile; ii) the average receipt period; iii) the client's financial condition; and iv) future perspective of the evolution of the collections.
In the semester ended at 30 June 2020, as a direct consequence of the slowdown in the Portuguese economy due to the measures adopted to combat the new coronavirus COVID-19, the company recognized extraordinary expected credit losses of 28.2 million euro, incorporating, in the projection model of future collections, the new projections released by Banco de Portugal for GDP growth and Unemployment rate for the next 3 years.
In terms of the projection of future impacts at NOS, these will depend on the extent, namely timing, of the spread of the virus and the respective containment measures, making it difficult to predict the scale of the impact, in the knowledge, however, that it will occur in the areas mentioned above. NOS 'capital structure is within the 2x Net Financial Debt / EBITDA After Leasings Payments (EBITDA - Leasings Payments (Capital and Interest)) threshold, so the Board of Directors of NOS believes that the company will overcome the negative impacts caused by this crisis, without jeopardizing business continuity, this conviction is demonstrated with the maintenance of the shareholders' remuneration policy with the payment of dividends on 3 July 2020.
The detail per company of investments in associates is as follows:
| COMPANY | 30 Jun 2020 | 31 Dec 2019 |
|---|---|---|
| Sonae MC | ||
| Sempre a Postos - Produtos Alimentares e Utilidades, Lda | 377,712 | 960,282 |
| Sonae Sierra | ||
| 3shoppings - Holding, SGPS, S.A. | 12,506,022 | 12,749,317 |
| Aliansce Sonae Shopping Centers, S.A. | 83,639,226 | 118,535,408 |
| Area Sur Shopping, S.L. | 6,764,065 | 7,469,872 |
| Fundo Investimento Imobiliário Parque Dom Pedro Shopping Center ("FIIPDPSH") | 10,555,184 | 15,784,000 |
| Fundo Investimento Imobiliário Shop. Parque Dom Pedro ("FIISHPDP") | 103,259,314 | 153,438,522 |
| Le Terrazze - Shopping Centre 1 Srl | 6,956,032 | 7,196,941 |
| Iberia Shop.C. Venture Coöperatief U.A. ("Iberia Coop") | 15,353,403 | 16,112,511 |
| Sierra Portugal Real Estate ("SPF") | 21,094,598 | 21,655,244 |
| Olimpo Real Estate SOCIMI, S.A. | 7,702,170 | 7,932,798 |
| Olimpo Real Estate Portugal, SIGI, S.A. | 2,520,823 | 2,528,224 |
| Serra Shopping- Centro Comercial, S.A. | 1,028,214 | 1,050,037 |
| Sierra Cevital Shopping Center, Spa | - | 38,543 |
| Sierra Portugal Feeder 1 | 2,232,038 | 3,491,812 |
| Trivium Real Estate Socimi, S.A. | 30,913,253 | 30,707,669 |
| Zenata Commercial Project | 1,969,133 | 2,041,966 |
| 1) Mercado Urbano – Gestão Imobiliária, S.A. | 1,234,830 | - |
| 2) Sierra European Retail Real Estate Assets Holdings, BV ("Sierra BV") | 229,023,079 | - |
| Sonae SGPS | ||
| Iberian Sports Retail Group (ISRG) | 78,389,885 | 81,540,597 |
| Sonae IM | ||
| Armilar Venture Partners - Sociedade de Capital de Risco, SA (Armilar) | 1 | 1 |
| Fundo de Capital de Risco Armilar Venture Partners II (Armilar II) | 94,349,318 | 94,176,915 |
| Fundo de Capital de Risco Armilar Venture Partners III (Armilar III) | 33,119,007 | 32,707,854 |
| Fundo de Capital de Risco Espirito Santo Ventures Inovação e Internacionalização (AVP I+I) |
16,223,369 | 17,056,948 |
| Secucloud GMBH | 3,640,882 | 3,731,809 |
| Probe.ly - Soluções de Cibersegurança, Lda | 346,883 | 342,497 |
| Alfaros SARL | 10,379 | 10,379 |
| Suricate Solutions | 25,843 | 25,843 |
| Others | 14,624 | 14,626 |
| Investment in associates companies | 763,249,287 | 631,300,615 |
2) Joint venture "Sierra Prime" resulting from the dilution of percentage of Sierra BV (Note 5).
During the period ended at 30 June 2020, movements in investments in joint ventures and associates are as follows:
| 30 Jun 2020 | |||
|---|---|---|---|
| Proportion on equity |
Goodwill | Total investment |
|
| Investments in joint ventures | |||
| Balance as at 1 January | 409,263,098 | 567,017,663 | 976,280,761 |
| Transfer to Associates | (125,984,114) | (38,550,000) | (164,534,114) |
| Increases during the period | 340,600 | - | 340,600 |
| Equity method: | |||
| Effect in gains or losses in joint controlled Distributed dividends |
1,201,291 (9,278,785) |
- - |
1,201,291 (9,278,785) |
| Effect in equity capital and non-controlling interests | (6,794,828) | - | (6,794,828) |
| 268,747,262 | 528,467,663 | 797,214,925 | |
| 30 Jun 2020 | |||
| Proportion on equity |
Goodwill | Total investment |
|
| Investments in associates companies | |||
| Initial balance as at 1 January | 610,439,640 | 20,860,975 | 631,300,615 |
| Transfer from joint ventures | 125,984,114 | 38,550,000 | 164,534,114 |
| Change of method by percentage dilution (Note 5) | 69,591,682 | - | 69,591,682 |
| Acquisitions during the period | 1,273,178 | - | 1,273,178 |
| Capital reduction in associated companies | (2,132,697) | - | (2,132,697) |
| Period disposals | (38,543) | - | (38,543) |
| Equity method | |||
| Effect in gains or losses in associated companies | (24,912,179) | - | (24,912,179) |
| Distributed dividends | (3,759,296) | - | (3,759,296) |
| Effect in equity capital and non-controlling interests | (72,607,587) | - | (72,607,587) |
The effect on equity and non-controlled interests results fundamentally from the exchange rate conversion effect of companies with a different functional currency than the euro.
As at 30 June 2020, the value of transfers from joint ventures to associates and change of method by dilution of percentage is related to the operation in Sonae Sierra that diluted its participation in the subsidiary Sierra B.V. from 50.1% to 25.1% (Note 5).
Dividend distributions related to Investments in Joint Ventures refer to Sonae Sierra's joint ventures and associates.
Other non-current investments, their head offices and book value as at 30 June 2020 and 31 December 2019, are as follows:
| Statment of financial position | |||
|---|---|---|---|
| Company | Head Office | 30 Jun 2020 | |
| Sonae MC | |||
| Dispar - Distrib. de Participações, SGPS, SA | Lisbon | 9,976 | 9,976 |
| Insco - Insular de Hipermerc., SA | Ponta Delgada | 2,672,520 | 2,672,520 |
| Sportessence - Sport Retail, SA | Ponta Delgada | 2,672,520 | 2,672,520 |
| Other financial assets | 19,642,231 | 15,526,748 | |
| Financial assets at fair value through profit or loss | 22,324,727 | 20,881,764 | |
| Sonae IM | |||
| Arctic Wolf Networks, Inc | Delaware | 12,101,193 | 12,101,193 |
| Ometria, Ltd. | Londres | 8,095,985 | 8,095,985 |
| Sixgill Ltd | Israel | 5,415,162 | 5,415,162 |
| CelllWise | Singapura | 5,357,593 | 5,357,593 |
| ViSenze | Singapura | 3,459,140 | 5,260,238 |
| CB4 | Israel | 4,368,720 | 4,368,720 |
| Case on IT | Madrid | 2,930,744 | 2,930,744 |
| Daisy Intelligence | Canadá | 2,406,623 | 2,406,623 |
| Reblaze | St. Louis | 2,352,438 | 2,352,438 |
| Nextail Labs, SL | Madrid | 2,300,000 | 2,300,000 |
| ciValue | Yokneam (Israel) | 1,970,097 | 1,970,097 |
| StyleSage, Inc. | Delaware | 1,848,578 | 1,848,578 |
| Jscrambler | Porto | 1,250,000 | 1,250,000 |
| Whitefantasy | Évora | 640,804 | 640,804 |
| Fyde | Califórnia | 0 | 443,687 |
| Sales Layer | Valência | 2,500,358 | - |
| Replay | Porto | 600,000 | - |
| Other financial assets | 1,986,060 | 1,625,160 | |
| Financial assets at fair value through other comprehensive income |
59,583,495 | 58,367,022 | |
| 81,908,222 | 79,248,786 |
At 30 June 2020, "Other financial assets" related to "Financial assets at fair value through profit or loss", 9,795,310 euros (9,823,569 euros at 31 December 2019), related to amounts deposited in an Escrow Account and which are invested in units in a higher rated monetary investment fund, which arise as guarantees for contractual liabilities assumed on the sale of the Brazil Retail segment and for which provisions have been set up in the applicable situations.
During the period ended 30 June 2020 Sonae IM acquired shareholdings in the following companies:
At 30 June 2020, the movements in "Other Investments" made up as follows:
| June 2020 | ||
|---|---|---|
| Non current | Current | |
| Other investments: | ||
| Fair value (net of impairment losses) as at 1 January | 79,248,786 | - |
| Acquisitions in the period | 5,130,352 | - |
| Disposals in the period | (396,490) | - |
| Increase/(decrease) in fair value through other comprehensive income | (2,058,885) | - |
| Transfers to available for sale | (15,541) | - |
| Fair value (net of impairment losses) as at 30 June | 81,908,222 | - |
| Derivative financial instruments | ||
| Fair value as at 1 January | - | 588,747 |
| Increase/(decrease) in fair value | - | 1,193,119 |
| Fair value as at 30 June | - | 1,781,866 |
| Financial instruments others | ||
| Fair value as at 1 January | - | 76,466 |
| Increase/(decrease) in fair value | - | (22,707) |
| Fair value as at 30 June | - | 53,758 |
| 81,908,222 | 1,835,624 |
Deferred tax assets and liabilities as at 30 June 2020 and 31 December 2019 may be described as follows considering the different natures of temporary differences:
| Deferred tax assets | Deferred tax liabilities | |||
|---|---|---|---|---|
| 30 Jun 2020 | 31 Dec 2019 | 30 Jun 2020 | 31 Dec 2019 | |
| Difference between fair value and historical cost | 4,468,688 | 4,468,688 | 92,982,314 | 102,130,077 |
| Temporary differences on property, plant and equipment and intangible assets |
1,085,067 | 1,208,423 | 80,901,179 | 78,169,489 |
| Temporary difference of negative goodwill and equity method | - | - | 22,290,073 | 21,804,204 |
| Provisions and impairment losses not accepted for tax purposes | 16,816,947 | 15,808,902 | - | - |
| Valuation of hedging derivatives | 111,188 | 107,345 | 25,287 | 67,639 |
| Amortisation of Goodwill for tax purposes in Spain | - | - | 30,828,303 | 27,919,963 |
| Revaluation of property, plant and equipment | - | - | 636,991 | 684,588 |
| Tax losses carried forward | 45,497,935 | 31,966,592 | - | - |
| Tax Benefits | 5,216,387 | 6,732,857 | - | - |
| Rights of use | 264,327,912 | 267,892,456 | 235,092,554 | 240,187,489 |
| Others | 5,966,025 | 3,200,113 | 1,381,761 | 1,326,045 |
| 343,490,149 | 331,385,376 | 464,138,462 | 472,289,494 |
As at 30 June 2020 and 31 December 2019, the tax rate to be used in Portuguese companies, for the calculation of the deferred tax assets relating to tax losses is 21%. The tax rate to be used to calculate deferred taxes in temporary differences in Portuguese companies is 22.5% increased by the state surcharge in companies in which the expected reversal of those deferred taxes will occur when those rates will be applicable. For companies or branches located in other countries, rates applicable in each jurisdiction were used.
During the period ended 30 June 2020, the movement in non-controlling interests are detailed as follows:
| 30 June 2020 | |||||||
|---|---|---|---|---|---|---|---|
| Sonae MC | Worten | Sonae Fashion | Sonae IM - Sonaecom, SGPS, SA |
Sonae Sierra | Others | Total | |
| Opening balance as at 1 January 2020 | 54,885,160 | 478,103 | 28,838,691 | 109,174,875 | 782,072,434 | (734,921) | 974,714,342 |
| Distributed dividends | (5,231,349) | - | - | (2,721,573) | (74,522,088) | - | (82,475,010) |
| Change in currency translation reserve | - | - | - | 308,146 | 1,477,036 | - | 1,785,182 |
| Participation in other comprehensive income (net of tax) related to joint ventures and associated companies included in consolidation by the equity method |
- | - | - | (335,685) | (22,084,011) | - | (22,419,696) |
| Capital decrease | (2,000,000) | - | - | - | (23,952,884) | - | (25,952,884) |
| Loss of control of subsidiaries | - | - | - | - | (356,522,582) | - | (356,522,582) |
| Changes in hedging reserves | (214,342) | - | - | - | 84,630 | - | (129,712) |
| Others | (39,855) | (1) | 125,696 | (34,094) | (74,342) | (14) | (22,610) |
| Profit for the period attributable to non-controlling interests | 2,024,509 | (370,108) | (7,008,121) | (242,575) | (3,755,298) | (151,240) | (9,502,833) |
| Closing balance as at 30 June | 49,424,123 | 107,994 | 21,956,266 | 106,149,094 | 302,722,895 | (886,175) | 479,474,197 |
As at 30 June 2020 and 31 December 2019, loans are made up as follows:
| 30 Jun 2020 | 31 Dec 2019 | |||
|---|---|---|---|---|
| Outstanding amount | Outstanding amount | |||
| Current | Non Current | Current | Non Current | |
| Bank loans | ||||
| Sonae, SGPS, SA - commercial paper | 154,500,000 | 320,000,000 | 143,350,000 | 285,000,000 |
| Sonae SGPS, SA 2016/2023 | 10,000,000 | 40,000,000 | 10,000,000 | 40,000,000 |
| Sonae MC, SGPS,SA - commercial paper | 8,500,000 | 265,000,000 | 13,500,000 | 266,000,000 |
| Sonae MC affiliated /2014/2023 | - | 50,000,000 | - | 50,000,000 |
| Sonae MC affiliated /2015/2023 | - | 20,000,000 | - | 20,000,000 |
| Sonae MC affiliated /2017/2025 | 3,333,333 | 13,333,333 | 3,333,333 | 16,666,667 |
| Sonae MC /2018/2031 | - | 55,000,000 | - | 55,000,000 |
| Sonae MC affiliated /2020/2025 | - | 55,000,000 | - | - |
| Sonae Holding affiliated /2014/2021 | - | 20,000,000 | - | 20,000,000 |
| Sonae Holding affiliated /2019/2023 | - | 50,000,000 | - | 50,000,000 |
| Sonae Holding affiliated - commercial paper | 5,000,000 | 35,000,000 | 5,000,000 | 27,500,000 |
| Sonae Sierra SGPS, SA - commercial paper | - | 25,000,000 | - | 25,000,000 |
| Sonae Sierra / 2018/2022 | - | 10,000,000 | - | 10,000,000 |
| Sonae Sierra affiliated /2016/2021 | 41,300,000 | - | - | 41,300,000 |
| Sonae Sierra affiliated /2015/2023 | 5,200,000 | 115,700,000 | 5,200,000 | 118,300,000 |
| Others | 6,790,089 | 6,550,412 | 8,776,056 | 6,566,657 |
| 234,623,422 | 1,080,583,745 | 189,159,389 | 1,031,333,324 | |
| Bank overdrafts | 3,551,052 | - | 2,698,070 | - |
| Up-front fees beard with the issuance of borrowings | (445,800) | (1,338,888) | (407,610) | (1,226,479) |
| Bank loans | 237,728,674 | 1,079,244,857 | 191,449,849 | 1,030,106,845 |
| Bonds | ||||
| Bonds Sonae SGPS/ 2015/2022 | - | - | - | 100,000,000 |
| Bonds Sonae SGPS/ 2016/2023 | - | - | - | 60,000,000 |
| Bonds Sonae SGPS/ 2019/2026 | - | 50,000,000 | - | 50,000,000 |
| Bonds Sonae SGPS/ 2020/2027 | - | 160,000,000 | - | - |
| 2) and 3) Bonds Sonae MC / December 2015/2024 | - | 50,000,000 | - | 50,000,000 |
| Bonds Sonae MC / May 2015/2022 | - | 75,000,000 | - | 75,000,000 |
| 2) and 3) Bonds Sonae MC / December 2019/2024 | - | 30,000,000 | - | 30,000,000 |
| 1) and 2) Bonds Sonae MC / June 2016/2021 | - | - | - | 95,000,000 |
| Bonds Sonae MC / September 2016/2021 | 3,000,000 | 3,000,000 | 3,000,000 | 3,000,000 |
| Bonds Sonae MC / April 2020/2027 | - | 95,000,000 | - | - |
| Bonds Sonae Sierra / 2018/2025 | 10,000,000 | 40,000,000 | - | 50,000,000 |
| Bonds Sonae Sierra / 2018/2023 | - | 25,000,000 | - | 25,000,000 |
| Bonds Sonae Sierra / 2018/2023 | - | 25,000,000 | - | 25,000,000 |
| Up-front fees beard with the issuance of borrowings Bonds |
(153,665) 12,846,335 |
(4,978,464) 548,021,536 |
(153,665) 2,846,335 |
(2,670,667) 560,329,333 |
| Other loans | 516,185 | 1,790,921 | 908,663 | 1,706,802 |
| Derivates | 962,499 | - | 773,784 | - |
| Derivative instruments (Note 26) Other loans |
1,478,684 | 1,790,921 | 1,682,447 | 1,706,802 |
| Obligations under finance leases | 184,437 | 155,099 | 289,839 | 164,472 |
| 252,238,129 | 1,629,212,413 | 196,268,470 | 1,592,307,452 |
It is estimated that the book value of all loans does not differ significantly from its fair value, determined based on discounted cash flows methodology.
The interest rate at 30 June 2020 on bond loans and bank loans averaged approximately 1.15% (1.30% at 31 December 2019). Most of the bond loans and variable-rate bank loans are indexed to Euribor.
The derivatives are recorded at fair value.
The loans face value, maturities and interests are as follows (including obligations under financial leases):
| 30 Jun 2020 | 31 Dec 2019 | |
|---|---|---|
| N+1 a) | 251,875,096 | 196,055,960 |
| N+2 | 150,679,810 | 378,265,906 |
| N+3 | 529,686,454 | 350,293,255 |
| N+4 | 420,419,835 | 431,409,483 |
| N+5 | 294,600,145 | 239,721,238 |
| After N+5 | 240,143,521 | 196,514,715 |
| 1,887,404,861 | 1,792,260,558 |
a) Includes amounts used from commercial paper programs when classified as current.
The maturities presented above were estimated according to the contractual clauses of the loans and considering Sonae's best expectation as to its amortization date.
As at 30 June 2020, Sonae has, as detailed below, cash and bank balance equivalents in the amount of 595 million euro (610 million euro as at 31 December 2019) and available credit lines as follows:
| 30 Jun 2020 | 31 Dec 2019 | |||
|---|---|---|---|---|
| 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 | ||||
| Sonae MC | 92,235,860 | 265,000,000 | 124,000,000 | 284,000,000 |
| Sonae Sierra | 54,969,346 | - | 54,719,947 | - |
| Holding & Others | 66,830,994 | 135,000,000 | 55,777,214 | 67,500,000 |
| 214,036,200 | 400,000,000 | 234,497,161 | 351,500,000 | |
| Agreed credit facilities | ||||
| Sonae MC | 94,000,000 | 530,000,000 | 129,000,000 | 550,000,000 |
| Sonae Sierra | 54,969,346 | - | 54,719,947 | 25,000,000 |
| Holding & Others | 149,000,000 | 490,000,000 | 207,750,000 | 380,000,000 |
| 297,969,346 | 1,020,000,000 | 391,469,947 | 955,000,000 |
Movements in "Provisions and impairment losses" during the period ended 30 June 2020 are as follows:
| Caption | Balance as at 01 Jan 2020 |
Increase | Decrease | Transfer to help for sale |
Balance as at 30 Jun 2020 |
|---|---|---|---|---|---|
| Accumulated impairment losses on investments | 4,501,208 | 17,706 | - | - | 4,638,914 |
| Impairment losses on property, plant and equipment | 114,081,043 | 117,649 | (2,248,070) | (166,738) | 111,783,884 |
| Impairment losses on intangible assets | 30,008,630 | 213,135 | (1,150,892) | (246,909) | 28,823,964 |
| Accumulated impairment losses on other current debtors | 26,630,737 | 2,398,047 | (1,307,496) | (935,219) | 26,786,069 |
| Non - current provisions | 42,652,254 | 2,615,782 | (3,155,570) | - | 42,112,466 |
| Current provisions | 4,405,596 | 24,011,884 | (2,061,607) | (24,199) | 26,331,674 |
| 222,279,468 | 29,374,203 | (9,923,635) | (1,373,065) | 240,476,971 |
The increase in current provisions relates mainly to development projects in Sonae Sierra, which were made prudent in the context of the Covid 19 pandemic.
Impairment losses are deducted from the value of the corresponding asset.
Income or expenses related to investments for the periods ended 30 June 2020 and 2019 can be detailed as follows:
| 30 Jun 2020 | 30 Jun 2019 Restated |
|
|---|---|---|
| Dividends | 100,000 | 100,239 |
| Sierra Fund % Dilution (Note 5) Loss generated on sales of the financial contribution regarding Sonae Sierra segment |
20,462,064 - |
- (17,269,517) |
| Others | 1,476,053 | 127,921 |
| Gains / (losses) on the sale of investments in subsidiaries, joint ventures and associates |
21,938,117 | (17,141,596) |
| Others | (101,746) | 2,162 |
| Impairment of investments in subsidiaries Impairment reversal on financial investments |
- 2,885 |
(15,152) - |
| Impairment reversal/(losses) on investments | 2,885 | (15,152) |
| Total income and (expenses) related to investments | 21,939,256 | (17,054,347) |
Balances and transactions with related entities can be detailed as follows:
| Turnover and other income | Purchases and services obtained | ||||
|---|---|---|---|---|---|
| Transactions | 30 Jun 2020 | 30 Jun 2019 Restated |
30 Jun 2019 Restated |
||
| Parent Company | 139,273 | 131,927 | 239,210 | 241,985 | |
| Jointly controlled companies | 20,698,166 | 23,929,623 | 147,285,278 | 146,032,042 | |
| Associated companies | 34,926,497 | 40,283,854 | 2,572,463 | 2,179,102 | |
| Other related parties | 25,623,206 | 25,466,923 | 4,303,821 | 5,003,157 | |
| 81,387,142 | 89,812,327 | 154,400,772 | 153,456,286 |
| Interest income | Interest expenses | ||||
|---|---|---|---|---|---|
| Transactions | 30 Jun 2020 | 30 Jun 2019 Restated |
30 Jun 2020 | 30 Jun 2019 Restated |
|
| Parent Company | - | - | - | - | |
| Jointly controlled companies | 208,208 | 229,035 | 193,218 | 212,464 | |
| Associated companies | 235,067 | 895,972 | 2,638,662 | 2,475,670 | |
| Other related parties | 17,325 | - | 58,765 | 120,130 | |
| 460,599 | 1,125,007 | 2,890,645 | 2,808,264 |
| Accounts receivable | Accounts payable | ||||
|---|---|---|---|---|---|
| Balances | 30 Jun 2020 | 31 Dec 2019 | 30 Jun 2020 | 31 Dec 2019 | |
| Parent Company | 38,250 | 38,875 | 220,809 | 466,133 | |
| Jointly controlled companies | 15,428,434 | 7,429,858 | 81,931,935 | 80,692,278 | |
| Associated companies | 17,271,840 | 15,222,656 | 5,055,410 | 3,205,693 | |
| Other related parties | 11,996,565 | 16,061,643 | 3,608,108 | 7,768,566 | |
| 44,735,090 | 38,753,032 | 90,816,262 | 92,132,670 |
| Loans | |||||||
|---|---|---|---|---|---|---|---|
| Obtained | Granted | ||||||
| Balances | 30 Jun 2020 | 31 Dec 2019 | 30 Jun 2020 | 31 Dec 2019 | |||
| Jointly controlled companies | - | - | 15,538,655 | 15,785,680 | |||
| Associated companies | 63 | 287 | 11,488,500 | 19,218,261 | |||
| Other related parties | - | - | - | 2,160,000 | |||
| 63 | 287 | 27,027,155 | 37,163,940 |
The related parties include subsidiaries and jointly controlled companies or associated companies of Sonae Sierra SGPS, SA, ZOPT SGPS, SA, Sonae Indústria, SGPS, SA and Sonae Capital, SGPS, SA, as well as other shareholders of subsidiaries or jointly controlled companies by Sonae, and other subsidiaries of the parent company Efanor Investimentos, SGPS, SA.
Earnings per share for the periods ended 30 June 2020 and 2019 were calculated taking into consideration the following amounts:
| 30 Jun 2020 | 30 Jun 2019 Restated |
|||
|---|---|---|---|---|
| Continuing Operations |
Descontinuing Operations |
Continuing Operations |
Descontinuing Operations |
|
| Net profit | ||||
| Net profit taken into consideration to calculate basic earnings per share (consolidated profit for the period) |
(72,722,427) | (2,033,879) | 36,633,692 | 1,341,456 |
| Effect of dilutive potential shares | - | - | - | - |
| Interest related to convertible bonds (net of tax) | - | - | 3,746,214 | - |
| Net profit taken into consideration to calculate diluted earnings per share | (72,722,427) | (2,033,879) | 40,379,906 | 1,341,456 |
| Number of shares | ||||
| Weighted average number of shares used to calculate basic earnings per share | 1,910,236,308 | 1,910,236,308 | 1,903,965,803 | 1,903,965,803 |
| Effect of dilutive potential ordinary shares from convertible bonds | 128,667,482 | 128,667,482 | 128,667,482 | 128,667,482 |
| Outstanding shares related with share based payments | 10,630,179 | 3,885,211 | 10,630,179 | 10,630,179 |
| Shares related to performance bonus that can be bought at market price | (985,164) | (1,588,454) | (768,694) | (768,694) |
| Weighted average number of shares used to calculate diluted earnings per share | 2,048,548,805 | 2,041,200,547 | 2,042,494,770 | 2,042,494,770 |
| Earnings per share | ||||
| Basic | (0.038070) | (0.001065) | 0.019241 | 0.000705 |
| Diluted | (0.035499) | (0.000996) | 0.019770 | 0.000657 |
In the Management Report, and for the purposes of calculating financial indicators as EBIT, EBITDA and Underlying EBITDA the consolidated income statement is divided between Direct Income and Indirect Income.
The Indirect Income includes the contribution of Sonae Sierra, net of taxes that result from: (i) valuation of investment properties; (ii) gains (losses) with the sale of financial investments, joint ventures or associates; (iii) impairment losses relating to non-current assets (including Goodwill) and (iv) provisions for assets at risk. Additionally and with regard to the portfolio of Sonae, it includes: (i) impairment of real estate assets for retail, (ii) decreases in Goodwill, (iii) negative Goodwill (net of taxes) related to acquisitions in the financial year, (iv) provisions (net of tax) for possible future liabilities, and impairments related to noncore investments, businesses and discontinued assets (or to be discontinued / repositioned), (v) valuation results based on the methodology "mark-to-market" of other current investments that will be sold or traded in the near future and (vi) other irrelevant issues
The value of EBITDA, Underlying EBITDA and EBIT are calculated in the direct income component, i.e. excluding the indirect contributions.
The reconciliation between the two presentation formats for the consolidated income statement for the periods ended 30 June 2020 and 2019 can be summarized as follows:
| 30 Jun 2020 | 30 Jun 2019 Restated |
|||||
|---|---|---|---|---|---|---|
| Consolidated | Indirect Income | Direct Income | Consolidated | Indirect income | Direct income | |
| Turnover | 3,135,822,611 | - | 3,135,822,611 | 2,960,319,119 | - | 2,960,319,119 |
| Value created on investment properties | (12,015,453) | (12,015,453) | - | 6,461,135 | 6,461,135 | - |
| Investment income | ||||||
| Dividends and others adjustments | 100,160 | - | 100,160 | 100,239 | - | 100,239 |
| Others | 794,022 | - | 794,022 | (17,154,586) | - | (17,154,586) |
| Others income | ||||||
| Reversal of impairment losses | 280,359 | - | 280,359 | 371,594 | - | 371,594 |
| Reversal of provisions for warranty extensions | 823,895 | - | 823,895 | 1,365,816 | - | 1,365,816 |
| Others Total income |
48,764,103 3,174,569,696 |
- (12,015,453) |
48,764,103 3,186,585,149 |
48,155,695 2,999,619,012 |
- 6,461,135 |
48,155,695 2,993,157,877 |
| Total expenses | (2,954,990,460) | 1,864,046 | (2,956,854,506) | (2,750,008,409) | - | (2,750,008,409) |
| Depreciation and amortisation | (170,441,601) | - | (170,441,601) | (162,956,522) | - | (162,956,522) |
| Impairments of inventories - Covid-19 | (44,100,000) | - | (44,100,000) | - | - | - |
| Losses on property, plant and equipment and intangible assets | (1,291,679) | - | (1,291,679) | (482,301) | - | (482,301) |
| Impairment losses and provisions | ||||||
| Provisions for warranty extensions | (249,211) | - | (249,211) | (226,094) | - | (226,094) |
| Others | (35,716,663) | (26,820,880) | (8,895,783) | (3,489,651) | - | (3,489,651) |
| Profit before financial results and results of joint ventures and associates and non recurrent items |
(32,219,918) | (36,972,287) | 4,752,369 | 82,456,035 | 6,461,135 | 75,994,900 |
| Non-recurrent items | 14,341,880 | - | 14,341,880 | (16,293,007) | (5,031,033) | (11,261,974) |
| Financial profit/(loss) | (46,700,048) | 8,114,907 | (54,814,955) | (56,684,062) | - | (56,684,062) |
| Share of results of joint ventures and associated undertakings | ||||||
| Associates and joint ventures of Sonae Sierra | (27,668,741) | (37,812,312) | 10,143,571 | 35,071,139 | 5,450,411 | 29,620,728 |
| Armilar Venture Funds | (200,018) | (200,018) | - | (997,904) | (997,904) | - |
| ZOPT | 10,555,528 | - | 10,555,528 | 20,656,000 | - | 20,656,000 |
| Others Profit before income tax |
(6,383,001) (88,274,318) |
- (66,869,710) |
(6,383,001) (21,404,608) |
2,159,322 66,367,523 |
- 5,882,609 |
2,159,322 60,484,914 |
| Income Tax | 6,049,057 | 2,538,138 | 3,510,919 | (3,924,650) | (3,189,000) | (735,650) |
| Profit/(Loss) from continued operations | (82,225,261) | (64,331,572) | (17,893,688) | 62,442,873 | 2,693,609 | 59,749,264 |
| Profit/(Loss) from discontinued operations | (2,033,879) | (900,000) | (1,133,879) | 1,722,066 | 5,031,033 | (3,308,967) |
| Profit/(Loss) for the period | (84,259,140) | (65,231,572) | (19,027,567) | 64,164,939 | 7,724,642 | 56,440,297 |
| Attributable to equity holders of Sonae | (74,756,306) | (62,636,561) | (12,119,745) | 37,975,148 | 1,014,230 | 36,960,918 |
| Non-controlling interests | (9,502,834) | (2,595,012) | (6,907,822) | 26,189,791 | 6,710,412 | 19,479,379 |
| "Underlying" EBITDA (b) | 228,557,377 | 241,457,319 | ||||
| EBITDA (a) | 256,081,476 | 279,322,428 | ||||
| EBIT (c) | 32,176,308 | 113,759,770 |
On 4 August, Sonae, SGPS, S.A., informed that its subsidiary Sonae MC, SGPS, S.A. (Sonae MC) issued a bond loan, by private subscription, in the amount of 50,000,000 euros, without guarantees and with maturity on 30 July 2025, and its admission to trading on the Euronext Lisbon Access market, under the name "SONAE MC 07/2020 - 2025.
Sonae, SGPS, S.A. also announces that Sonae MC has completed three additional medium and long-term refinancing operations totalling 122,500,000 euros. These operations were carried out under very competitive market conditions, once again underscoring the stalwart nature of the Company and its robust capital structure.
On 5 August, Sonae - SGPS, SA informed that its subsidiary Sonae MC SGPS, SA (Sonae MC) concluded the sale and leaseback of 4 food retail assets located in Portugal. As a result of this operation, which totalled 34 million euro, Sonae MC's freehold level of retail assets now stands at 41%.
On 19 August, Sonae – SGPS, SA informed to have signed, with Banco BPI, SA, a sale and purchase agreement for the purpose of acquiring, in an over-the-counter transaction, 38,000,000 (thirty eight million) shares representing 7.38% (seven point thirty eight percent) of the share capital and voting rights of the public company NOS, SGPS, SA ("NOS"), at market price.
As a result of this transaction, Sonae shall be attributed the voting rights pertaining to 306,644,537 (three hundred and six million, six hundred and forty four thousand and five hundred and thirty seven) NOS shares, corresponding to a shareholding of 59.52% (fifty nine point fifty two percent) of the share capital and voting rights of NOS, through a direct shareholding of 7.38% (seven point thrity eight percent) and an indirect shareholding of 268,644,537 (two hundred and sixty eight million, six hundred and forty four thousand and five hundred and thirty seven) NOS shares, representing 52.15% (fifty two point fifteen percent) of NOS share capital and voting rights by means of the joint control exercised trough its subsidiary, the public company Sonaecom, SGPS, SA ("Sonaecom"), over the company ZOPT, SGPS, S.A. ("ZOPT").
Sonae additionally informs that, on the date of execution of the dissolution of ZOPT, as announced to the market on 19 august by Sonaecom, a controlling shareholding in NOS of 33.45% (thirty three point forty five percent) of said company's share capital and voting rights will continue to be attributable to Sonae through the direct holding of the aforementioned shareholding of 7.38% (seven point thirty eight percent), and by the maintenance of the indirect ownership of the voting rights pertaining to half of the aforesaid shareholding of 52.15% (fifty two point fifteen percent) that, as a result of the proportional distribution of assets between ZOPT shareholders, will still be attributable to Sonae's subsidiary Sonaecom.
The financial statements were approved by the Board of Directors in a meeting held on 26 August 2020.
The Board of Directors,
Duarte Paulo Teixeira de Azevedo Ângelo Gabriel Ribeirinho dos Santos Paupério José Manuel Neves Adelino Margaret Lorraine Trainer Marcelo Faria de Lima Carlos António Rocha Moreira da Silva Fuencisla Clemares Philippe Cyriel Elodie Haspeslagh Maria Cláudia Teixeira de Azevedo João Pedro Magalhães da Silva Torres Dolores
Shares held and voting rights attributable to shareholders owning 2% or more of the share capital of the Sonae - SGPS, S.A., calculated according to article 20 of the Portuguese Securities Code, as required by article 8 paragraph 1, subparagraph c), of the Portuguese Securities Market Commission (CMVM) Regulation no. 05/2008:
| Shareholder | Nr. of shares | % Share capital and voting rights* |
% of exercisable voting rights** |
|---|---|---|---|
| Efanor Investimentos, SGPS, S.A. (I) | |||
| Directly | 200,100,000 | 10.0050% | 10.0050% |
| By Pareuro, BV (controlled by Efanor Investimentos, SGPS, S.A.) | 849,533,095 | 42.4767% | 42.4767% |
| By Maria Margarida CarvalhaisTeixeira de Azevedo (Director of Efanor Investimentos, SGPS, S.A.) |
14,901 | 0.0007% | 0.0007% |
| By Maria Cláudia Teixeira de Azevedo (Director of Efanor Investimentos, SGPS, S.A.) | 724,707 | 0.0362% | 0.0362% |
| By Duarte Paulo Teixeira de Azevedo (Director of Sonae, SGPS, S.A. and Efanor Investimentos, SGPS, S.A.) |
1,053,075 | 0.0527% | 0.0527% |
| By Ângelo Gabriel Ribeirinho dos Santos Paupério (Director of Sonae, SGPS, S.A. and Efanor Investimentos, SGPS, S.A.) |
444,625 | 0.0222% | 0.0222% |
| By Migracom, S.A. (company controlled by Efanor Investimentos, SGPS, S.A and Sonae, SGPS, S.A.'s Director Duarte Paulo Teixeira de Azevedo) |
3,198,524 | 0.1599% | 0.1599% |
| By Linhacom, SGPS, S.A. (company controlled by Efanor Investimentos, SGPS, S.A and Sonae, SGPS, S.A.'s Director Maria Cláudia Teixeira de Azevedo) |
189,314 | 0.0095% | 0.0095% |
| By Enxomil - Consultoria e Gestão, SA (company controlled by Efanor Investimentos, SGPS, S.A and Sonae, SGPS, S.A.'s Director Ângelo Gabriel Ribeirinho dos Santos Paupério) |
2,021,855 | 0.1011% | 0.1011% |
| By Enxomil - Sociedade Imobiliária, SA (company controlled by Efanor Investimentos, SGPS, S.A and Sonae, SGPS, S.A.'s Director Ângelo Gabriel Ribeirinho dos Santos Paupério) |
662,987 | 0.0331% | 0.0331% |
| By Carlos António Rocha Moreira da Silva (Director of Efanor Investimentos, SGPS, S.A.) | 22,000 | 0.0011% | 0.0011% |
| Total attributable to Efanor Investimentos, SGPS, S.A. | 1,057,965,083 | 52.8983% | 52.8983% |
| Banco BPI, S.A. | 96,034,789 | 4.8017% | 4.8017% |
| Total attributable to Banco BPI, S.A. (II) | 96,034,789 | 4.8017% | 4.8017% |
| Criteria Caixa, S.A. | 40,019,035 | 2.0010% | 2.0010% |
| Total attributable to Criteria Caixa, S.A. | 40,019,035 | 2.0010% | 2.0010% |
Source: communications received by the Company regarding qualified shareholdings up to 30th June 2020.
(I) As from 29th November 2017, Efanor Investimentos SGPS, SA ceas ed to have any controlling shareholder purs uant to the set forth in articles 20 and 21 of the Portugues e Securities Code.
*** Total number of voting rights attributed to Banco BPI, S.A. as per article 20 of the Portugues e Securities Code. Banco BPI is part of CaixaBank group, which holds 100% of Banco BPI's s hare capital, according to the disclos ure made by Banco BPI to the market on the 5th April 2019 at www.cmvm.pt.
* Voting rights calculated based on the Company's share capital with voting rights, as per s ubparagraph b) of paragraph 3 of article 16 of the Portuguese Securities Code.
**Voting rights calculated bas ed on the Company's share capital with voting rights that are not s ubject to s us pension of exercise.
The signatories individually declare that, to their knowledge, the Management Report, the Consolidated and Individual Financial Statements and other accounting documents required by law or regulation were prepared meeting the standards of the applicable International Financial Reporting Standards, giving a truthful (fairly) and appropriate image, in all material respects, of the assets and liabilities, financial position and the consolidated and individual results of the issuer and that the Management Report faithfully describes the progress of the business and position of the issuer and of the companies included in the consolidation perimeter and contains a description of the major risks and uncertainties that they face.
Maia, 26 of August 2020
The Board of Directors
This document may contain forward-looking information and statements, based on management's current expectations or beliefs. Forward-looking statements are statements that should not be regarded as historical facts.
These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, including, but not limited to, changes in regulation, industry and economic conditions; and the effects of competition. Forward-looking statements may be identified by words such as "believes," "expects," "anticipates," "projects," "intends," "should," "seeks," "estimates," "future" or similar expressions.
Although these statements reflect our current expectations, which we believe are reasonable, investors and analysts, and generally all recipients of this document, are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. You are cautioned not to put undue reliance on any forward-looking information or statements. We do not undertake any obligation to update any forward-looking information or statements.
Patrícia Vieira Pinto Head of Investor Relations [email protected] Tel.: + 351 22 010 4794
External Communication [email protected] Tel.: + 351 22 010 4747
Lugar do Espido Via Norte 4471-909 Maia Portugal Tel.: +351 22 948 7522
Sonae is listed on the Euronext Stock Exchange. Information may also be accessed on Reuters under the symbol SONP.IN and on Bloomberg under the symbol SON PL
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