Sonaecom SGPS

Management Reports • Aug 30, 2019

SONAECOM

MANAGEMENT REPORT & ACCOUNTS

THEFT

The consolidated financial information disclosed in this report is bosed on unaudited financial statements, prepared in accordance with the International Financial Reporting Standards (AS/IFRS), issued by the International Accounting Standards Board (ASB), as adopted by the
European Union.

Table of contents

I MANAGEMENT REPORT
1. Main Highlights	5
2. Sonaecom Consolidated Results	5
2.1 Telecommunications	б
2.2 Technology	7
2.3 Media	10
3. Subsequent events	10
4. Appendix	11
5. Sonaecom Individual Results	13
5.1. Operational data	13
5.2. Financial data	14
6. Corporate Governance	15
7. Qualified Holdings	16
8. Declaration for the purpose of Article 246 of CVM (Portuguese Security Code)	17
II FINANCIAL STATEMENTS
9. Financial Information	19
9.1. Sonaecom consolidated financial statements	19
9.2. Notes to the consolidated financial statements of Sonaecom	26
9.3. Sonaecom separate financial statements	88
9.4. Notes to the separate financial statements of Sonaecom	94

I - MANAGEMENT REPORT

1. Main Highlights

Consolidated turnover of 100.5 million euros increasing 27.3% y.o.y, or 12.2% on a comparable basis

NOS presenting a sustained solid revenue performance in Telco, with strong recovery in Cinemas & Audiovisuals in the 2019

Technology revenues reaching 92.8 million euros, growing 29.7% on a comparable basis, and with International markets weighting almost 50%

Total EBITDA decreasing to 24.5 million euros, mainly explained by the captal with Outsystems financing round occurred in the 1H18

ど. Sonaecom Consolidated Results

Introductory notes:

As from 1Q19, Sonaecon's accounts are reported applying iFRS 16, primarily of operating lease contracts. Restored while for the corresponding periods in 2018 are presented in this report.

On March, Sonae IM sold the total share capital of Saperation, Sonaecom adjusted the 2018 and the 1Q19 projit and loss statements on a pro-forma basis, assuming Saphety contribution as a discontinued operation since January 2018.

Telecommunications area, which includes a 50% stake in ZOPT - consolidated through the equity method – which owns 52.15% stake in NDS, presented, in the 2019, a sustained solid revenue performance in Cinemas & Audovisuals, and an EBITDA expansion above revenue growth, positively impacting margin. Despite higher by the transformational investments on fixed and mobile network, continued to present a year on year FCF improvement.

During the 1H19, Technology area, besides reinforcing in some portfolio companies, has entered in the capital of five new companies, three of which in early stage.

Also in the 1H19, and aligned with its active portfolio management strategy, Sonae IM sold 100% of its Saphety's of management team, backed by Oxy Capital.

Turnover

Consolidated turnover in 1H19 reached 100.5 million euros, increasing 27.3%, when compared to 1H18, or 12.2%, on a comparable basis, assuming the same portfolio companies in both periods.

This positive evolution was driven by both Media and Technology area, the latter presenting a growth of 29.7%, on a comparable hasis.

Operating costs

Operating costs amounted to 102.9 million euros, 32.8% above 1H18. Personnel costs grew 35.2% reflecting the increase number of employees, driven by the consolidation of Nextel and Excellium. Commercial costs increased 36.0% to 47.4 million euros, mainly driven by the higher cost of goods sold, aligner level of sales. Other operating costs increased 21.1%, mainly explained by the higher level of Outsourcing costs, also explained by the consolidation of Nextel and Excellium.

EBITDA

Total EBITDA stood at 24.5 million euros or 19.5 million euros excluding non-recurrent itens that correspond to the capital generated by Saphety's sale. The equity results, mostly driven by ZDPT contribution which, in turn, depends on NDS net income evolution, increased to 20.2 million euros. Underlying EBITDA stood at negative 0.9 million euros versus 1H18, strongly impacted by the negative contribution of the new consolidated companies.

Net results

Sonaecom's EBIT decreased to 17.0 million in 1H18, explained by the lover level of EBITDA and the higher level of depreciations.

Net financial results stood at negative 0.4 million euros in 1H19 that compares with positive 0.04 million in the previous year.

Sonaecom's earnings before tax (EBT) decreased from 53.9 million to 16.6 million euros, driven by the lower EBIT and financial results.

lndirect results reached negative 0.8 million euros, that compare with positive 6.9 million euros in 1H18, impacted by Armilar Venture Funds' portfolio fair value adjustments.

Net results group share stood at 17.5 million euros, below the 49.8 million euros presented in 1H18.

Operating CAPEX

Sonaecom's operating CAPEX increased to 9.5 million euros, reaching 9.4% of turnover, 2.7 p.p. above 1H18. Excluding the IFRS 16 impact, operating CAPEX would be 3.8 million euros, in line with 1H18, also without IFRS 16.

Capital structure

The net cash position stood at 187.0 million euros since December 2018. Excluding IFRS 16 impacts, Net cash position stood at 203.5 million below December 2018, driven by 4.7 million of investment cash-out, the negative operating cash flow of 10.4 million euros and the 34.2 million euros of dividends distribution, despite the 35.5 million euros of dividends from ZDPT.

2.1 Telecommunications

NOS operating revenues were 781.7 million euros in 1H19, growing 1.2% y.o.y..

EBITDA reached 331.9 million euros, increasing 2.5% when compared to 1H18 and representing a 42.5% EBITDA margin. CAPEX amounted to 207.5 million euros in 1H19, an increase of 2.3% y.o.y. As a consequence of EBITDA and CAPEX evolution, EBITDA-CAPEX increased 2.7%.

At the end of 1H19, total net debt including leasings and long-term contracts (according to IFRS 16) amounted to 1,376,1 million euros. Net Financial Debt/EBITDA after lease payments (last 4 quarters) now stands at 2.0x EBITDA, and with an average maturity of 3.1 years.

NOS published its 1H19 results on 22നd July 2019, which are available at www.nos.pt.

During 1H19, NOS share price increased 9.2% from €5.295 to €5.78, whilst PS120 increased by 8.6%.

Operational Indicators

Million euros
Operational Indicators ('000)	2018 (H)		2019	1019	Q.O.Q.	1H18 (K)	1419
Total RGUs	9.483.4	9.583.5	1.1%	9.556.5	0.3% -	9.483.4	9.583.5	1.1%
Convergent RGUs	3.812.1	3.927.0 -	3.0% - - - -	3.916.6	0.3% -------------------------------------------------------------------------------------------------------------------------------------------------------------------------	3.812.1	3.927.0	3.0%

Financial indicators

Million euros
NOS HIGHLIGHTS	2018 (K)	2019	v 19/18	1019	q.o.q.	1H18 (K)	lərin fəsiləsinin cinsinə aid bitki növü. İstinadlar Respublikasının fəsiləsinin cinsinə aid bitki növü. İstinadlar Respublikasının fəsiləsinə cinsinə aid bitki nö
Operating Revenues	389.3	396.4	1.8%	385.3	29%	772 3	781.7	1.2%
EBITDA	166.6	171.2	2.8%	160.7	6.5%	324.0	3319	25%
EBITDA margin (%)	42.8%	43.2%	0.4pp	41.7%	1.5pp	419%	425%	0.5pp
Net Income	449	47.7	6.4%	425	12.4%	79.8	90.2	13.0%
CAPFX	103.7	116.5	123%	91.0	28.1%	202.8	207.5	23%
EBITDA-CAPEX	62.9	54.7	-13.0%	69.7	-21.6%	121.1	124.4	2.7%

(R) The values were restated in order to reflect IFRS16 applicationimpacts

2.2 Technology

The Technology area aims to build and manage a portfolio of technology businesses around retail and telecommunications, as well as cupersecurity, with an international scale. This area currently comprises, alongside with minority stakes, Bright Pixel and Vector I fund, five controlled companies - WeDo Technologies, S21Sec, Bizdirect, Inovretail and Excellium- that generated circa 46.9% of its revenues outside the Portuguese market with 51.8% out of the total 1,279 employees based abroad.

Controlled Companies

WeDo Technologies is a worldwide leader in Revenue and Fraud Management that works with more than 180 telecommunications operators in over 100 countries. The international markets represented 78.8% of its turnover.

WeDo Technologies' market leadership was recognized by Stratecast Communication Services Providers Financial Assurance Market Leadership) and Gartner named WeDo as Vendor to Watch in its Report.

During 1H19, WeDo acquired six new telco customers based in Phlippines, Fiji Islands, Trinidad and Portugal.

S21Sec is a reference multinational MSSP (Managed Security Services Provider), focused on the delivery of cyber security services and development of proprietary supporting technologies, with a global customer base, leveraging its teams in Spain, Portugal and Mexico. Since June 2018, with the integration of Nextel, S21Sec is the most recializing exclusively in the cybersecurity sector) in Spain and Portugal in terms of turnover of cybersecurity experts.

Excellium is a market-leading managed security services with presence in Belgium and counting with more than 100 experts. Sonae Minvestment, at the end of 2018, was aimed both at accelerating growth through a capital raise and acquisition of a majority stake.

This investment, together with the stake on S21sec, turns Sonae M's cybersecurity group as one of the most relevant cybersecurity services pure players in Europe, counting with more than 500 professionals and direct presence in 13 cities across 6 countries.

The significant European scale and cross-country presence of this group of cybersecurity companies will be key to address the increasingly challenging needs of all organizations and specially the requirements of those large and multi-national of the European space, while ensuring agile and fast response from specialized teams close to the customer.

Bizdirect is a technology company specialization, consulting and management of corporate software licensing contracts and Microsoft solutions integration.

During 1H29, the cloud business unit continued to improve its presence on helping customers in digital transformation and the solutions business unit achieved important new customer center, in Viseu, contributed to the international revenues that already represent 6.1% of total revenues.

InovRetail is a retail innovation company that provide data science solutions and digital tools that deliver quantifiable insights and actionable recommendations with direct and sustainable impact on retrics. The company's main product is the Staff Empowerment Solution, a SaaS based solution that help reas like Sales Performance Enhancement; Customer Experience Optimisation and Advanced Planning & Scheduling.

Bright Pixel is a company builder studio whose goal is to transform the way companies address innovation. Bright Pixel is managing a venture lifecule going from experimentation and lab phases that have the objects that should be brewed in its incubation program. Bright Pixel invests and supports the development of internally brewed projects as well as assisting their first batch of invited startups in their product development roadmap and market rollout.

Bright Pixel is also investing in events, like its activity to the tech community as well as promoting a close relationship with its partners, by developing quick proof of concepts aimed at resolving technology and business retail, media, cubersecurity and telecommunications.

Minority Stakes (non-exhaustive)

Probe.ly, having started as an internal project of Bright Pixel, won the Coixo Copital Empreender Award (minimum valuable product) to an independent Web Application Security startup.

Armilar Venture Funds are the 3 Venture Capital funds in which Sonae IM owns participation units acquired to Novo Banco. With this transaction, concluded in December 2016, Sonae M reinforced its portfolio with sizeable stakes in leading edge as Outsustems and Feedzai, both consistently presenting meaningful and sustains of growth. During 2018, Sonae M recorded a significant capital gain with the AVP II Fund capital distribution subsequent to the partial sale of Outsystems.

Stylesage is a strategic analytics SaaS platform that helps fashion, home and beauty retailers and brands with critical pre, in and post season decisions globally. Every day, StyleSage pulls product data from competitors' ecommerce websites from with groundbreaking technology in machine and visual recognition, StyleSage cleans, organizes, and analyzes the massive amounts of collected data into a cloud-based dashboard thands and retailers to make informed, data-driven decisions in areas such line planning, markdown optimization, and global expansion.

Ometria is a London based Al powered custom with the vision to become the central hub that powers all the communication between retailers and their customers. This investment was done by Sonae M in the Series A round, alongside several strategic investors (including Summit Action, the US VC fund of the Summit Series) and was recently reinforced during an internal round.

Secucloud is a Germany based company that provides a cloud security platform for protecting and operating systems with no installation required, offered to Telcos & ISPs as a white label subscribed the multi million Series B financing round.

ArcticWolf, a US based campany, is a gobal pioneer in the SOL-as-a-Sevice market with cutting-edge managed detection and response (MDR), which provides a unique combination of technology and services to quickly detect and contain threats. US technology investors Lightspeed Venture Partners and Redpoint were joined by Sonae M and Knollwood Investment Advisory in the series Bround. During 2018, the Company closed a \$45M Series C round at a significant higher valuation, in which Sonae IM participated reinforcing its stake.

Continuum Security is a Spanish based company with an application to address vunerabilities early in the development process. In order to realise their international growth plans, the company has raised an investment round of 1.5million euros, which was led by Swaanlaab Venture Factory and joined by JME Venture Capital and Sonae IM.

Iscrambler is a Portuguese startup that develops a security solution to protect Web and Mobile Applications (Javascript code). The company raised a 2.3 million dollars in a series A financing round that was led by Sonae IM with the co-investment of Portugal Ventures.

Nextail is a Spanish company that has developed a cloud-based platform that combines and prescriptive analytics to upgrade retailers' inventory management processes and store operations. The company raised a \$10.0 million Series A round led by London and Amsterdam based venture capital firm KEEN Venture Partners LLP ("KEEN"), together with Sonae M and existing investor Nauta Capital. The new financing is being used to accelerate product development and double the size of the team, as it grows internationally.

Case on IT is a Spanish company that has developed Medux, a machine learning solution for the measurement, prediction and analysis of landline, mobile and television services the customer experience in markets that collectively seve over 600 million users worldwide. The company raised a Series B round of international fund with Sonae IM.

Reblaze is an Israeli company that proprietary security technologies in a unified platform, shielding assets from threats found on the Internet. The company raised a Series A round in which Sonae IM led jointly with JAL Ventures and Data Point Capital.

CiValue is an Israeli company with offices in New York, Paris, and Tel Aviv, is a disuptive provider of cloud-based Precision Marketing and Supplier Advertising Platforms for Retailers. Sonae IM, coupled with Nielsen, led a \$6M Series A investment.

Visenze is a Singapre-based company that deligent image recognition solutions that shorten the pation as consumers search and discover on the visual web. Retailers use ViSenze to convert images into immediate product search opportunities, improving conversion rates. Media companies use ViSenze to turn an engagement opportunity, driving incremental revenue. Sonae IM co-led, with Gobi Partners, a \$20M Series C round that will enable the artificial intelligence company to further invest in its penetration among smartphone manufacturers, as well as with consumer and social communication applications.

CB4 is a company based in Israel that provides a patented Al software solution for brick and mortar critical operational issues at store, product level. The investment was part of a series B \$16M round, led by joining, Existing investors Sequoia Capital and Pereg Ventures also participated in the round.

Cellwize is a leading provider of Mobile Network Automation solutions for telco, based in Israel. Cellwize offers modular solutions for an agile adoption of 'zero-touch' network and of a virtualized service orchestration platform. It supports network operations, especially given the increase in network driven by 5G adoption. Sonae IM invested in a series B round of \$15M led by Deutsche Telekom Capital Partners.

Financial indicators

	Million euros

TECHNOLOGY AREA	2018 (R)	2019	v 19/18	1019	0.0.q.	1H18 (R)	1H19	v 19/18
Turnover	40.2	48.7	21.2%	44.1	10.4%	71.6	92.8	29.7%
Service Revenues	20.0	23.6	17.7%	23.4	0.9%	38.1	46.9	23.2%
Sales	20.1	25.1	24.8%	20.8	21.1%	33.5	45.9	37.2%
Other Revenues	0.2	0.6	174.5%	0.6	-9.5%	0.3	1.2
Operating Costs	38.0	48.9	28.4%	44.9	8.9%	68.3	93.7	37.2%
Personnel Costs	11.1	16.0	44.4%	16.3	-1.9%	22.8	32.4	41.7%
Commercial Costs(1)	20.4	25.0	22.5%	20.7	20.8%	33.1	45.6	38.1%
Other Operating Costs(2)	6.6	79	19.8%	7.8	0.2%	12.4	15.7	26.7%
EBITDA	40.7	0.2	-99.6%	4.6	-96.7%	41.6	4.8	-88.6%
Underlying EBITDA(3)	23	0.4	-82.3%	-0.1		36	0.3	-91.3%
Non recurrent itens (4)	38.3	0.0	-100.0%	4.8	-100.0%	38.3	48	-87.5%
Equity method(5)	-0.1	-0.3	-180.0%	-0.3	8.8%	-0.5	-0.5	-8.5%
Discontinued Operations(6)	0.2	0.0	-100.0%	0.2	-100.0%	0.2	0.2	3.5%
Underlying EBITDA Margin (%)	5.8%	0.8%	-5.0pp	-0.2%	1.1pp	5.0%	0.3%	-4.7pp
Operating CAPEX(7)	27	2.2	-21.2%	6.3	-65.6%	4.8	8.4	77.3%
Operating CAPEX as % of Turnover	6.8%	4.4%	-2.4pp	14.2%	-9.8pp	6.6%	9.1%	2.4pp
Underlying EBITDA - Operating CAPEX	-0.4	-1.7		-6.4	72.6%	-1.1	-8.1
Total CAPEX	10.7	8.4	-22.0%	13.8	-39.4%	14.5	22.1	52.9%

(1) Commerial Costs = COSS + Mtg& Sales (2) Other Opening Services + G&A + Provisions + others, (3) hridules the businesses fully consolidated Technology are; (4) ncludes the carial and Saphety's sale; (5) hidudes the 50% holding in Bg Data, the 27.45% holding in Secudoudant the 2.28% holdnigin Probelly, 5) holudes Saphery contibution until the sale; 7) Qerating OPE: excludes were restated in oder to reflect FRSS appication impacts and Sonacomstructure ater Sphety sales

Turnover

Turnover increased 29.7% you, fuelled by the integration of Nextel and Excellium. On a comparable basis, assuming the same portfolio companies in both periods, Turnover increased by 12.9%.

Operating costs

Operating costs increased 37.2% to 93.7 million euros. Staff costs increased 41.7% driven by the growth in the number of employees, mainly driven by Nextel and Excellium consolidation. Commercial costs increased 38.1% mainly driven with the higher level of sales. Other operating costs increased 26.7%, mainly explained by the higher level of Dutsourcing Costs, also explained by the enlarged portfolio.

EBITDA

EBITDA reached 4.8 million euros, or break even excluding non-recurrent itens related with the capital gashety's sale. Underlying EBITDA stood at 0.3 million euros presented in 1H18, significantly impacted by the consolidation of the new cybersecurity companies.

Underlying EBITDA-operating CAPEX

Underlying EBITDA-operating CAPEX stood at negative 8.1 million euros, decreasing when compared to the higher level of Operating CAPEX but also driven by the lower EBITDA. Excluding the IFRS 16 impacts, operating CAPEX would have reached 3.4 million euros, in line with 1H18, also without IFRS 16.

2.3 Media

During 1H19, Público continued to pursue its digital competencies and presence in online platforms and continued to implement important initiatives aimed at strengthening Público as the reference Portuguese speaking news organisation.

The positive performance of online subscriptions, newspaper sales and advertising offline translated into an overall when compared to 1H18.

3. Subsequent events

On July 10th, Sonae M reached an agreement with Mobileum") according to which Sonae IM would sell to Mobileum the entire share capital and voting rights of WeDo Consulting – Sistemas de Intransaction was subject to the fulfilment of a
set of requirements agreed between the parties, which were m

The transaction price comprises a fixed amount of 70 million USD and a variable and deferred amount, depending on the performance of the combined businesses, until 31 December 2021, with a maximum value of 27 million USD.

4. Appendix

Consolidated income statement

Million euros

CONSOLIDATED INCOME STATEMENT	2018 (R)	2019	ﺔ 19/18	1019	d.o.q.	1H18 (R)	1419	ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤ
Turnover	44.2	52.9	19.9%	47.6	11.2%	79.0	100.5	27.3%
Service Revenues	21 ਰ	25.6	17.0%	24.7	3.7%	41.3	50.4	22.0%
Sales	22.2	27.3	22.7%	22.9	19.3%	37.7	50.2	33.1%
Other Revenues	0.4	0.6	33.2%	0 ਰ	-35.8%	0.7	14	98.8%
Operating Costs	42.9	53.5	24.6%	49.4	8.2%	77.4	102.9	32.8%
Personnel Costs	135	18.4	36.5%	19.0	-3.1%	27.6	37.3	35.2%
Commercial Costs(1)	21.3	26.0	21.9%	21.4	21.2%	34 9	474	36.0%
Other Operating Costs(4)	8.1	91	12.0%	9.0	1.2%	15.0	18.1	21.1%
EBITDA	50.6	10.9	-78.5%	13.7	-20.5%	59.5	24.5	-58.8%
Underlying EBITDA(3)	17	0.0	-98.2%	-0.9		23	-0.9
Non recurrent itens 4)	38.3	0.0	-100.0%	5.0	-100.0%	38.3	5.0	-86.8%
Equity method(5)	10.5	10.8	2.8%	ਰ ਤ	15.9%	18.8	20.2	7.2%
Discontinued Operations 6)	0.2	0.0	-100.0%	0.2	-100.0%	0.2	0.2	-5.8%
Underlying EBITDA Margin (%)	3.8%	0.1%	-3.7pp	-1.9%	2.0pp	2.9%	-0.9%	-3.7pp
Depreciation & Amortization	3.2	4.1	30.8%	3.4	21.5%	5.7	75	32.8%
EBIT	47.5	6.7	-85.8%	10.3	-34.4%	53.9	17.0	-68.4%
Net Financial Results	0.4	-0.5		0.1		0.0	-0.4
Financial Income	1.4	0.6	-53.5%	11	-40.9%	24	1.7	-27.2%
Financial Expenses	1.0	11	12.5%	1.0	8.4%	23	21	-8.7%
FBT	47.9	6.3	-86.9%	10.3	-39.4%	53.9	16.6	-69.2%
Tax results	-10.7	0.0		0.6	-97.7%	-10 d	0.7
Direct Results	37.1	6.3	-83.1%	11.0	-42.8%	43.0	17.3	-59.8%
Indirect Results(1)	7.4	-0.9		0.1		6.9	-0.8
Net Income	44.5	5.4		11.1		49.9	16.5	-67.0%
Group Share	44.5	6.2	-86.1%	11.3	-44.9%	49.8	175	-64.9%
Attributable to Non-Controlling Interests	0.0	-0.8		-0.2		0.1	-1.0

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Consolidated balance sheet

CONSOLIDATED BALANCE SHEET	2018 (R)	2019	ﺍﻟﻤﺮﺍﺟﻊ	1019 (k)	q.o.q.	1H18 (R)	1H19	ﺍﻟﻤﺴﺎﻓﺮ ﺍﻟﻤﺮﺍﺟﻊ
Total Net Assets	1 176.2	1189.2	1.1%	1 219.0	-2.4%	1176.2	1189.2	1.1%
Non Current Assets	848.5	897.0	5.7%	9211	-2.6%	848.5	897.0	5.7%
Tangible and Intangible Assets	35.4	44.2	25.0%	46.1	-4.0%	35.4	44.2	25.0%
Goodwill	25.1	36.3	44.6%	36.3	-0.1%	251	36.3	44.6%
Investments	774.9	799.6	3.2%	823.5	-2.9%	774.9	799.6	3.2%
Deferred Tax Assets	10.8	11.0	1.7%	10.6	3.1%	10.8	11.0	1.7%
Others	23	5.8	156.6%	4.6	26.7%	23	5.8	156.6%
Current Assets	327.7	292 3	-10.8%	297 g	-1.9%	327.7	292 3	-10.8%
Trade Debtors	45.1	48.7	8.1%	42.0	16.0%	45.1	48.7	8.1%
Liquidity	251.0	211.0	-15.9%	224.2	-5.9%	251.0	211.0	-15.9%
Others	31.6	326	3.0%	31.6	2.9%	31.6	326	3.0%
Shareholders' Funds	1 053.1	1048.9	-0.4%	1080.2	-2.9%	1 053.1	1048.9	-0.4%
Group Share	1 054.3	1 048.4	-0.6%	1079.9	-2.9%	1 054.3	1 048.4	-0.6%
Non-Controlling Interests	-1.2	05		0.3	71.9%	-1.2	0.5
Total Liabilities	123.1	140.3	14.0%	138.7	1.1%	123.1	140.3	14.0%
Non Current Liabilities	41.5	59.6	43.7%	60.6	-1.6%	41.5	59.6	43.7%
Bank Loans	4.0	27	-33.7%	27	-0.4%	4.0	27	-33.7%
Provisions for Other Liabilities and Charges	20.5	22.4	9.7%	23.3	-3.7%	20.5	22.4	9.7%
Others	17.0	34.5	103.1%	34.6	-0.3%	17.0	34.5	103.1%
Current Liabilities	81.6	80.7	-1.1%	78.1	3.2%	81.6	80.7	-1.1%
Loans	3.6	4.0	11.2%	3.3	23.5%	3.6	4.0	11.2%
Trade Creditors	24.7	23.8	-3.6%	19.7	21.3%	24.7	23.8	-3.6%
Others	53.2	52.8	-0.7%	55.2	-4.4%	53.2	52.8	-0.7%
Operating CAPEX(1)	31	25	-17.6%	ਦ ਰੇ	-63.6%	53	95	78.9%
Operating CAPEX as % of Turnover	6.9%	4.8%	-2.2pp	14.6%	-9.8pp	6.7%	9.4%	2.7pp
Total CAPEX	11.0	8.7	-20.9%	145	-39.6%	15.0	23.2	54.3%
Underlying EBITDA - Operating CAPEX	-1.4	-2.5	-78.7%	-7.9	68.2%	-3.0	-10.4
Gross Debt	15.8	23.9	51.4%	235	2.0%	15.8	23.9	51.4%
Net Debt	-235.2	-187.0	20.5%	-200.7	6.8%	-235.2	-187.0	20.5%
(1) Operating CADEV ovelydoc Einspeigh proctmonto

(1) Dperating CAPEX excludes Financiallyesments;
(R) The values were reflectleRSD application impacts and Sonaecom structure after Saphety sale.
The Balance Shee of 2018 a

Consolidated levered FCF

Million euros

LEVERED FREE CASH FLOW	2018 (K)	2019	ﺍﻟﻤﺮﺍﺟﻊ	1019	q.o.q.	1H18 (K)	1H19	ﺍﻟﻤﺮﺍﺟﻊ
Underlying EBITDA-Operating CAPEX	-1.4	-2.5	-78.7%	-7.9	68.2%	-3.0	-10.4
Change in WC	-8.2	-5.1	38.7%	0.4		-5.1	-4.6	8.9%
Non Cash Items & Other	5.0	0.4	-915%	4.1	-89.8%	5.9	4.5	-23.0%
Operating Cash Flow	-4.7	-7.1	-52.2%	-3.3	-114.9%	-2.2	-10.4
Investments	47.2	-6.3		1.6		45.5	-4.7
Dividends	173	35.5	105.7%	0.0		17.3	35.5	105.7%
Financial results	1.2	-0.7		0.9		0.7	0.2	-70.2%
Income taxes	-0.1	-0.3		0.2		0.1	-0.1
FCF(1)	60.9	211	-65.3%	-0.6		61.3	20.5	-66.6%

5. Sonaecom Individual Results

5.1. Operational data

Sonaecom SGPS's individual results for the periods ended at 30 June 2018 are summarised as follows:

Million euros	1H18	1H19	Difference	%
Service Revenues	0.3	0.2	(0.1)	-37%
Operating Costs (1)	0.9	0.8	(0.1)	-6%
EBITDA	(0.7)	(0.7)	0.0	5%
EBIT	(0.7)	(0.7)	0.0	3%
Dividend Received	17.3	35.5	18.2	106%
Net Financial Activity	0.5	0.5	(0.0)	-4%
Other Financial Results	(1.6)	(1.5)	0.1	8%
EBT	15.4	33.8	18.4	119%
Net Income	15.4	33.8	18.4	120%

(1) Excluding depreciation, amortisation and provisions.

On 30 June 2019, the headcount of Sonaecom SGPS includes one director and seven employees.

Service revenues

Service Revenues totalled 0.2 million euros and it essentially comprises provided to its subsidiaries.

Total operational costs

Total operating costs, excluding depreciation charges and provisions, amounted to 0.8 million euros, which compares with 0.9 million euros in 1H18.

EBITDA

EBITDA was negative by 0.7 million euros, almost in line with the previous year.

Dividends received

In 1H19, Sonaecom received dividends from ZOPT, amounting to 35.5 million euros in 1H18).

Net financial activity

The net financial activity (interest income less interest expenses) was positive by 0.5 million euros, almost in line with the previous year.

Other financial results

Other financial results were negative by 1.5 million euros due to an impairment investments in the amount of 1.7 million euros. In 1H18, were negative by 1.6 million euros also due to an impairment recorded in the financial investments.

Net income

Net results for the year were positive by 33.8 million euros, significantly above 1H18, mainly driven by dividends.

5.2. Financial data

The following table summarises the major cash movements during the period ended at 30 June 2019:

Changes in Sonaecom SGPS Liquidity	Million euros
Sonaecom SGPS stand-alone liquidity as at 31 December 2018	212.7
Cash and Bank	210.8
Treasury Applications	19
Bank	0.0
Subsidiaries	19
Shareholder Loans and Supplementary capital granted	(0.9)
Dividend paid	(34.2)
Free Cash Flow	35.0
Interest paid	(0.0)
Interest received	0.4
Dividend received	35.5
Operational Free Cash Flow and others	(0.9)
Sonaecom SGPS stand-alone liquidity as at 30 June 2019	212.5
Cash and Bank	1481
Treasury Applications	64.4
Bank	50.0
Subsidiaries	14.4

During 1H19, Sonaecom's stand-alone liquidity decreased 0.2 million euros due to the following movements:

(i)

and despite,

The decrease in Loans granted to subsidiaries by 11.1 million euros; and

(iii)

6. Corporate Governance

Sonaecom's detailed annual Corporate Governance Report is an integral part of Sonaecom's 2018 Annual Report and is disclosure on the Company's website (www.sonae.com)

The company´s website also contains a section on Corporate Governance.

7. Qualified Holdings

Qualified holdings

ln compliance with sub-paragraph b), number 1, of the CMW Regulation no. 06/2008, we declare the qualifying holdings at 30 June 2019:

Shareholder	Number of shares	% of Share capital	% Share capital and voting rights *	% of exercisable voting rights **
Efanor Investimentos, SGPS, S.A.(4)
Directly
Sontel BV (company controlled by Sonae SGPS)	194.063.119	62.33%	62.33%	63.47%
Sonae- SGPS, S.A. (company controlled by Efanor SGPS,S.A)	81,022,964	26.02%	26.02%	26.50%
Total attributable (1)	275,086,083	88.36%	88.36%	89.97%

(1) Sonaecom SPGS, S.A is indirectly controlled company by Efanor') as of this company indirectly controls Sonae SGPS, S.A. and Sontel BV.

Efanor Investimentos SGPS, S.A., with effect from 29 November 2017, has no longer a controlling shareholder under the terms

* Voting rights calculated based on the Company's share capital with voting ights, as per subpragraph 3 of article 16 of the Portuguese Securities Code

**Voting rights calculated based on the Company's share capital with voting rights that are not subject to suspension of exercise

8. Declaration for the purpose of Article 246 of CVM (Portuguese Security Code)

The signatories individually declare that, to their knowledge, the Consolidated and Individual Financial Statements and other accounting documents required by law or regulation were prepared meeting the applicable International Financial Reporting Standards, giving a truthful (fairly) and appropriate image, in all material respects, of the assets and liablities, financial position and the consolidated and individual results of the Management Report faithfully describes the progress of the business and position of the companies included in the consolidation perimeter and contains a description of the major risks and uncertainties that they face.

The Board of Directors

Ângelo Gabriel Ribeirinho Paupério

Maria Cláudia Teixeira de Azevedo

João Pedro Magalhães da Silva Torres Dolores

Eduardo Humberto dos Santos Piedade

II - FINANCIAL INFORMATION

9. Financial Information

9.1. Sonaecom consolidated financial statements

Consolidated statement of financial position

For the periods ended at 30 June 2019 and 2018 (restated – note 1) and for the year ended at 31 December 2018 (restated – note 1)

(Amounts expressed in Euro)	Notes	June 2019 (not audited)	June 2018 (not audited and restated)	December 2018 (restated)
Assets
Non-current assets
Tangible assets	1.c and 5	2,941,094	2,956,024	3,381,652
Intangible assets	1.d, 1.e, 1.x and 6	25,662,694	24,650,291	29,375,733
Rights of use	1.h and 7	15,608,506	7,774,994	13,123,658
Goodwill	1.f, 1.x and 8	36,302,376	25,105,511	36,289,522
Investments in associated companies and companies jointly controlled	1.band 9	759,518,081	762,064,966	779,132,697
Investments at fair value through other comprehensive income	1.g. 4 and 10	40,117,853	12,871,427	28,101,682
Deferredtax assets	1.p, 1.t and 11	10,984,389	10,802,239	10,275,910
Other non-current assets	1.g, 1.r, 4 and 23	5,826,353	2,270,975	3,009,243
Total non-current assets		896,961,346	848,496,427	902,690,097
Lurrent assets
Inventories	1.i	406,293	509,502	369,870
Trade debtors	1.g, 1.j, 1.x., 4 and 23	48,726,193	45,091,533	50,960,546
Other current debtors	1.g, 1.j, 1.x, 4 and 23	9,109,879	7,374,977	8,591,940
Income tax receivable	1.pand 4	2,454,093	6,918,449	3,043,207
Other current assets	1.g, 1.r, 1.x, 4 and 23	20,596,696	16,813,103	17,051,088
Cash and cash equivalents	1.g, 1.k, 4 and 12	210,969,333	251,004,219	229,040,868
Total current assets		292,262,487	327,711,783	309,057,519
Total assets		1,189,223,833	1,176,208,210	1,211,747,616
Shareholders' funds and liabilities
Shareholders' funds
Share capital	13	230,391,627	230,391,627	230,391,627
Own shares	1.v and 14	(7,686,952)	(7,686,952)	(7,686,952)
Reserves	1.u	808,241,160	781,845,249	776,723,449
Consolidated net income/(loss) for the period		17,463,993	49,769,658	69,035,562
		1,048,409,828	1,054,519,582	1,068,465,686
Non-controlling interests		501.562	(1,170,265)	668.928
Total Shareholders' funds		1,048,911,390	1,053,149,317	1,069,132,614
Liabilities
Non-current liabilities
Non-current loans net of current position	1.g, 1.l, 1.m, 1.q, 4 and 15.a	2,683,489	4,044,592	3,677,091
Non-current lease liabilities	1.g, 1.h, 4 and 16	13,924,527	4,786,904	9,639,221
Provisions for other liabilities and charges	1.o, 1.t and 17	22,444,951	20,463,150	23,615,649
Deferred tax liabilities	1.p, 1.t and 11	13,706,204	11,557,874	13,930,732
Other non-current liabilities	1.g, 1.r, 1.y, 4, 23 and 29	6,869,847	646,115	7,294,586
Total non-current liabilities		59,629,018	41,498,635	58,157,279
Current liabilities
Current loans and other loans	1.g, 1.l, 1.m, 1.q, 4 and 15.b	4,034,348	3,627,273	5,209,946
Trade creditors	1.g. 4 and 23	23,830,830	24,719,979	18,941,483
Current lease liabilities	1.g, 1.h, 4 and 18		3,351,649	3,735,981
Other creditors	1.g. 4 and 23	3,293,066	18,773,418	14,440,264
Income tax payable	1.pand 4	14,769,190 254,392	191,422	310,220
Other current liabilities			30,896,517
	1.g, 1.r, 1.y, 4, 23 and 29	34,501,599		41,819,829
Total current liabilities		80,683,425	81,560,258	84,457,723
Total liabilities Total Shareholders' funds and liabilities		140,312,443	123,058,893 1.176.208.210	142,615,002 1.211.747.616
		1.189.223.833

The notes are an integral part of the consolidated financial statements.

The Chief Accountant

Consolidated income statement by nature

For the periods ended at 30 June 2019 and 2018 (restated – note 1) and for the year ended at 31 December 2018 (restated – note 1)

(Amountsexpressed in Euro)	Notes	June 2019 (not audited)	April to June 2019 (not audited)	June 2018 (not audited and restated)	April to June 2018 (not audited and restated)	December 2018 (restated)
Sales	1.s and 23	50,178,614	27,292,368	37,696,976	22,248,564	72,677,987
Services rendered	1.s and 23	50,364,237	25,637,864	41,270,339	21,909,736	88,550,100
Other operating revenues	1.qand 23	1,435,613	561,245	722,271	421,503	2,607,614
		101,978,464	53.491.477	79,689,586	44,579,803	163,835,701
Cost of sales	1i	(44,885,033)	(24,531,832)	(32,650,630)	(19,955,276)	(62,331,733)
External supplies and services	19 and 23	(20,123,004)	(10,298,007)	(16,801,028)	(9,204,943)	(35,872,821)
Staff expenses	1.y, 28 and 29	(37,342,926)	(18,379,029)	(27,613,233)	(13,463,065)	(59,593,020)
Depreciation and amortisation	1.c, 1.d, 1.f, 1. h, 1.x, 5, 6, 7 and 8	(7,517,595)	(4,123,193)	(5,662,862)	(3,153,326)	(13,654,690)
Provisions and impairment losses	1.j. 1.o. 1.x and 17	(226,151)	(123,310)	(214,819)	(205,625)	(1,206,276)
Other operating costs		(281,761)	(129,811)	(154,425)	(81,717)	(389,155)
		(110,376,470)	(57,585,182)	(83,096,997)	(46,063,952)	(173,047,695)
Gains and losses in associated companies and companies jointly controlled	1.b. 9 and 21	19,180,865	9,711,916	66.001.451	58,312,593	89,861,059
Other financial expenses	1.h. 1.m. 1.w. 1.x and 20	(2,142,205)	(1,114,445)	(2,347,071)	(990,705)	(4,569,388)
Other financial income	1.h. 1.w and 20	1,734,281	644,138	2,383,119	1,384,179	4.477.342
Current income / (loss)		10,374,935	5,147,904	62,630,088	57,221,918	80,557,019
Income taxation	1.p, 11 and 22	881,211	266,389	(12,940,186)	(12,870,052)	(11,880,028)
Consolidated net income/(loss) for the period of continued operations		11,256,146	5,414,293	49,689,902	44,351,866	68,676,991
Consolidated net income/(loss) for the period of discontinued operations	26	5,228,516		208,599	162,330	297,098
Consolidated net income/(loss) for the period		16,484,662	5,414,293	49,898,501	44,514,196	68,974,089
Attributed to:
Shareholders of the parent company	27	17,463,993	6,204,251	49,769,658	44,479,278	69,035,562
Non-controlling interests		(1,204,570)	(789,958)	101,714	13,806	(100,111)
Non-controlling interests (discontinued operations)	26	225,239		27,129	21,112	38,638
Earnings per share Including discontinued operations
Basic	27	0.06	0.02	0.16	0.15	0.23
Diluted	27	0.06	0.02	0.16	0.15	0.23
Excluding discontinued operations
Basic	27	0.06	0.02	0.16	0.15	0.23
Diluted	27	0.06	0.02	0.16	0.15	0.23

The notes are an integral part of the consolidated financial statements.

The Chief Accountant

Consolidated statement of comprehensive income

For the periods ended at 30 June 2019 and 2018 (restated – note 1) and for the year ended at 31 December 2018 (restated – note 1)

(Amounts expressed in Euro)	Notes	June 2019 (not audited)	April to June 2019 (not audited)	June 2018 (not audited and restated)	April to June 2018 (not audited)	December 2018 (restated)
Consolidated net income / (loss) for the period		16.484.662	5,414,293	49,898,501	44,514,196	68,974,089
Components of other consolidated comprehensive income, net of tax, that will be reclassified subsequently to profit or loss:
Changes in reserves resulting from the application of the equity method	g	(1,911,544)	(1,860,646)	(17,131,529)	(9,014,337)	(24,862,555)
Changes in currency translation reserve and other	Lu	328,320	150.195	(437,910)	(251,659)	(136,830)
Components of other consolidated comprehensive income, net of tax, that will not be reclassified subsequently to profit or loss:
Changes in reserves resulting from the application of the equity method Fair value of investments	g	(1,688,496)	(1,773,501)	(785,640)		(785,643) 2,385,907
Consolidated comprehensive income for the period		13.212.942	1,930,341	31,543,422	35,248,200	45,574,968
Attributed to:
Shareholders of the parent company		14,192,273	2,720,299	31,414,579	35,213,282	45,636,441
Non-controlling interests		(979,331)	(789,958)	128,843	34,918	(61,473)

The notes are an integral part of the consolidated financial statements.

The Chief Accountant

Consolidated statement of changes in equity

For the periods ended at 30 June 2019 and 2018 (restated- note 1)

							Reserves
		Own shares		Legal reserves	Reserves of own			Non-	Net
(Amounts expressed in Euro)	Share capital	(note 14)	Share premium		shares	Other reserves	Total reserves	-controlling interests	income / (loss)	Total
2019
Balance at 31 December 2018 (restated)	230,391,627	(7,686,952)	775,290,377	17,701,887	7,686,952	(23,955,767)	776.723.449	668.928	69,035,562	1.069.132.614
Appropriation of the consolidated net result of 2018
Transfers to other reserves				843,305		68,192,257	69,035,562		(69,035,562)
Dividend Distribution						(34,246,131)	(34,246,131)	(110,000)		(34,356,131)
Consolidated comprehensive income for the period ended at 30 June 2019						(3,271,720)	(3,271,720)	(979,331)	17.463.993	13,212,942
Capital increase in subsidiaries								947,500		947,500
Other changes								(25,535)		(25,535)
Balance at 30 June 2019	230,391,627	(7,686,952)	775,290,377	18.545.192	7,686,952	6.718.639	808.241.160	501.562	17.463.993	1.048.911.390
							Reserves
		Own shares			Reserves of own			Non-	Net
(Amountsexpressed in Euro)	Share capital	(note 14)	Share premium	Legal reserves	shares	Other reserves	Total reserves	-controlling interests	income / (loss)	Total
2018
Balance at 31 December 2017	230.391.627	(7,686,952)	775.290.377	16,913,362	7.686.952	(15,108,859)	784.781,832	1,625,044	22,765,966	1,031,877,517
Appropriation of the consolidated net result of 2017
Transfer to other reserves				788.525		21,977,441	22,765,966		(22,765,966)
Dividend Distribution						(11,313,454)	(11,313,454)			(11,313,454)
Percentage change in subsidianes						4,590,440	4,590,440	(4 590 440)
Consolidated comprehensive income for the period ended at 30 June 2018						(11,403,433)	(11,403,433)	130,287	49.493.963	38.220.817
Consolidated comprehensive income for the period ended at 30 June 2018 - Impact of
application of IFRS 16 (restated)						(6,944,555)	(6,944,555)			(6,944,555)
Capital increase in subsidiaries								1,553,149		1,553,149
Impact of the application of IFRS 15						(359,278)	(359,278)			(359,278)
Impact of the application of IFRS 16 (restated)						(314,378)	(314 378)	(8,535)	275,695	(47,218)
Other changes Balance at 30 June 2018 (restated)	230,391,627	(7,686,952)	775,290,377	17,701,887	7.686.952	42.109 (18,833,967	42.109 781,845,249	120.230 (1,170,265)	49,769,658	162.339 1,053,149,317

The notes are an integral part of the consolidated financial statements.

The Chief Accountant

Consolidated cash flow statement

For the periods ended at 30 June 2019 and 2018 (restated – note 1)

(Amounts expressed in Euro)	Notes		June 2019 (not audited)		June 2018 (not audited and restated)
Operating activities
Receipts from trade debtors		97,403,169		81,026,831
Payments to trade creditors		(59,817,266)		(45,242,369)
Payments to employees		(44,027,471)		(31,988,988)
Cash flows generated by operations		(6,441,568)		3,795,474
Payments / receipts relating to income taxes		(1,338,066)		(4,872,365)
Other receipts / payments relating to operating activities		436,667		(2,176,200)
Cash flows from operating activities (1)			(7,342,967)		(3,253,091)
Investing activities
Receipts from:
Financial investmens		8,323,095		16,480,788
Tangible assets		34,583		2,988
Intangible assets		(7,203)		18,418
Dividends	23	35,491,788		17,256,031
Interest and similar income		284,532		16,338
Others	9			41,343,720
Payments for:
Financial investments		(13,250,434)		(9,878,139)
Tangible assets		(912,342)		(712,428)
Intangible assets		(493,879)		(1,090,935)
Cash flows from investing activities (2)			29,470,140		63,436,781
Financing activities Receipts from:
Capital increases, supplementary capital and share premium				1,553,149
Others				1,503,670
Payments for:
Leasing	16	(2,644,016)		(2,073,312)
Interest and similar expenses		(રાતુંટાર)		(202,591)
Dividends	23	(34,356,131)		(11,313,454)
Loans obtained		(1,527,194)		(594,523)
Cash flows from financing activities (3)			39,046,854)		(11,127,861)
Net cash flows (4)=(1)+(2)+(3)			(16,919,681)		49,055,829
Effect of the foreign exchanges			14,968		(/7,296)
Effect of the discontinued operations			(676,276)
Cash and cash equivalents at the beginning of the period	12		228,550,322		202,025,377
Cash and cash equivalents at the end of the period	12		210,969,333		251,003,910

The notes are an integral part of the consolidated financial statements.

The Chief Accountant

Notes to the consolidated cash flow statement

For the periods ended at 30 June 2019 and 2018

1. Description of non-monetary financing activities

	Notes	June 2019	June 2018
a) Bank credit obtained and not used	15	1.500.000	1,000,000
b) Purchase of company through the issue of shares		Not applicable	Not applicable
c)Conversion of loans into shares		Not applicable	Not applicable

2. Acquisition or sale of subsidiaries or other businesses

	Notes	June 2019	June 2018
a) Amounts received of acquisitions
Sold of participation on Saphety	3.c	8,323,095
Sold of 0,10% of participation on Digitmarket	3.c		3,422
Return of capital investedon Fundo Armilar II	9		16,477,366
		8,323,095	16,480,788
b) Amounts paid of acquisitions and others
Cellwise	3.a	5,357,593
Visenze	3.a	5,244,147
Case on IT	3.a	650,744	2,280,000
Armilar	3.a	450,212
Fyde	3.a	443,687
Nextel	3.a		2,684,250
Nextail	3.a		2,300,000
Jscrambler	3.a		1,250,000
Style Sage	3.a		812,414
Convertible Loan Style Sage	3.a	442,282	126,475
Convertible Loan Secucloud		341,769
Convertible Loan Sensei			200,000
Others		320,000	225,000
		13,250,434	9,878,139
c) Amounts received of dividends
ZOPT	23	35,491,559	17,255,883
Caixa Bank		229	148
		35,491,788	17,256,031
d) Amounts paid of dividends Sontel BV, Sonae SGPS and other minority interests Aitec and BPI	23	34,246,131	11,313,454
		110,000 34,356,131	11,313,454

3. Cash flow breakdown by activity

Activity	Cash flow from operating activities	Cash flow from investing activities	Cash flow from financing activities	Net cash flows
2019
Multimedia	(1,030,156)	(304,291)	(165,194)	(1,499,641)
Information Systems	(4,392,451)	(5,762,229)	(4,239,106)	(14,393,786)
Holding	(1,920,360)	35,536,660	(34,642,554)	(1,026,254)
	(7,342,967)	29,470,140	(39,046,854)	(16,919,681)
Activity	Cash flow from	Cash flow from	Cash flow from	Net cash flows
	operating activities	investing activities	financing activities
2018
Multimedia	(1,030,113)	(263,407)	(65,448)	(1,358,968)
Information Systems	283,996	46,666,274	450,357	47.400.627
Holding	(2,506,974)	17,033,914	(11,512,770)	3,014,170
	(3,253,091)	63,436,781	(11,127,861)	49,055,829

The notes are an integral part of the consolidated financial statements.

The Chief Accountant

SONAECOM, SGPS, S.A. (hereinafter referred to as 'the Company' or 'Sonaecom') was established on 6 June 1988, under the name Sonae – Tecnologias de Informação, S.A. and has its head office at Lugar de Espido, Via Norte, Maia-Portugal. It is the parent company of the Group of companies listed in note 2 and 3 ('the Group').

Sonaecom SGPS, S.A. is owned directly by Sontel BV and Sonae SGPS, SA and Efanor Investimentos SGPS, S.A. is the ultimate controlling company.

Pargeste, SGPS, S.A.'s subsidiaries in the communications and information technology area were transferred to the Company through a demerger-merger process, executed by public deed dated September 30, 1997.

On 3 November 1999 the Company's share capital was increased, its Articles of Association were modified and its name was changed to Sonae.com, SGPS, S.A.. Since then the Company's corporate object has been the management of investments in other companies. Also on 3 November 1999, the Company's share capital was re-denominated to Euro, being represented by one hundred and fifty million shares with a nominal value of 1 Euro each.

On 1 June 2000, the Company carried out a Combined Share Offer, involving the following:

• · A Retail Share Offer of 5,430,000 shares, representing 3.62% of the share capital, made in the domestic market and aimed at: (i) employees of the Sonae Group; (ii) customers of the companies controlled by Sonaecom; and (iii) the general public;
• · An Institutional Offering for sale of 26,048,261 shares, representing 17.37% of the share capital, aimed at domestic and foreign institutional investors.

In addition to the Combined Share Offer, the Company's share capital was increased under the terms explained below. The new shares were fully subscribed for and paid up by Sonae, SGPS, S.A. (a Shareholder of Sonaecom, hereinafter referred to as 'Sonae'). The capital increase was subscribed for and paid up on the date the price of the Combined Share Offer was determined, and paid up in cash, 30,000,000 new ordinary shares of 1 Euro each being issued. The subscription price for the new shares was the same as that fixed for the sale of shares in the aforementioned Combined Share Offer, which was Euro 10.

In addition, in this year, Sonae sold 4,721,739 Sonaecom shares under an option granted to the banks leading the Institutional

Offer for Sale and 1,507,865 shares to Sonae Group managers and to the former owners of the companies acquired by Sonaecom.

By decision of the Shareholders' General Meeting held on 17 June 2002, Sonaecom's share capital was increased from Euro 181,000,000 to Euro 226,250,000 by public subscription reserved for the existing Shareholders, 45,250,000 new shares of 1 euro each having been fully subscribed for and paid up at the price of Euro 2.25 per share.

On 30 April 2003, the Company's name was changed by public deed to SONAECOM, SGPS, S.A..

By decision of the Shareholders' General Meeting held on 12 September 2005, Sonaecom's share capital was increased by Euro 70,276,868, from Euro 226,250,000 to Euro 296,526,868, by the issuance of 70,276,868 new shares of 1 euro each and with a share premium of Euro 242,455,195, fully subscribed by France Télécom. The corresponding public deed was executed on 15 November 2005.

By decision of the Shareholders General Meeting held on 18 September 2006, Sonaecom's share capital was increased by Euro 69,720,000, from Euro 296,526,868 to Euro 366,246,868, by the issuance of 69,720,000 new shares of 1 euro each and with a share premium of Euro 275,657,217, subscribed by 093X – Telecomunicações Celulares, S.A. ('EDP') and Parpública - Participações Públicas, SGPS, S.A. ('Parpública'). The corresponding public deed was executed on 18 October 2006.

By decision of the Shareholders General Meeting held on 16 April 2008, bearer shares were converted into registered shares.

During the year ended at 31 December 2013, the merger between Zon Multimédia – Serviços de Telecomunicações e Multimédia, SGPS, S.A. ('Zon') and Optimus SGPS, SA (note 9) was closed.

Accordingly, the telecommunications segment was classified, for presentation purposes, as a discontinued operation and the Group's business became of, rather than the holding activity:

• Media:
• · Information systems consultancy.

Consequently, since the merger mentioned above, the telecommunications segment became jointly controlled (note a).

On 5 February 2014, Sonaecom made public the decision to launch a general and voluntary tender offer for the acquisition of shares representing the share capital of Sonaecom.

The offer was general and voluntary, with the offered obliged to acquire all the shares that were the object of the offer and were, until the end of the respective period, subject to valid acceptance by the recipients.

The period of the offer, during which sales orders were received, ran for two weeks, beginning on 6 February and ending on 19 February 2014. On 20 February 2014, the results of the offer were released. The level of acceptance reached 62%, corresponding to 54,906,830 Sonaecom shares.

In 2014 Sonaecom reduced its share capital to Euro 230,391,627.

Euronext Lisbon announced Sonaecom exclusion from the PSI-20 from 24 February 2014 forward.

The Group operates in Portugal and has subsidiaries (from the information systems consultancy segment) operating in about 12 countries.

The consolidated financial statements are also presented in Euro, rounded to the unit, and the transactions in foreign currencies are included in accordance with the accounting policies detailed below.

1. Basis of presentation

The accompanying financial statements relate to the consolidated financial statements of the Sonaecom Group and have been prepared with an on going concern basis, based on the accounting records of the companies included in the consolidation through full consolidation method (note 2) in accordance with the International Financial Reporting Standards (IFRS) as adopted and effective in the European Union on 1 January 2019 and taking into consideration the IAS 34 - Interim Financial Reporting.These financial statements were prepared based on the historical cost, except for the revaluation of some financial instruments.

Sonaecom adopted IFRS for the first time according to SIC 8 (First-time adoption of IAS) on 1 January 2003.

The following standards, interpretations, amendments and revisions have been approved (endorsed) by the European Union, and have mandatory application to the financial years beginning on or after 1 January 2019 and were first adopted in the period ended at 30 June 2019:

Standard / Interpretation .	Effective date
	(annual periods
	beginning on or
	after)
IFRS 16 - Leases	1-Jan-19

This new standard replaces IAS 17 with a significant impact on accounting by lessees who are now required to recognize a lease liability reflecting future lease payments and a "right of use" asset for all leases, except for certain short-term leases and for low value assets. The definition of a lease has also been modified, based on the "right to control the use of an identified asset." With regards to the transition regime, the new standard may be applied retrospectively or a modified retrospective approach can be followed.

IFRIC 23 - Uncertainty over income tax treatments 1-Jan-19 This is an interpretation of IAS 12 - 'Income tax', referring to the measurement and recognition requirements to be applied when there is uncertainty as to the acceptance of a certain tax treatment by the tax authorities in respect of income tax . In the event of uncertainty as to the position of the tax authority on a specific transaction, the entity shall make its best estimate and record the income tax assets or liabilities under IAS 12, rather than IAS 37 - 'Provisions, contingent liabilities and contingent assets', based on the expected value or the most probable value. The application of IFRIC 23 may be retrospectively or retrospectively modified.

Amendments to IAS 19 - Plan amendment, curtailment or settlement

1-Jan-19

This amendment to IAS 19 requires an entity: (i) to use updated assumptions to determine the current service cost and net interest for the remaining period after the change, reduction or settlement of the plan; and (ii) recognises in profit or loss as part of the past service cost, or as gain or loss in settlement any reduction in excess hedge, even if the hedge surplus has not previously been recognized due to the impact of the asset ceiling. The impact on the asset ceiling is always recorded in 'Other Comprehensive Income', and can not be recognised as a result of the year.

1-Jan-19 Amendments to IFRS 9 - Prepayment features with negative compensation

The objective of the amendments to IFRS 9 is examine whether amortized cost measurement would provide relevant and useful information for instruments that contain symmetric prepayment options and otherwise have contractual cash flows that are solely payments of principal and interest.

1-Jan-19 Amendments to IAS 28 - Long-term interests in associates and joint ventures

This amendment clarifies that long-term investments in associates and joint ventures (components of an entity's investment in associates and joint ventures), which are not being measured using the equity method, are accounted for under IFRS 9. Long-term investments in associates and joint ventures are subject to the estimated impairment loss model, before being added to the impairment test for global investment in an associate or joint ventures, when there are impairment indicators.

Standard / Interpretation

Effective date (annual periods beginning on or after)

1-Jan-19

Annual Improvements to IFRS Standards 2015-2018 Cycle

Annual Improvements to IFRSs 2015-2018 Cycle is a collection of amendments to IFRSs in response to issues addressed during the 2015–2018 cycle for annualimprovements to IFRSs. This cycle afects the following standards: IAS 23, IAS 12, IFRS 3 e IFRS 11.

Regarding the new standards that became effective in the year beginning at 1 January 2019, the Group made an analysis of the changes introduced and the impact on the financial statements and concluded that the application of these standards, except for IFRS 16, had no material effect in the financial statements.

Disclosure of IFRS 16 impacts

IFRS 16 is now defined as the new accounting record of leases, both from the lessor's point of view and from the lessee's perspective, by introducing a new accounting regime for the lessee, which determines the registration of a right of use over leased assets and a lease liability relating to rental payable for all lease contracts.

The Group analysed all the contracts that contain the use of assets in order to identify the underlying conditions, the contract period, the nature of the rent payable and the implicit interest rates in the contracts.

On the date of transition to IFRS 16, the Group applied the standard retrospectively to the beginning of each of the analised lease contracts, with application on 1 January 2018 and restatement of the comparative amounts of the financial statements.

From the analysis of the contracts the impacts of the adoption of IFRS 16 in the financial statements of the period ended at 30 June 2018 and of the year ended at 31 December 2018 are as follows:

(Amounts expressed in Euro)	June 2018		June 2018
	(reported)	IFRS 16	(restated)
Balance sheet
Non-current assets
Tangible assets	3.227.255	(271,231)	2.956.024
Intangible assets	24.722.846	(72.555)	24.650.291
Rights of use		7.774.994	7.774.994
Other non-current assets	2,256,540	14 435	2.270.975
Investments in associated companies and companies jointly controlled	768,772,407	(6,707,441)	762,064,966
Current assets
Other currents deptors	7,290,162	84,815	7.374.977
Non-current liahilities
Non-current lease liabilities	76.454	4.710.450	4.786.904
Current liabilities
Current lease liabilities	247,309	3.104.340	3.351649
Shareholders' funds
Reserves	789.104.182	(7,258,933)	781,845,249
Non-controlling interests	(1,161,730)	(8.535)	(1,170,265)
Profit and loss statement
External supplies and services	(20115,247)	1.852.494	(18,262,753)
Depreciation and amortisation	(4.432.640)	(1681,258)	(6.113.898)
Other financial expenses	(2,207,972)	(133,224)	(2,341,196)
Other financial income	2,329,869	2,223	2,332,092
Gains and losses in associated companies and companies jointlu	83,088,749	237 114	83,325,863
Consolidated net income/(loss) for the period of discontinued operations		(3,098)	(3,098)
Non-controlling interests	130,287	(1,041)	129,246
Non-controlling interests (discontinued operations)		(403)	(403)

(Amounts expressed in Euro)	December 2018 (reported)	IFRS 16	December 2018 (restated)
Balance sheet
Non-current assets
Tangible assets	4.041,331	(646.195)	3,395,136
Intangible assets	25,607,506	(198,455)	25,409,051
Rights of use		13.123.658	13.123.658
Investments in associated companies and companies jointly controlled	787,033,203	(7,892,403)	779.140.800
Current assets
Other currents deptors	8.506.707	57.233	8.563.940
Non-current liahilities
Non-current lease liabilities	158.447	9.480.774	9.639.221
Current liabilities
Current lease liabilities	427,046	3.308.935	3.735.981
Shareholders' funds
Reserves	783.365.333	(7,323,403)	776.041.930
Non-controlling interests	(730,688)	(71,981)	(802,669)
Profit and loss statement
External supplies and services	(42,779,676)	3,730,220	(39.049.456)
Depreciation and amortisation	(11,088,290)	(3,465,596)	(14.553.886)
Other financial expenses	(4,362,799)	(284,278)	(4.647.077)
Other financial income	4,373,104	3.696	4.376.800
Gains and losses in associated companies and companies jointly	90,808,907	(947,848)	89.861059
Consolidated net income/(loss) for the period of discontinued operations		(7,132)	(7.132)
Non-controlling interests	(41,022)	(19,523)	(60,545)
Non-controlling interests (discontinued operations)		(a28)	(928)

The following standards, interpretations, amendments and revisions have not yet been approved (endorsed) by the European Union at 30 June 2019:

Standard / Interpretation	Effective date
	(annual periods
	be ginning
	on or after)
IFRS 17 - Insurance contracts	1-lan-21
This new standard replaces IFRS 4 and applies to all entities that issue insurance contracts, reinsurance contracts and investment contracts with discretionary
participation characteristics. IFRS 17 is based on the current measurement of
technical liabilities at each reporting date. The current measurement can be based on
a complete "building block approach" or "premium allocation approach". The
recognition of the technical margin is different depending on whether it is positive or
negative. IFRS 17 has retrospective application.
Amendments to references to the conceptual framework in IFRS standards	1-lan-20
Amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 8, IAS 34, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32. in order to clarify the application of the new definitions of asset / liability and expenditure / income, in addition to some of the characteristics of the financial information. These changes are retrospective, except if impractical.
Amendments to IAS 1 and IAS 8: Definition of Material	1-Jan-20
This amendment introduces a modification to the concept of material. It includes clarifications regarding the reference to unclear information, corresponding to situations in which its effect is similar to omitting or distorting such information, within the overall context of the financial statements; as well as clarifications as to the term 'principal users of financial statements', which are defined as 'current and future investors, lenders and creditors' who rely on the financial statements to obtain a significant portion of the information they require.
Amendments to IFRS 3: Business Combinations	1-jan-20
This amendment constitutes a review of business combinations for the purpose of
accounting for business activities. The new definition requires that an acquisition include an input and a substantial process that together generate output. Output is
defined as goods and services that are delivered to customers, which generate
income from financial investments and other income, excluding returns in the form
of cost reductions and other economic benefits to shareholders. Concentration
tests are allowed to determine whether a transaction refers to the acquisition of an

asset or a business.

These standards have not yet been approved ('endorsed') by the European Union and, as such, were not adopted by the Group for the period ended at 30 June 2019. Their application is not yet mandatory.

The accounting policies and measurement criteria adopted by the Group at 30 June 2019 are comparable with those used in the preparation of 30 June 2018 financial statements.

Disclosure of the impacts of the alienation of the Saphety Group

In the period ended at 30 June 2019, the Saphety Group composed by Saphety Level - Trusted Services, SA (with a share capital held of 86.99% by Sonae Investment Management - Software and Technology, SGPS, SA, 7.84% by AITEC SA and 5.17% by Banco BPI, SA), by Saphety Brasil Transações Eletrônicas Ltda. (with a share capital held of 99.99% by Saphety Level - Trusted Services, SA and 0.01% by the Administrator) and also by Saphety -Transacciones Eletronicas SAS (100% owned by Saphety Level - Trusted Services, SA), was sold to members of its Management team, supported by Oxy Capital (Note 3.c)). The Group was classified, for presentation purposes, as a discontinued operation. As envisaged by IFRS 5, changes were made in the Consolidated Statements of Income by nature for the period ended at 30 June 2018 and for the year ended at 31 December 2018 to reflect in a single item ('Net income for the period of discontinued operations'), on the face of the income statement, the after-tax profits or losses of the discontinued operations.

ﺍﯾﻦ ﺍﺯ ﺍﯾﺮﺍﻥ ﺩﺭ ﺍﯾﺮﺍﻥ ﺩﺭ ﺍﯾﻦ ﺩﺍﺩ ﺑﺮﺍﯼ ﺍﺯ ﺍﯾﻦ ﺩﺭ ﺍﺳﺖ. ﺩﺭ ﺍﺳﺖ. ﺩﺭ ﺍﺳﺖ.
(Amountsexpressed in Euro)	Before the alienation	Reexpression of the contribution of the Saphety Group for the discontinued operations	Income statement restated
Total revenue	83,587,761	(3.898.175)	79,689,586
Costs and losses
External supplies and services	(20,115,247)	1,461,725	(18,653,522)
Depreciation and amortisation	(4.432.640)	451,036	(3,981,604)
Other operating costs	(62,220,197)	1,587,091	(60.633.106)
	(86,768,084)	3.499.852	(83,268,232)
Financial results	83,210,646	45,151	83,255,797
Income taxation	(16,979,654)	141475	(16,838,179)
Consolidated net income/(loss) for the period of continued operations	63,050,669	(211697)	62,838,972
Consolidated net income/{loss} for the period of discontinued operations		211,697	211,697
Consolidated net income/(loss) for the period	63.050.669		63.050.669
Attributed to:
Shareholders of parent company	62,920,382		62,920,382
Non-controlling interests (continued operations)	130,287	(27,532)	102,755
Non-controlling interests (discontinued operations)		27,532	27,532
Farningsner share
Including discontinued operations
Basic	0.21	0.00	0.21
Diluted	0.21	0.00	0.21
Excluding discontinued operations
Basic	0.21	0000	0.21
Diluted	0.21	0.00	0.21

Consolidated income statement at 31 December 2018

(Amounts expressed in Euro)	Before the alienation	Reexpression of the contribution of the Saphety Group for the discontinued operations	Income statement restated
Total revenue	171,788,260	(7.952.559)	163.835.701
Costs and losses
External supplies and services	(42,779,676)	3,176,635	(39.603.041)
Depreciation and amortisation	(11,088,290)	899 196	(10.189.094)
Other operating costs	(126.627.632)	3.107.448	(123,520,184)
	(180,495,598)	7,183,279	(173.312.319)
Financial results	90,819,934	177,509	90,997,443
Income taxation	(12,167,568)	287,540	(11,880,028)
Consolidated net income/(loss) for the period of continued operations	69.945.028	(304,231)	69,640,797
Consolidated net income/{loss} for the period of discontinued operations		304,231	304,231
Consolidated net income/(loss) for the period	69.945.028		69,945,028
Attributed to:
Shareholders of parent company	69,986,050		69,986,050
Non-controlling interests (continued operations)	(41,022)	(39,566)	(80,588)
Non-controlling interests (discontinued operations)		39,566	39.566
Earnings per share Including discontinued operations
Rasir	023	0000	0.23
Diluted	0.23	0.00	0.23
Excluding discontinued operations
Basic	023	0000	023
Diluted	0.23	0.00	0.23

Disclosure of the impacts of the Goodwill restatement

In December 2018 with the acquisition of Excellium Group, a Goodwill was recorded although the allocation of the purchase price is subject to changes until the completion of the one year period from the date of acquisition, as permitted by IFRS 3 Business Concentrations.

For the period ended at 30 June 2019, the fair value of identifiable assets acquired and liabilities assumed was measured.

As provided in IFRS 3, the provisional amounts recognised at the acquisition date were retrospectively adjusted to reflect the new information obtained on facts and circumstances that existed at the acquisition date and that, if known, would have affected the measurement of the recognised amounts in this date.

The impact of the restatement of identifiable assets acquired and liabilities assumed as of December 2018 was as follows:

(Amounts expressed in Euro)	December 2018 (reported)	Adjustments to fair value	December 2018 (restated)
Balance sheet
Non-current assets
Tangible assets	4,041,331	(13,484)	4.027.847
Intangible assets	25,607,506	3,966,682	29.574.188
Rights of use	37,312,620	(1,023,098)	36.289.522
Investments in associated companies and companies jointly controlled	787.033.203	(8,103)	787,025,100
Current assets
Trade debtors	50.945.298	15,248	50,960,546
Other currents debtors	8,506,707	28,000	8,534,707
Other current assets	15.809.849	1,241,239	17.051088
Cash and cash equivalents	229,038,912	1956	229,040,868
Non-current liabilities
Non-current lease liabilities	6,863 944	430.642	7,294,586
Current liabilities
Trade creditors	18.931330	10,153	18,941,483
Other creditors	14.383.863	56.401	14,440,264
Current lease liabilities	40.261.701	1,558,128	41,819,829
Shareholders' funds
Reserves	783,365,333	681.519	784.046.852
Non-controlling interests	(730,688)	1471597	740.909

Disclosure of the impacts of the restatement of Armilar's incentive provision

The main accounting policies used in the preparation of the accompanying consolidated financial statements are as follows:

The provision recorded at 31 December 2018 related to the incentive in favor of Armilar, due to the fact that the fund's performance exceeded the return level defined for that purpose, was partially reclassified to 30 June 2019 for June 2018 in order to adjust the provision at the moment the return level was exceeded, leading to the restatement of the comparative periods in this period.

The impact of the restatement at 30 June 2018 was as follows:

(Amounts expressed in Euro)	June 2018 (reported)	Adjustments,	June 2018 (restated)
Balance sheet Non-current liabilities Provisions for other liabilities and charges Deferred tax liabilities Income statement	3.138.738 15.455.867	17.324.412 (3.897.993)	20.463.150 11.557.874
Gains and losses in associated companies and companies jointly controlled	83.088.749	(17.324.412)	65.764.337
Income taxation	(16.979.654)	3,897,993	(13.081661)

Main accounting policies

a) Investments in Group companies

Sonaecom has control of the subsidiary when the company cumulatively fulfils the following conditions: i) has power over the subsidiary; ii) is exposed to, or has rights over, variable results from its involvement with the subsidiary; and iii) has the ability to use its power to affect its returns. These Investments were fully consolidated in the accompanying consolidated financial statements. Third party participations in the Shareholders' equity and net results of those companies are recorded separately in the consolidated statement of financial position and in the consolidated profit and loss statement, respectively, under the caption 'Non-controlling interests'.

The total comprehensive income is attributed to both the Shareholders of parent company and the non-controlling interests even if this results in a deficit balance of noncontrolling interests.

To acquire subsidiaries, the purchase method is applied. The results of subsidiaries bought or sold during the period are included in the profit and loss statement as from the date of acquisition (or of control acquisition) or up to the date of sale (or of control cession). Intra-Group transactions, balances and dividends are eliminated.

The fully consolidated companies are listed in note 2.

The acquisition cost is the amount of cash or cash equivalents paid or the fair value of other consideration transferred to acquire an asset at the time of its acquisition or constitution or, where applicable, the amount attributed to that asset upon initial recognition in accordance with the specific requirements of IFRS 3.

The transferred consideration may include assets or liabilities of the acquirer that have carrying amounts that differ from their fair value at the acquisition date (for example, non-cash assets or a business of the acquirer). If so, the acquirer shall remeasure the assets or liabilities transferred at their fair value at the acquisition date and recognise any gains or losses arising, if any, on the statement of income. However, sometimes the transferred assets or liabilities remain in the entity acquired after the business is carried out, and therefore, the acquirer retains control over them. In such situation, the acquirer shall measure those assets and liabilities at their carrying amounts immediately before the acquisition date and shall not recognise any gain or loss in the statement of profit and loss on assets or liabilities that it controls both before and after the business.

The expenses incurred with the acquisition of investments in Group companies are recorded as cost at the time they are incurred.

b) Investments in associated companies and companies jointly controlled

Investments in associated companies correspond to investments in which the Group has significant influence (generally investments representing between 20% and 50% of a company's share capital) and are recorded using the equity method.

The investments in companies jointly controlled are also recorded using the equity method. The classification of these investments is determinate based on Shareholders Agreements, which regulate the shared control.

In accordance with the equity method, investments are adjusted annually by the amount corresponding to the Group's share of the net results of associated companies, against a corresponding entry to gain or loss for the year, and by the amount of dividends received, as well as by other changes in the equity of the associated companies, which are recorded by a corresponding entry under the caption 'Other reserves'. These equity variations, excluding the cost related to NOS's own share plans, are recorded under the caption 'Other Comprehensive Income'. An assessment of the investments in associated companies and companies jointly controlled is performed annually, with the aim of detecting possible impairment situations.

When the Group's share of accumulated losses of an associated company or a company jointly controlled exceeds the book value of the investment, the investment is recorded at nil value, except when the Group has assumed commitments to the associated company or a company jointly controlled. If that is the case, when a provision shall be recorded a situation when a provision is recorded under the caption 'Provisions for other liabilities and charges'.

The difference between the acquisition price of the investments in associated companies and companies jointly controlled and the fair value of identifiable assets and liabilities at the time of their acquisition, when positive, is recorded as Goodwill, included in the investment value and, when negative, after a reassessment, is recorded, directly, in the profit and loss statement under the caption 'Gains and losses in companies in associated companies and companies jointly controlled'.

The description of the associated companies and companies jointly controlled is disclosed in note 9.

c) Tangible assets

Tangible assets are recorded at their acquisition cost minus their accumulated depreciation and the estimated accumulated impairment losses.

Depreciations are calculated on a straight-line monthly basis from the date the assets are available for use under the necessary conditions to operate as intended by the management, by a corresponding charge under the profit and loss statement caption 'Depreciation and amortisation'.

The annual depreciation rates used correspond to the estimated useful life of the assets, which are as follows:

	Years of
	useful life
Buildings and other constructions	5 - 20
Plant and machinery	2 - 16
Fixtures and fittings	7 - 10
Tools and utensils	7-4

Impairment losses detected in the realisation value of tangible assets are recorded in the year in which they arise, by a corresponding charge under the caption 'Depreciation and amortisation' in the profit and loss statement.

Current maintenance and repair expenses of tangible assets are recorded as costs in the year in which they occur. Improvements of significant amount, which increase the estimated useful life of the assets, are capitalised and depreciated in accordance with the remaining estimated useful life of the corresponding assets.

The estimated costs related with the mandatory dismantling and removal of tangible assets, incurred by the Group, are capitalised and depreciated in accordance with the estimated useful life of the corresponding assets.

Work in progress corresponds to tangible assets still in the construction/development stage which are recorded at their acquisition cost. These assets are depreciated as from the moment they are available to be used and when they are ready to start operating as intended by the management.

d) Intangible assets

Intangible assets are recorded at their acquisition cost minus their accumulated amortisation and less estimated accumulated impairment losses. Intangible assets are only recognised if they were identifiable and if it is likely that they will bring future economic benefits to the Group, if the Group controls them and if their cost can be reasonably measured.

Intangible assets comprise, essentially, software, industrial property, costs incurred with the acquisition of clients portfolios (value attributed under the purchase price allocation in business combinations) and know-how.

Amortisations of intangible assets are calculated on a straightline monthly basis, over the estimated useful life of the assets, as from the month in which the corresponding expenses are incurred. The amortisation of the customer's portfolios is provided on a straight-line basis over the estimated average retention period of the customers.

Expenditures with internally-generated intangible assets, namely research and development expenditures, are recognised in the profit and loss statement when incurred. Development expenditures can only be recognised as an intangible asset if the Group demonstrates the ability to complete the project and is able use it or sell it.

Amortisation for the period is recorded in the profit and loss statement under the caption 'Depreciation and amortisation'.

Impairment losses detected in the realisation value of intangible assets are recorded in the year in which they arise, by a corresponding charge under the caption 'Depreciation and amortisation' in the profit and loss statement.

The annual depreciation rates used correspond to the estimated useful life of the assets, which are as follows:

	Years of
	useful life
Brands and patents	1 - 15
Customers' portfolios	б
Contratuals rights	б
Software	1-15

e) Brands and patents

Brands and patents are recorded at their acquisition cost and are amortised on a straight-line basis over their respective estimated useful life. When the estimated useful life is undetermined, they are not depreciated but are subject to annual impairment tests.

Sonaecom Group does not hold any brands or patents with undetermined useful life, therefore the second half of the above referred paragraph is not applicable.

f) Goodwill

The differences between the acquisition price of investments in Group companies, companies jointly controlled and associated companies added the value of non-controlling interests (in the case of subsidiaries), the fair value of any interests previously held at the date and the fair value of the identifiable assets, liabilities and contingent liabilities of these companies at the date of business combination, when positive, are considered 'Goodwill'. If related to subsidiaries are recorded under the caption "Goodwill" (note 8), if related to jointly controlled and associated companies are included in the value of the investment in the caption "Investments in associated companies and companies jointly controlled" (note 9). The differences between the price of investments in foreign subsidiaries whose functional currency is not the Euro, the value of non-controlling interests (in case of subsidiaries) and the fair value of the identifiable assets and liabilities of these companies at the acquisition date are recorded in the functional currency of those subsidiaries and are they converted into reporting currency of Sonaecom (Euro), at the exchange rate on the date of the statement of financial position. The exchange rates differences that arise upon conversion are recorded in the caption "Reserves".

Contingent consideration is recognised as a liability, at the acquisition-date, according to its fair value, and any changes to its value are recorded as a change in the 'Goodwill', but only as long as they occur during the 'measurement period' (until 12 months after the acquisition-date) and as long as they relate to facts and circumstances that existed at the acquisition date, otherwise these changes must be recognised in profit or loss.

Transactions regarding the acquisition of additional interests in a subsidiary after control is obtained, or the partial disposal of an investment in a subsidiary while control is retained, are accounted for as equity transactions impacting the shareholders' funds captions, and without giving rise to any additional 'Goodwill' and without any gain or loss recognised.

When a sales transaction generates a loss of control, the assets and liabilities of the entity should be derecognised and any interest retained in the entity sold should be remeasured at fair value and any gain or loss calculated on the sale is recorded in profit and loss.

The Goodwill amount is not amortised, being tested annually or whenever there are impairment indices, to verify if there are any impairment losses to be recognised. The recoverable amount is determined based on the business plans used by Sonaecom's management. Goodwill impairment losses of the year are recorded in the profit and loss statement of the year under the caption 'Depreciation and amortisation'.

Goodwill impairment losses can not be reversed.

Goodwill, if negative, is recognised as income on the acquisition date after reconfirmation of the fair value of identifiable assets, liabilities and contingent liabilities.

g) Financial instruments

Financial assets

The Group classifies its financial assets into the following categories: financial assets at fair value through profit or loss, financial assets measured at amortised cost, financial assets at fair value through other comprehensive income. Their classification depends on the entity's business model to manage the financial assets and the contractual characteristics in terms of the cash flows of the financial asset.

Changes to the classification of financial assets can only be made when the business model is changed, except for financial assets at fair value through other comprehensive income, as equity instruments, which can never be reclassified to another category.

(i) Financial assets measured at amortised cost

Financial assets measured at amortised cost are those that are part of a business model with the purpose to hold financial assets in order to receive contractual cashflows, although these contractual cash flows can only be capital repayments and interest payments of capital in debt.

(ii) Financial assets at fair value through other comprehensive income

This category may include financial assets that qualify as debt instruments (contractual obligation to deliver cash flows) or equity instruments (residual interest in an entity);

a. Regarding of debt instruments, this category includes financial assets that correspond only to the payment of nominal value and interest, for which the business model followed by the management is the receipt of contractual cash flows or on time sale;

b. Regarding of equity instruments, this category includes the percentage of interest held in entities over which the Group does not exercise control, joint control or significant influence, and which the Group irrevocably chose on the date of initial recognition to designate at fair value through other comprehensive income.

(iii) Financial assets at fair value through profit or loss

This category includes debt instruments and equity instruments that do not meet the criteria for qualification as financial assets at amortised cost and which the Group has not classified as financial assets through other comprehensive income at the time of initial recognition. This category also includes all financial instruments whose contractual cash flows are not exclusively capital and interest.

Gains and losses resulting from the change in the fair value of assets measured at fair value through profit or loss are recognised as income for the year in which they occur in the respective caption "Gains / (losses) on financial assets", which include income amounts interest and dividends.

Financial assets are recognised in the Group's statement of financial position on the trade or date of contract, which is the date on which the Company undertakes to acquire or dispose of the asset. At the initial moment, except for trade accounts receivable, financial assets are recognised at fair value plus directly attributable transaction costs, except for assets at fair value through profit or loss in which transaction costs are immediately recognised in the income statement. Trade accounts receivable, at the initial time, are recognised at their transaction price, as defined in IFRS 15.

Financial assets are derecognised when: (i) the contractual rights of the Group expire upon receipt of their cash flows; (ii) the Group has transferred substantially all the risks and benefits associated with its detention; or (iii) notwithstanding that it retains a portion, but not substantially all the risks and rewards associated with its detention, the Group has transferred control over the assets.

Financial assets at amortised cost are subsequently measured in accordance with the effective interest rate method and deducted from impairment losses. Interest income on these financial assets is included in "Interest earned on assets at amortised cost" in financial income.

Financial assets at fair value through other comprehensive income, which are debt instruments, are subsequently measured at fair value through fair value changes recognised in other comprehensive income, except for variations related to the recognition of impairment, interest income and gains/(losses) due to foreign exchange differences, which are recognised in income for the year. Financial assets at fair value through other comprehensive income are subject to impairment.

Financial assets at fair value through other comprehensive income that are equity instruments are measured at fair value on the date of initial registration and subsequently, the fair value changes are recorded directly in 'Other comprehensive income', in the equity. Future reclassification is not possible, even after derecognition of the investment. Dividends obtained from these investments are recognised as gains, in results for the year, on the date they are attributed.

Financial assets and liabilities are offset and presented at net value, when and only when the Group has the right to offset the amounts recognised and intends to settle at the net value.

The Group derecognises financial assets when and only when contractual rights to cash flows have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership of the asset.

Financial liabilities

Financial liabilities are classified according to the contractual substance regardless of their legal form. Equity instruments are contracts that show a residual interest in the Group's assets after deducting liabilities. The equity instruments issued by the company are recorded at the amount received, net of the costs incurred with their issuance. Financial liabilities are derecognised only when they are extinguished, that is, when the obligation is settled, cancelled or expired.

Financial liabilities are classified into two categories:

• (i) Financial liabilities at amortised cost;
• (ii) Financial liabilities at fair value through profit or loss.

In accordance with IFRS 9, financial liabilities are classified as subsequently measured at amortised cost, except for:

• a) Financial liabilities at fair value through profit or loss. These liabilities, including derivatives that are liabilities, should subsequently be measured at fair value;
• b) Financial liabilities that arise when a transfer of a financial asset does not meet the conditions for derecognition or when the continued involvement approach is applied;
• c) Financial guarantee contracts;
• d) Commitments to grant a loan at a lower interest rate than the market;
• e) The contingent consideration recognised by a purchaser in a business combination to which IFRS 3 applies. This contingent consideration should be subsequently measured at fair value, with changes recognised in profit or loss.

The category "Financial liabilities at amortised cost" includes the liabilities presented in the captions loans obtained (note i), suppliers and other creditors.These liabilities are initially recognised at fair value net of transaction costs and are

subsequently measured at amortised cost at the effective interest rate.

Financial liabilities are derecognised when the underlying obligations are extinguished by payment, are canceled or expire.

At 30 June 2019, the Group only recognises liabilities classified as "Financial liabilities at amortised cost".

h) Rights of use and leasing

A lease is defined as a contract, or part of a contract, that transfers the right to use a good (the underlying asset) for a period of time in exchange for a value.

At the beginning of each contract, it is evaluated and identified whether or not the contract contains a lease. This evaluation involves an exercise of judgment as to whether each contract depends on a specific asset, if the companies of Sonaecom Group obtain substantially all the economic benefits from the use of that asset and whether they have the right to control the use of the asset.

All contracts that constitute a lease are accounted for on the basis of a single recognition model in the balance sheet as the IAS 17 established for financial leases.

At the date of commencement of the lease, the Group recognises the liability related to lease payments (i.e. the lease liability) and the asset that represents the right to use the underlying asset during the lease period (i.e. the right of use or "RoU").

The interest on the lease liability and the depreciation of the RoU are recognised separately.

Lease liabilities are remeasured if certain events occur (such as a change in the lease period, a change in future payments that result from a change in the reference rate or rate used to determine such payments). This remeasurement of the lease liability is recognised as an adjustment in the RoU.

Rights of use (assets)

The Group recognises the right to use the assets at the starting date of the lease (that is, the date on which the underlying asset is available for use).

The right to use the assets is recorded at acquisition cost, less accumulated depreciation and impairment losses and adjusted for any new measurement of lease liabilities. The cost of the right to use the assets includes the recognised amount of the lease liability, any direct costs incurred initially and payments already made prior to the initial rental date, less any incentives received.

Unless it is reasonably certain that the Group obtains ownership of the leased asset at the end of the lease term, the recognised right to use the assets is depreciated on a straightline basis over the shorter of its estimated useful life and the term of the lease.

Rights of use are subject to impairment.

Lease liabilities

At the date of commencement of the lease, the Group recognises the liabilities measured at the present value of the future payments to be made until the end of the lease.

Lease payments include fixed payments (including fixed payments on the substance), less any incentives to receive, variable payments, dependent on an index or rate, and expected amounts to be paid under residual value guarantees. The lease payments also include the exercise price of a call option if it is reasonably certain that the Group will exercise the option and penalties for termination of the lease if it is reasonably certain that the Group will terminate the lease.

Variable payments that do not depend on an index or a rate are recognised as an expense in the period in which the event giving rise to them occurs.

In calculating the present value of the lease payments, the Group uses the incremental loan rate at the start date of the lease if the implied interest rate is not readily determinable.

After the starting date of the lease, the value of the lease liability increases to reflect the increase in interest and reduces the payments made. In addition, the book value of the lease liability is remeasured if there is a change, such as a change in the lease term, fixed payments or the purchase decision of the underlying asset.

i) Inventories

Inventories are stated at their acquisition cost, net of any impairment losses, which reflects their estimated net realisable value.

Accumulated inventory impairment losses reflect the difference between the acquisition cost and the realisable amount of inventories, as well as the estimated impairment losses due to low turnover, obsolescence and deterioration, and are registered in the profit and loss statement, in 'Cost of sales'.

j) Trade and other current debtors

These captions mainly include the amounts of trade debtors resulting from services rendered within the scope of the Group's activity and other amounts related to operating activities. The amounts are defined as current assets when the collection is estimated within a 12-month period. The amounts

are defined as non-current if the estimated collection occurs more than 12 months after the relate date.

'Trade debtors' and 'Other debtors' are initially recognised at fair value and are subsequently measured at amortised cost, net of impairment adjustments. Impairment losses of 'Trade debtors' and 'Other debtors' are recorded in accordance with the principles described in the policy in note 1.x. The identified impairment losses are recorded in the income statement and other comprehensive income in 'Provisions and impairment losses'.

k) Cash and cash equivalents

Amounts included under the caption 'Cash and cash equivalents' correspond to amounts held in cash and term bank deposits and other treasury applications, with less than three months' maturity, where the risk of change in value is insignificant.

The consolidated cash flow statement has been prepared in accordance with IAS 7, using the direct method. The Group classifies, under the caption 'Cash and cash equivalents', investments that mature in less than three months, for which the risk of change in value is insignificant. The caption 'Cash and cash equivalents' in the cash flow statement also includes bank overdrafts, which are reflected in the balance sheet caption 'Current loans and other loans'.

The cash flow statement is classified by operating, financing and investing activities. Operating activities include collections from customers, payments to suppliers, payments to personnel and other flows related to operating activities. Cash flows from investing activities include the acquisition and sale of investments in associated, subsidiary companies and companies jointly controlled as well as receipts and payments resulting from the purchase and sale of fixed assets. Cash flows from financing activities include payments and receipts relating to loans obtained and finance lease contracts, as well as cash flows from the shareholders' transactions, as shareholders.

All amounts included under this caption are likely to be realised in the short term and there are no amounts given or pledged as guarantee.

l) Loans

Loans are recorded as liabilities by the 'amortised cost'. Any expenses incurred in setting up loans are recorded as a deduction to the nominal debt and recognised during the period of the loan, based on the effective interest rate method. The interests incurred but not yet due are added to the loans caption until their payment.

m) Financial expenses relating to loans obtained

Financial expenses relating to loans obtained are generally recognised as expenses at the time they are incurred. Financial expenses related to loans obtained for the acquisition, construction or production of assets are capitalised as part of the cost of the assets. These expenses are capitalised starting from the time of preparation for the construction or development of the asset and are interrupted when the assets are ready to operate, at the end of the production or construction phases or when the associated project is suspended.

n) Derivatives

The Group only uses derivatives in the management of its financial risks to hedge against such risks. The Group does not use derivatives for trading purposes.

The cash flow hedges used by the Group are related to:

• (i) Interest rate swaps to hedge the interest rate risk on loans obtained. The amount of the loans, interest maturities and repayment plans for the loans underlying the interest rate swaps are in all respects identical to the conditions laid down for the contracted loans.
• (ii) Forward's exchange rate for hedging foreign exchange risk, particularly from receipts from customers of subsidiary We Do Consulting. The values and time periods involved are identical to the amounts invoiced and their maturities.

Transactions that qualify as hedging instruments in relation to cash flow hedges are recorded in the statement of financial position at fair value and, to the extent that they are considered effective hedges, changes in the fair value of the instruments are initially recorded as equity and subsequently reclassified to the financial costs caption. In cases where the hedge instrument is not effective, the amounts that arise from the adjustments to fair value are recorded directly in the profit and loss statement.

At 30 June 2019, the Group had no foreign exchange forwards. At 30 June 2018, the Group had foreign exchange forwards in the amount of USD 520,000 fixing the exchange rate for EUR, which had an average maturity of 2 months.

o) Provisions and contingencies

'Provisions' are recognised when, and only when, the Group has a present obligation (either legal or implicit) resulting from a past event, the resolution of which is likely to involve the disbursement of funds by an amount that can be reasonably estimated. Provisions are reviewed at the balance sheet date and adjusted to reflect the best estimate at that date.

Provisions for restructurings are only registered if the Group has a detailed plan and if that plan has already been communicated to the parties involved.

Contingent liabilities are not recognised in the consolidated financial statements but are disclosed in the notes, if the possibility of a cash outflow affecting future economic benefits is remote.

Contingent assets are not recognised in the consolidated financial statements but are disclosed in the notes when future economic benefits are likely to occur.

p) Income tax

'Income tax' expense represents the sum of the current tax payable and deferred tax. Income tax is recognised in accordance with IAS 12 – 'Income Taxes'.

Sonaecom was covered, since January 2008, by the special regime for the taxation of groups of companies, under which, the provision for income tax is determined on the basis of the estimated taxable income of all the companies covered by that regime. However in accordance with such rules since 2015, the Sonaecom Group, no longer has an independent group of companies covered by the special regime for taxation as tarted to integrate the special regime for taxation of groups of Sonae SGPS companies.

Therefore, since 1 January 2015, Sonaecom is under the special regime for the taxation of groups of companies, from which Sonae, SGPS is the dominant company. The tax losses generated by the companies controlled in the tax group (RETGS) used to allocate their tax losses to the group, so that, since 2017, only the parent company has recognised the amounts of such tax losses, without giving rise to any financial flow. From 2018 onwards these tax losses generated by the companies controlled within the Group were offset by the Group's dominant entity. With respect to the tax losses generated by the unsettled companies in the year, they will be offset as the Group recovers, taking into account its future taxable income, and the amount to be offset is recorded in noncurrent assets in an account receivable from the Group. Each company records the income tax on its individual accounts, and the tax recorded is recorded against the Group companies account. The special regime for the taxation of groups of companies covers all direct or indirect subsidiaries, and even through companies resident in another Member State of the European Union or the European Economic Area, only if, in the last case, there is an obligation of administrative cooperation, on which the Group holds at least 75% of their share capital, where such participation confers more than 50% of voting rights, if meet certain requirements. The subsidiary Digitmarket is not part of the special tax regime for groups of companies, as Sonae SGPS's indirect stake in Digitmarket is less than 75%. The subsidiary S21sec Portugal left the special tax regime for groups due the integration of the company Nexthold, S.L..

Deferred taxes are calculated using the liability method and reflect the time differences between the amount of assets and liabilities for accounting purposes and the respective amounts for tax purposes.

'Deferred tax assets' are only recognised when there is reasonable expectation that sufficient taxable profits shall arise in the future to allow such deferred tax assets to be used. At the end of each year the recorded and unrecorded deferred tax assets are revised and they are reduced whenever their realisation ceases to be probable, or increased if future taxable profits are likely, enabling the recovery of such assets (note 11).

Deferred taxes are calculated with the tax rate that is expected to be in force at the time the asset or liability will be used based on decreed tax rate or substantially decreed tax rate at the relate date.

Whenever deferred taxes derive from assets or liabilities directly registered in Shareholders' funds, its recording is also made under the Shareholders' funds caption. In all other situations, deferred taxes are always recorded in the profit and loss statement.

q) Government subsidies

Subsidies awarded to finance staff expenses are recognised as less cost during the period in which the Group incurs in its costs and are included in the profit and loss statement under the caption 'Staff expenses'.

Subsidies awarded to finance investments are recorded as deferred income on the Balance Sheet and are included in the profit and loss statement under the caption 'Other operating revenues'. Subsidies are recognised during the estimated useful life of the corresponding assets.

For businesses in the digital security area, non-repayable subsidies are recognised in the balance sheet as deferred income and are recognised in the profit and loss statement in 'Other operating income'. The incentive is recognised during the project development period.

The reimbursable subsidies are recognised in the balance sheet as liabilities in 'Medium and long-term loans – net of short-term portion' and 'Short-term loans and other loans' and are depreciated in accordance with the established payment plans. These subsidies are recorded at amortised cost in accordance with the method of effective interest rate.

r) Accrual basis

Expenses and income are recorded in the year to which they relate, regardless of their date of payment or receipt. Estimated amounts are used when actual amounts are not known.

The captions of 'Other non-current assets', 'Other current assets', 'Other non-current liabilities' and 'Other current liabilities' include expenses and income relating to the current period, where payments and receipts will occur in future periods, as well as payments and receipts in the current period but which relate to future periods. The latter shall be included by the corresponding amounts in the results of the periods that they relate to.

The costs attributable to the current year and whose expenses will only occur in future years are estimated and recorded under the caption 'Other current liabilities' and 'Other non-current liabilities', when it is possible to reliably estimate the amount and the timing of occurrence of the expense. If there is uncertainty regarding both the date of disbursement of funds, and the amount of the obligation, the value is classified as Provisions (note 1.o).

s) Revenue

Revenue includes the fair value of the consideration received or receivable from the sale or services rendered arising from the normal business activity of the company. The revenue is recognised net of taxes, any commercial and quantity discounts granted by the company.

The recognition of the Group's revenue is based on the fivestep model established by IFRS 15:

• (i) Identification of the contract with the trade debtor;
• (ii) Identification of performance obligations;
• (iii) Determination of the price of the transaction;
• (iv) Allocation of transaction price to performance obligations; and
• (v) Recognition of revenue.

Thus, at the beginning of each contract, the Group evaluates the promised goods or services and identifies, as a performance obligation, every promise to transfer to the customer any distinct good or service. These promises in client agreements may be express or implied, provided such promises create a valid expectation in the client that the entity will transfer a good or service to the customer, based on the entity's published policies, specific statements or business practices.

To determine the amount of revenue, the Group evaluates for each transaction its performance obligations to its customers, the price of the transaction to be affected by each performance obligation identified in the transaction, and the existence of variable price conditions that may lead to future success to the value of the recorded revenue, and for which the Group makes its best estimate. To determine and allocate the transaction price to each performance obligation, the Group uses the stand-alone prices of the products and services promised at the date of conclusion of the contract with the customer.

Revenue is recorded in the income statement when the control over the product or service is transferred to the customer, that is, at the moment when the customer becomes able to manage the use of the product or service and obtain all the benefits economic conditions associated with it.

The specialisation of revenue is presented as 'Assets of customer contracts - Billing due to customers' or 'Customer contract liabilities - Prepaid billing to customers', under 'Other current assets' and 'Other current liabilities' in the Statement of Financial Position.

Sale of goods

Revenue from the sale of assets is recognised in the income statement when the following conditions are met:

• (i) the risks and significant advantages of ownership of the asset have been transferred by the enterprise to the buyer;
• (ii) effective control of the assets sold is transferred to the buyer and the company ceases to have continuous management involvement to a degree generally associated with ownership;
• (iii) the amount of income can be reasonably quantified;
• (iv) the economic benefits associated with the transaction are likely to flow to the enterprise; and
• (v) the costs incurred with the transaction, or to be incurred, can reasonably be measured.

Services rendered

The income from the services rendered in the consulting projects is recognised, every year, accordingly to the performance obligation to which they comply and accordingly to the percentage of completion of the projects. That is, for each performance obligation, the Group recognises revenue over time by measuring progress towards full compliance with that performance obligation.

The revenue from the implementation of Software as a Service (SaaS) contracts in some cases must be recognised together with the service as a single performance obligation on a monthly basis over the contract period.

Revenue from consulting services contracts must be recognised at the time the benefits of the performance obligation are transferred to the customer.

Revenue from the provision of services is recognised in the income statement when the following conditions are met:

• (i) the amount of income can be reasonably quantified;
• (ii) it is probable that the company will obtain future economic benefits:
• (iii) the performance of the performance obligation at the balance sheet date is reliably measured; and

(iv) the costs incurred with the transaction and the costs to complete the transaction can be reliably measured.

The Group's sales and service contracts do not contain a significant financing component and in the case of variable remuneration, the estimated variable remuneration is restricted to an amount corresponding to what is highly probable that it will not be subject to significant reversals .

t) Fair value

The measurement of fair value presumes that an asset or liability is exchanged in an orderly transaction between market participants to sell the asset or transfer the liability at the measurement date, under current market conditions. The measurement of fair value is based on the assumption that the transaction to sell the asset or transfer the liability may occur:

• (i) In the main asset and liability market, or
• (ii) If the main asset and liability does not exist, in the market in which an orderly transaction would take place for the asset or liability.

The Group uses valuation techniques appropriate to the circumstances and for which there is sufficient data to measure fair value, maximising the use of observable relevant data and minimising the use of unobservable data.

All assets and liabilities measured at fair value or for which disclosure is mandatory are classified according to a fair value hierarchy, which alocates the data to be used in the fair value measurement, into three levels detailed below:

Level 1 - unadjusted quoted prices for identical assets and liabilities in active markets, which the entity can access at the measurement date;

Level 2 - Valuation techniques that use inputs that although are not quoted are directly or indirectly observable;

Level 3 - Valuation techniques that use inputs not based on observable market data, i.e., based on unobservable data. The measurement of fair value is classified fully at the lowest level of the input that is significant for the measurement as a whole.

u) Reserves

Legal reserve

The portuguese commercial legislation requires that at least 5% of the annual net profit must be appropriated to a 'Legal reserve', until such reserve reaches at least 20% of the share capital. This reserve is not distributable, except in case of liquidation of the Group, but may be used to absorb losses, after all the other reserves are exhausted, or to increase the share capital.

Share premiums

The share premiums relate to premiums generated in the issuing of capital or in capital increases. According to Portuguese Commercial law, share premiums follow the same requirements of 'Legal reserves', i.e., they are not distributable, except in case of liquidation, but they can be used to absorb losses, after all the other reserves are exhausted or to increase share capital.

Own shares reserve

The own shares reserve reflects the acquisition value of the own shares and deducted in equity, being unavailable for distribution, while own shares are held.

Other reserves

This caption includes retained earnings from previous years, foreign exchange reserves of companies by the consolidated comprehensive income method in the amount of Euro 282,356.

Under Portuguese law, the amount of distributable reserves is determined in accordance with the individual financial statements of the Group, presented in accordance with the IFRS standards. Additionally, the increments resulting from the application of fair value through equity components, including its implementation through net results, shall be distributed only when the elements that gave rise to them are sold, liquidated or exercised or when they finish their use, in the case of tangible or intangible assets. Therefore, at 30 June 2019, Sonaecom have free reserves distributable amounting approximately Euro 61 million. To this effect were considered as distributable increments resulting from the application of fair value through equity components already exercised during the period ended 30 June 2019.

v) Own shares

Own shares are recorded as a deduction of Shareholders' funds. Gains or losses arising from the sale of own shares are recorded under the heading 'Other reserves'.

w) Balances and transactions in foreign currency

Euro is the functional currency of presentation. All transactions in foreign currency are translated for the functional currency at the exchange rate of the transaction date. At each closing date, the exchange restatement of outstanding balances is carried out, applying the exchange rate in effect at that date.

Favourable and unfavourable foreign exchange differences resulting from changes in the rates in force at the transaction date and those in force at the date of collection, payment or at the balance sheet date are recorded as income and expenses in the consolidated profit and loss statement of the year, in financial results.

Assets and liabilities of the financial statements of foreign entities are translated to the functional currency of the Group (EUR) using the exchange rates in force at the statement of financial position date, while expenses and income in such financial statements are translated into euro using the average exchange rate for the period. The resulting exchange differences were recorded under the Shareholders' funds caption 'Other reserves'.

Entities operating abroad with organisational, economic and financial autonomy are treated as foreign entities.

Goodwill and adjustments to fair value generated in the acquisitions of foreign entities reporting in a functional currency other than Euro are translated at the statement of financial position.

The following rates were used to translate into Euro the financial statements of foreign subsidiaries and the balances in foreign currency:

		2019		2018
	30 June	Average	30 June	Average
Pounds Sterling	1.1154	1.1452	11286	11368
Brazilian Real	0.2298	0.2303	0 2778	0.2419
American Dollar	0.8787	0.8853	0.8578	0.8264
Polish Zloti	0.2353	0.2330	0.2287	0.2370
Australian Dollar	0.6156	0.6252	0.6334	0.6374
Mexican Peso	0.4583	0.0462	0.0437	0.0434
Egyptian Pound	0.0527	0.0515	0.0478	0.0465
Malaysian Ringgit	0.2124	0.2149	0.2124	0.2098
Swiss Franc	0.9005	0.8852	0.8644	0.8549
South African Rand	0.0620	0.0624	0.0623	0.0672
Canadian Dollar	0.6715	0.6637	0.6476	0.6469
Turkish Lira	0.1523	0.1575	0.1873	0.2026
Colomhian Peso	0.0003	0.0003	0 0003	00003

x) Assets impairment

Whenever the book value of an asset is greater than the amount recoverable, an impairment loss is recognised and recorded in the profit and loss statement under the caption 'Depreciation and amortisation' in the case of tangible assets and Goodwill and for the other assets under the caption 'Provisions and impairment losses', in relation to the other assets.

Non-financial assets impairment

Impairment tests are performed for assets with undefined useful life and Goodwill at the date of each statement of financial position and whenever an event or change of circumstances indicates that the recorded amount of an asset may not be recoverable.

lmpairment tests are performed for assets with defined useful lives and investments in associated whenever there is evidence that their book value is higher than the recoverable value.

The recoverable amount is the greater of the net selling price and the value in use. The net selling price is the amount obtainable upon the sale of an asset in a transaction within the capability of the parties involved, less the costs directly related to the sale. The value in use is the present value of the estimated future cash flows expected to result from the continued use of the asset and of its sale at the end of its useful life

The recoverable amount is estimated for each asset individually or, if this is not possible, for the cash-generating unit to which the asset belongs.

For the value of Goodwill, the recoverable amount, calculated in terms of value in use, is determined based on the most recent business plans duly approved by the Group's Board of Directors. For Goodwill of Investments in companies jointly controlled, the recoverable amount is determined taking into account various information such as the most recent business plans duly approved by the Group's Board of Directors and the average of evaluations made by external analysts (researches).

Non-financial assets, except Goodwill, for which impairment losses have been recorded, are reviewed at each reporting date for reversal of these losses.

Financial assets impairment

The Group assesses at each reporting date the existence of impairment in financial assets at amortised cost. The expected loss results from the difference between all contractual cash flows that are due to an entity in accordance with the contract and all the cash flows that the entity expects to receive, discounted at the original effective interest rate.

The objective of this impairment policy is to recognise expected credit losses over the duration of financial instruments that have undergone significant credit risk increases since initial recognition, assessed on an individual or collective basis, taking into account all reasonable and sustainable information, including prospects. If, at the reporting date, the credit risk associated with a financial instrument has not increased significantly since the initial recognition, the Group measures the provision for losses related to that financial instrument by an amount equivalent to the expected credit losses within a period of 12 months .

With regard to the amounts under 'Trade debtors', 'Other debtors' and 'Customer contract assets', the impairment losses are calculated based on the expected credit loss, the calculation of which results from the application of expected loss rates based on payments received in the context of sales and

services rendered, over a period of 36 months before 31 December 2018, and historical credit losses.

Regarding accounts receivable from related entities, which are not considered as part of the financial investment in these entities, credit impairment is assessed according to the following criteria: i) if the balance receivable is immediately due, ii) if the balance has a low risk, or (iii) if it has a maturity of less than 12 months. In cases where the amount receivable is immediately payable and the related entity is able to pay, the probability of default is close to 0% and therefore the impairment is considered equal to zero. In cases where the receivable balance is not immediately due, the related entity's credit risk is assessed and if it is "low" or if the maturity is less than 12 months, then the Group only assesses the probability of a default occurring for the cash flows that mature in the next 12 months.

For all other situations and nature of receivables, the Group applies the general approach of the impairment model, evaluating at each reporting date whether there has been a significant increase in credit risk since the date of the initial recognition of the asset. If there is no increase in credit risk, the Group calculates an impairment corresponding to the amount equivalent to expected losses within a period of 12 months. If there has been an increase in credit risk, the Group calculates an impairment corresponding to the amount equivalent to expected losses for all contractual flows until the maturity of the asset.

The Group prospectively estimates the estimated credit losses associated with assets at amortised cost. The methodology of impairment applied depends on whether or not there has been a significant increase in credit risk.

y) Medium Term Incentive Plans

The accounting treatment of Medium Term Incentive Plans is based on IFRS 2 – 'Share-based Payments'.

Under IFRS 2, when the settlement of plans established by the company involves the delivery of Sonaecom's own shares, the estimated responsibility is recorded, as a credit entry, under the caption 'Medium Term Incentive Plans Reserve', within the heading 'Shareholders' funds' and is charged as an expense under the caption 'Staff expenses' in the profit and loss statement.

The quantification of this responsibility is based on fair value and is recognised over the vesting period of each plan (from the award date of the plan until its vesting or settlement date). The total responsibility, at any point of time, is calculated based on the proportion of the vesting period that has 'elapsed' up to the respective accounting date.

When the responsibilities associated with any plan are covered by a hedging contract, i.e., when those responsibilities are replaced by a fixed amount payable to a third party and when Sonaecom is no longer the party that will deliver the Sonaecom shares, at the settlement date of each plan, the above accounting treatment is subject to the following changes:

• (i) The total gross fixed amount payable to third parties is recorded in the balance sheet as either 'Other non-current liabilities' or 'Other current liabilities';
• (ii) The part of this responsibility that has not yet been recognised in the profit and loss statement (the 'unelapsed' proportion of the cost of each plan) is deferred and is recorded, in the balance sheet as either 'Other noncurrent assets' or 'Other current assets':
• (iii) The net effect of the entries in (i) and (ii) above eliminate the original entry to 'Shareholders' funds';
• (iv) In the profit and loss statement, the 'elapsed' proportion continues to be charged as an expense under the caption 'Staff expenses'.

At 30 June 2019 there are no outstanding hedge agreements.

For plans settled in cash, the estimated liability is recorded under the balance sheet captions 'Other non-current liabilities' and 'Other current liabilities' by a corresponding entry under the profit and loss statement caption 'Staff expenses', for the cost relating to the vesting period that has 'elapsed' up to the respective accounting date. The liability is quantified based on the fair value of the shares as of each statement of financial position date. When the liability is covered by a hedging contract, recognition is made in the same way as described above, but with the liability being quantified based on the contractually fixed amount.

Equity-settled plans to be liquidated through the delivery of shares of Sonae are recorded as if they were settled in cash, which means that the estimated liability is recorded under the balance sheet captions 'Other non-current liabilities' and 'Other current liabilities' by a corresponding entry under the profit and loss statement caption 'Staff expenses', for the cost relating to the deferred period elapsed. The liability is quantified based on the fair value of the shares as of each statement of financial position date.

At 30 June 2019, the plans atributed during the years 2017, 2018 and 2019 are not covered by the contract and so a liability at fair value was recorded. The responsibility of all plans is recorded in the captions 'Other non-current liabilities' and 'Other current liabilities'. The cost is recognised on the income statement under the caption 'Staff expenses'.

z) Subsequent events

Events occurring after the date of the balance sheet which provide additional information about conditions prevailing at

the time of the balance sheet (adjusting events) are reflected in the consolidated financial statements. Events occurring after the balance sheet date that provide information on postbalance sheet conditions (non-adjusting events), when material, are disclosed in the notes to the consolidated financial statements.

aa) Judgements and estimates

The most significant accounting estimates reflected in the consolidated financial statements of the periods ended at 30 June 2019 and 2018 are as follows:

• (i) Useful lives of tangible and intangible assets (note 1.c) and 1.d);
• (ii) Impairment analysis of goodwill, investments in associated companies and companies jointly controlled and of other tangible and intangible assets (note 8);
• (iii) Financial assets impairment;
• (iv) Recognition provisions and analysis of contingent liabilities:
• (v) Recoverability of deferred tax assets (note 11);
• (vi) Recognition of contract revenue;
• (vii) Investments at fair value of other comprehensive income (note 10).

Estimates used are based on the best information available during the preparation of the consolidated financial statements and are based on the best knowledge of past and present events. Although future events are neither foreseeable nor controlled by the Group, some could occur and have impact on such estimates. Changes to the estimates used by the management that occur after the approval date of these consolidated financial statements, will be recognised in net income, in accordance with IAS 8 - 'Accounting Policies, Changes in Accounting Estimates and Errors', using a prospective methodology.

Impairment of financial assets

The determination of impairment on financial assets involves significant estimates. In calculating this estimate, management assesses, among other factors, the duration and extent of the circumstances under which the recoverable amount of these assets may be lower than their book value. The balances of 'Trade debtors', 'Other current debtors' and 'Other Current Assets' are valued for factors such as default history, current market conditions, and estimated prospective information by reference to the end of each reporting period, the most critical evaluation elements for the purpose of analysing estimated credit losses.

Recognition of contract revenue

In the recognition of revenue on the basis of the percentage of completion, the management reviews, at each reporting date, the total estimated costs, which correspond to the best estimate of the costs associated with the provision of the construction service and / or until its completion. Where there are significant deviations in the performance of the contract that are not associated with changes that result in the right to additional revenue as agreed with the customer, the management reviews the percentage of completion and the margin associated with the contract, according to its best estimate, and may result in the recording of a provision (onerous contract) (note 1.s).

Disclosures for over time revenue recognition:

a) recognise revenue method (description of output or input methods and how they are applied),

b) justification of why the method provides a reliable representation of the transfer of goods or services

For the remaining judgments and estimates are described in attached notes, where applicable.

Rights of use

The Group determines the end of the lease as the noncancellable part of the lease term, together with any periods covered by an option to extend the lease if it is reasonably certain that it will be exercised, or any periods covered by an option to terminate the lease agreement, if it is reasonably certain that it will not be exercised.

The Group has the option, under some of its lease agreements, to lease its assets for additional periods. Sonaecom evaluates the reasonableness of exercising the option to renew the agreement. That is, the Group considers all the relevant factors that create an economic incentive for the renewal exercise. After the starting date, the Group re-evaluates the termination of the contract if there is a significant event or changes in circumstances that are under control and affect its ability to exercise (or not exercise) the renewal option (e.g. a change in the strategy of the business).

Entities included in the consolidation perimeter

To determine the entities to be included in the consolidation perimeter, the Group assesses the extent to which it is exposed, or has rights to variability in returns from its involvement with that entity and can take possession of them through the power it holds over this entity.

The decision that an entity must be consolidated by the Group requires the use of judgment, estimates and assumptions to determine the extent to which the Group is exposed to return variability and the ability to take possession of them through its power.

Other assumptions and estimates could lead to the Group's consolidation perimeter being different, with direct impact on the consolidated financial statements.

ab) Financial risk management

Due to its activities, the Group is exposed to a variety of financial risks such as market risk, liquidity risk and credit risk.

These risks arise from the unpredictability of financial markets, which affect the capacity of project cash flows and profits. The Group financial risk management, subject to a long-term ongoing perspective, seeks to minimise potential adverse effects that derive from that uncertainty, using, whenever it is possible and advisable, derivative financial instruments to hedge the exposure to such risks (note 1.n).

The Group is also exposed to equity price risks arising from equity investments, although they are usually maintained for strategic purposes.

Market risk

a) Foreign exchange risk

The Group operates internationally, having subsidiaries that operate in countries with a different currency than Euro namely Brazil, United Kingdom, United States of America, Mexico, Australia, Egypt, Colombia, Malaysia (branch), and so it is exposed to foreign exchange rate risk.

Foreign exchange risk management seeks to minimise the volatility of investments and transactions made in foreign currencies and contributes to reduce the sensitivity of Group results to changes in foreign exchange rates.

Whenever possible, the Group uses natural hedges to manage exposure, by offsetting credits granted and credits received expressed in the same currency. When such procedure is not possible, the Group adopts derivative financial hedging instruments (note 1.n).

The Group's exposure to foreign exchange rate risk, results essentially from the fact that some of its subsidiaries report in a currency different from euro, making the risk of operational activity immaterial.

b) Interest rate risk

Sonaecom's total debt is indexed to variable rates, exposing the total cost of debt to a high risk of volatility. The impact of this volatility on the Group results or on its Shareholders' funds is mitigated by the effect of the following factors (i) relatively low level of financial leverage; (ii) possibility to use derivative financial instruments that hedge the interest rate risk, as mentioned below; (iii) possible correlation between the level of market interest rates and economic growth having the latter a positive effect in other lines of the Group's consolidated results (particularly operational), and in this way partially offsetting the increase of financial costs ('natural hedge'); and (iv) the existence of stand alone or consolidated liquidity which is also bearing interest at a variable rate.

The Group only uses derivatives or similar transactions to hedge interest rate risks considered significant. Three main principles are followed in all instruments selected and used to hedge interest rate risk:

• For each derivative or instrument used to hedge a specific loan, the interest payment dates on the loans subject to hedging must equalise the settlement dates defined under the hedging instrument;
• Perfect match between the base rates: the base rate used in the derivative or hedging instrument should be the same as that of the facility/transaction which is being hedged;
• As from the start of the transaction, the maximum cost of the debt, resulting from the hedging operation is known and limited, even in scenarios of extreme changes in market interest rates, so that the resulting rates are within the cost of the funds considered in the Group's business plan.

As all Sonaecom's borrowings (note 15) are at variable rates, swaps and other derivatives are used, when it is deemed necessary, to hedge future changes in cash flow relating to interest payments. Interest rate swaps have the financial effect of converting the respective borrowings from floating rates to fixed rates. Under the interest rate swaps, the Group agrees with third parties (banks) to exchange, in pre-determined periods, the difference between the amount of interest calculated at the fixed contract rate and the floating rate at the time of re-fixing, by reference to the respective agreed notional amounts.

The counterparties of the derivative hedging instruments are limited to highly rated financial institutions, being the Group's policy, when contracting such instruments, to give preference to financial institutions that form part of its financing transactions. In order to select the counterparty for occasional operations, Sonaecom requests proposals and indicative prices from a representative number of banks in order to ensure adequate competitiveness of these operations.

In determining the fair value of hedging operations, the Group uses certain methods, such as option valuation and discounted future cash flow models, using assumptions based on market interest rates prevailing at the balance sheet date.

Comparative financial institution quotes for the specific or similar instruments are used as a benchmark for the valuation.

The fair value of the derivatives contracted that are not considered as fair value hedges or the ones that are considered not sufficiently effective for cash flow hedge are recognised under the statement of financial position and changes in the

fair value of such derivatives are recognised directly in the profit and loss statement for the year.

Sonaecom's Board of Directors approves the terms and conditions of the financing with significant impact in the Group, based on the analysis of the debt structure, the risks and the different options in the market, particularly as to the type of interest rate (fixed / variable). Under the policy defined above, the Executive Committee is responsible for the decision on the occasional interest rate hedging contracts, through the monitoring of the conditions and alternatives existing in the market.

At 30 June 2019, there are no contracted derivatives of interest rate hedging.

Liquidity risk

The existence of liquidity in the Group requires the definition of some policies for an efficient and secure management of the liquidity, allowing us to maximise the profitability and to minimise the opportunity costs related to that liquidity.

The liquidity risk management has a threefold objective: (i) Liquidity, i.e., to ensure the permanent access in the most efficient way to obtain sufficient funds to settle current payments within the respective dates of maturity as well as any eventual not forecasted requests for funds, within the deadlines set for this; (ii) Safety, i.e. to minimise the probability of default in any reimbursement of application of funds; and (iii) Financial Efficiency, i.e., to ensure that the Group maximises the value / minimises the opportunity cost of holding excess liquidity in the short term.

The main underlying policies correspond to the variety of instruments allowed, the maximum acceptable level of risk, the maximum amount of exposure by counterparty and the maximum periods for investments.

The existing liquidity in the Group should be applied to the alternatives and by the order described below:

• (i) Amortisation of short-term debt after comparing the opportunity cost of amortisation and the opportunity cost related to alternative investments;
• (ii) Consolidated management of liquidity the existing liquidity in Group companies, should mainly be applied in Group companies, to reduce the use of bank debt at a consolidated level; and
• (iii) Applications in the market.

The applications in the market are limited to eligible counterparties, with ratings previously established by the Board and limited to certain maximum amounts by counterparty.

The definition of maximum amounts intends to ensure that the application of liquidity in excess is made in a prudent way and taking into consideration the best practices in terms of bank relationships.

The maturity of applications should equal the forecasted payments (or the applications should be easily convertible, in the case of asset investments, to allow urgent and not estimated payments), considering a threshold for eventual deviations on the estimates. The threshold depends on the accuracy level of treasury estimates and would be determined by the business. The accuracy of the estimates is an important variable to quantify the amounts and the maturity of the applications in the market.

Loans, suppliers and other debts to third parties and other financial liabilities represent the Group's maximum exposure to liquidity risk.

Taking into account the low value of the liabilities and the high value of the cash and cash equivalents of the Group is understood that the liquidity risk is very low.

Credit risk

The Group's exposure to credit risk is mainly associated to the accounts receivable arising from its operating activities, treasury applications and supplies to other non-current assets.

(i) Cash and cash equivalents

Sonaecom Group holds financial assets arising from its relationship with financial institutions. There is a credit risk associated with the potential pecuniary default of the Financial Institutions that are counterparts in these relationships, however, in general, the exposure related to this type of financial assets is widely diversified and of limited duration in time.

Credit risk associated with relationships with financial institutions is limited by the management of risk concentration and a rigorous selection of counterparties with a high prestige and national and international recognition and based on their respective ratings, taking into account the nature, maturity and size of operations.

The Group uses credit assessment agencies and has specific departments for credit control, collection and litigations' management, as well as credit insurance, which help to mitigate such risk. The management of this risk is aimed at ensuring the effective collection of its credits within the established deadlines without affecting the financial balance of the Group.

(ii) Loans granted to related parties

There are no impairment losses for Loans granted to related parties.

Loans granted to related parties are considered to have low credit risk and, therefore, impairment losses recognised during the year are limited to estimated credit losses at 12 months. These financial assets are considered to have "low credit risk" when they have a low impairment risk and the borrower has a high capacity to meet its contractual cash flow liabilities in the short term.

(iii) Trade debtors and Other current debtors

To measure the expected credit losses, the unpaid amounts and contractual assets were grouped based on the common credit risk characteristics and the days of late payment. Contract assets refer to unbilled work in progress and have substantially the same risk characteristics as accounts receivable for the same types of contracts. The company therefore concluded that the expected loss rates for trade accounts receivable are a reasonable approximation of the loss rates on the contractual assets. The expected loss rates are based on the sales payment profiles over a period of 36 months (3 years) before 31 December 2018, and the corresponding historical credit losses verified during this period. Historical loss rates are adjusted to reflect current and prospective information on macroeconomic factors that affect customers ability to settle outstanding amounts.

As such, the impairment losses at 30 June 2019 were determined taking into account these assumptions of IFRS 9. Considering the aforementioned policies, the Board of Directors does not foresee the possibility of any occurrence of any material breach of contractual obligations.

The amounts related to cash and cash equivalents, other non current assets (loans granted) and other third party debts presented in the financial statements, which are net of impairment, represent the maximum exposure of the Group to credit risk.

Capital risk

Sonaecom's capital structure, determined by the ratio of equity and net debt, is managed in a way that ensures the continuity and development of its operating activities, maximises shareholder's returns and optimises the cost of financing.

Risks, opportunities and necessary adjustment measures in order to achieve the referred objectives are periodically monitorised by Sonaecom.

At 30 June 2019, Sonaecom reported an average negative gearing (accounting) of 19.7%. The average gearing at market values at 2019 was negative in 27.6%.

2. Companies included in the consolidation

Group companies included in the consolidation method, their head offices, main activities, shareholders and percentage of share capital held at 30 June 2019 and 2018, are as follows:

						Percentage of share capital held
Lompany (Lommercial brand)		Head office Main activity	Shareholder	Direct	2019 Effective*	Direct	2018 Effective *
Parent company
SONAECOM, S.G.P.S., S.A. ('Sonaecom')	Maia	Management of shareholdings
Subsidiaries Bright Development Studio, S.A. ('Bright')	Lisbon	Research, development and commercialization of projects and service solutions in the area of information technology, communications and retail, and consulting activities for business and management.	Sonae IM	100%	100%	100%	100%
Bright Ventures Capital, SCR, S.A.	Lisbon	Realization of investment in venture capital, management of venture capital funds and investment in venture capital fund units	Bright	100%	100%	100%	100%
Cape Technologies Limited ('Cape Technologies')	Dublin	Rendering of consultancy services in the area of information systems.	We Do	100%	100%	100%	100%
Digitmarket - Sistemas de Informação, S.A. ('Digitmarket' - using the brand 'Bizdirect')	Maia	Development of management platforms and commercialisation of products, services and information, with the internet as its main support.	Sonae IM	75.00%	75.00%	75.00%	75.00%
Excellium Group, S.A. ('Excellium') (a)	Contern	Provides professional and managed customised cybersecurity services	Sonae IM	59.20%	59.20%
Excellium Services, S.A. ('Excellium Services') (a)	Contern	Provide services within the IT and cibersecurity domain mainly to Luxembourgish institutions, banks and insurance companies.	Sonae IM	59.20%	59.20%
Excellium Services Belgium, S.A. ('Excellium Services Belgium') (a)	Wavre	Provide services within the IT and cibersecurity domain mainly to Belgium institutions, banks and insurance companies	Sonae IM	59.20%	59.20%
Excellium Factory SARL ('Excellium Factory') (a)	Raouad Ariana	Vehicle for the Excellium product development.	Sonae IM	80%	47.36%
Inovretail, S.A.	Uporto	Industry and sale of electronic equipment and software; development, installation, implementation, training and maintenance of systems and software products; rental equipment, sale of software use license; consulting business, advisory in retail segments, industry and services.	Sonae IM	100%	100%	100%	100%
Inovretail España, SL ('Inovretail Espanha') (b)	Madrid	Industry and sale of electronic equipment and software; development, installation, implementation, training and maintenance of systems and software products; rental equipment, sale of software use license; consulting business, advisory in retail segments, industry and services	Inovretail	100%	100%
Fundo Bright Vector I ('Bright Vector I')	Lisbon	Venture Lapital Fund	Sonae IM	50.13%	50.13%	5013%	5013%
Nextel, S.A. (Nextel) (c)	Bilbao	Rendering of engineering and IT consulting services specializing in information security and management of telecommunications services.	S21 Sec Gestion	Merged with S21Sec Gestion		100%	80.90%
Mxtel, S.A. de CV (Mxtel)	Mexico Lity	Rendering of engineering and IT consulting services specializing in information security and management of telecommunications services.	Nextel	99.93%	80.90%	100%	80.90%
PCJ - Público, Lomunicação e Jornalismo, S.A. ('PLJ')	Maia	Editing, composition and publication of periodical and non- periodical material and the exploration of radio and TV stations and studios.	Sonaecom	100%	100%	100%	100%
Praesidium Services Limited ('Praesidium Services')	Berkshire	Rendering of consultancy services in the area of information systems.	Sonae IM	100%	100%	100%	100%
Público - Comunicação Social, S.A. ('Público')	Uporto	Editing, composition and publication of periodical and non- periodical material.	Sonaecom	100%	100%	100%	100%
S21Sec Portugal Cybersecurity Services, S.A. ('S21 Sec Portugal')	Maia	Commercialization of products and management services, implementation and consulting in information systems and technologies areas.	521 Sec Gestion	100%	80.90%	100%	80.90%
S21 Sec Brasil, Ltda ('S21 Sec Brasil') (d)	São Paulo	Lonsulting in information technology. Development and Concertify of customizable computer programs. Development of custom computer programs. Technical support, maintenance and other services in information technology		Discontinued		gg gg%	80.90%
S21 Sec Gestion, S.A. ('S21 Sec Gestion')	Guipuzcoa	Consulting, advisory, audit and maintenance of all types of facilities and advanced communications services and security systems. Purchase and installation of advanced communications and security systems produced by others.	Sonaecom CSI	80.90%	80.90%	80.90%	80.90%
S21 Sec Information Security Labs, S.L. ('S21 Sec Labs')	Navarra	Research, development and innovation, as well as consulting, maintenance and audit for products, systems, facilities and communication and security services.	521 Sec Gestion	100%	80.90%	100%	80.90%
S21 Sec, S.A. de CV ('S21 Sec, S.A. de CV')	Mexico Lity	Computer consulting services	S21 Sec Gestion	99,9996%	80.90%	aa,aaae%	80.90%
Sonaecom effective participation			S21 Sec Labs	0.0004%		0,0004%

						Percentage of share capital held
					2019		2018
Company (Commercial brand)	Head office	Main activity	Shareholder	Direct	Effective *	Direct	Effective*
Saphety Level - Trusted Services, S.A. ('Saphety')(e)	Maia	Rendering services, training consultancy services in the area of communication, process and electronic certification of data; trade, development and representation of software.	Sonae IM	Alienated		86.995%	86.995%
Saphety Brasil Transações Eletrônicas Ltda. ("Saphety Brasil") (e)	São Paulo	Rendering services, training, consultancy services in the area of communication, process and electronic certification of data; electronic identification, storage and availability of databases and electronic payments; trade, development and representation of software related with these services.	Saphety	Alienated		ರಿಡಿ ಡಿಡಿ ಡಿಡಿ ಡಿಡಿ ಇದು ಒಂದು ಒಂದು ಒಂದು ಒಂದು ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ	86.986%
Saphety - Transacciones Electronicas SAS ('Saphety Colômbia') (e)	Bogota	Rendering services, training, consultancy services in the area of communication, process and electronic certification of data; electronic identification, storage and availability of databases and electronic payments; trade, development and representation of software related with these services.	Saphety	Alienated		100%	86.995%
Sonaecom - Cyber Security and Intelligence, SGPS, S.A. ('Sonaecom CSI')	Maia	Management of shareholdings.	Sonae IM	100%	100%	100%	100%
Sonaecom - Serviços Partilhados, S.A. ('Sonaecom SP')	Maia	Support, management consulting and administration, particularly in the areas of accounting, taxation, administrative procedures, logistics, human resources and training,	Sonaecom	100%	100%	100%	100%
Sonae Investment Management - Software and Technology, SGPS, S.A. ('SonaelM')	Maia	Management of shareholdings in the area of corporate ventures and joint ventures.	Sonaecom	100%	100%	100%	100%
Taikai, LTDA ('Taikai') (f)	Uporto	Research, design and development of products and services in the field of information technologies, as well as investment and training related to the development of new business information systems.	Bright	99.01%	99.01%
Tecnológica Telecomunicações, LTDA. ('Tecnológica')	Rio de Janeiro	Rendering of consultancy and technical assistance in the area of IT systems and telecommunications.	We Do Brasil	ರಿಡಿದ್ದಾರೆ. ಇದನ್ನೂ ಕರ್ನಾಟಕ ಸಾಮಾನ್ಯ ಸಾಮಾನ್ಯ ಸಾಮಾನ್ಯ ಸಾಮಾನ್ಯ ಮತ್ತು ಸಾಮಾನ್ಯ ಮತ್ತು ಸಾಮಾನ್ಯ ಮತ್ತು ಸಾಮಾನ್ಯ ಮತ್ತು ಸಾಮಾನ್ಯ ಮತ್ತು ಸಾಮಾನ್ಯ ಮತ್ತು ಸಾಮಾನ್ಯ ಮತ್ತು ಸಾಮಾನ್ಯ ಮತ್ತು ಸಾಮಾನ್ಯ ಮತ	99.90%	gg.gg%	ﻭﻭ. 90%
We Do Consulting-Sistemas de Informação, S.A. ('We Do')	Maia	Rendering of consultancy services in the area of information systems.	Sonae IM	100%	100%	100%	100%
Wedo do Brasil Soluções Informáticas, Ltda. ('We Do Brasil')	Rio de laneiro	Commercialisation of software and hardware; rendering of consultancy and technical assistance related to information technology and data processing.	We Do	99.91%	99.91%	ਰੂਰ ਰੀਡ	dd.a1%
We Do Technologies Americas, Inc (We Do USA') (g)	Delaware	Rendering of consultancy services in the area of information systems.	Cape Technologies We Do	100%	100%	100%	100%
We Do Technologies Australia PTY Limited (We Do Austrália') (h)	Sydney	Rendering of consultancy services in the area of information systems.	Lape Technologies	Discontinued		100%	100%
We Do Technologies BV ('We Do BV')	Amsterdam	Management of shareholdings.	We Do	100%	100%	100%	100%
We Do Technologies BV - Malaysian Branch ('We Do Malásia')	Kuala Lumpur	Rendering of consultancy services in the area of information systems.	We Do BV	100%	100%	100%	100%
We Do Chile ('We Do Chile') (i)	Santiago do Chile	Rendering of consultancy services in the area of information systems.	We Do	100%	100%	100%	100%
We Do Technologies Egypt LLC (We Do Egypt')	Cairo	Rendering of consultancy services in the area of information sys	We Do BV We Do	90% 10%	100%	90% 10%	100%
We Do Technologies España - Sistemas de Informação, S.L. ('WeDo España')	Madrid	Rendering of consultancy services in the area of information systems.	We Do	100%	100%	100%	100%
We Do Technologies (UK) Limited ('We Do UK')	Berkshire	Rendering of consultancy services in the area of information systems.	We Do	100%	100%	100%	100%
We Do Technologies Mexico, S de R.L. ('We Do Mexico')	Mexico City	Rendering of consultancy services in the area of information curtome	We Do WA DA DU	0.001% 00 00000	100%	0.001% 00 0000	100%

* Sonaecom effective participation
(a) Company acquired in December 2018.
(b) Company acquired in December 2018.
(6) Company Constituted and Commended Comments continued.
(2)

(e) At 21 March 2019, Sonae IM alongside with AITEC and BPI sold their participation in the Saphety Group (note 3.c).

(f) Company constituted in September 2018.

(e) In October 2018 the participation of 100% held by Cape Technologies Limited was sold to We Do Consulting - Sistemas de Informação, S.A.

(h) In March 2019, the subsidiary We Do Australia was discontinued.

(i) Company constituted in October 2018.

All the above companies were included in the consolidation in accordance with the full consolidation method under the terms of FRS 10 – 'Consolidated Financial Statements'.

3. Changes in the Group

During the periods ended at 30 June 2019 and 2018, the following changes occurred in the Group:

a) Acquisitions

Shareholder	Subsidiary	Date
2019
Sonae IM	Fundo de Capital de Risco Armilar Venture Partners III ('Armilar III') (note 9)	Jan-19
Sonae IM	ViSenze Pte. Ltd ("ViSenze") (note 10)	Feb-19
Sonae IM	Case on IT, S.L. ('Case on IT') (note 10)	Feb-19
Sonae IM	C-B4, Ltd ('CB-4') (note 10)	Feb-19
Fundo Bright Vector l	Automaise, Lda ('Automaise') (note 10)	Mar-19
Fundo Bright Vector I	Social Disruption Marketing Agency, Lda ('Sway') (note 10)	Apr-19
Sonae IM	Cellwize Wireless Technologies Ltd. ("Cellwise') (note 10)	May-19
Bright	Fyde, Inc. ('Fyde') (note 10)	Jun-19

Shareholder	Subsidiary	Date
2018
Bright	Food Orchestrator, Lda ('Food Orchestrator') (note 10)	Jan-18
Sonae IM	Jscrambler, S.A. ('Jscrambler') (note 10)	Feb-18
Fundo Bright Vector I	Advert.io, Lda ('Advert.io') (note 10)	Mar-18
Fundo Bright Vector I	Binary Answer, Lda ('Binary Answer') (note 10)	Mar-18
Sonae IM	Style Sage, Inc. ('Style Sage') (note 10)	Apr-18
Sonae IM	Nextail Labs, Inc ('Nextail') (note 10)	May-18
Sonae IM	Case on IT, S.L. ('Case on IT') (note 10)	Jun-18
Bright	EGI Factory, S.L ('EGI Factory') (note 10)	Jun-18
S21Sec Gestión	Nextel	Jun-18
S21Sec Gestión	Mxtel	Jun-18

b) Dissolutions

Shareholder	Subsidiary	Date
2019
Sonae IM	We Do Australia	Mar-19
S21 Sec Gestion	S21 Sec Brasil	Jun-19

c) Alienations

Shareholder	Subsidiary	Date
2019
Sonae IM	Saphety	Mar-19
Saphety	Saphety Brasil	Mar-19
Saphety	Saphety Colômbia	Mar-19

Shareholder	Subsidiary	Date
2018
Sonae IM	Digitmarket (0,10%)	Mau-18
Sonae IM	Armilar Venture Partners - Sociedade de Capital de Risco, SA ('Armilar')(note 9)	Jun-18

Effects of the alienation of subsidiaries in the financial statements

In March 2019, the companies that are part of the Saphety Group were alienated by the amount of Euro 8,580,809 to its management team, supported by Oxy Capital. As a result of the value of sale and the Saphety Group, an add value of Euro 4,832,163 was registered, as detailed below:

		Saphety Group
(Amounts expressed in Euro)	Notes	March 2019
Acquired assets
Tangible assets	5	(280,044)
Intangible assets	ნ	(2,303,459)
Rights of use	7	(1,487,795)
Deferred tax assets	11	(123,408)
Trade debtors		(2,725,770)
Other current debtors		(209,344)
Other current assets		(831,324)
Cash and cash equivalents	12	(257,712)
		(8,218,856)
Acquired liabilities
Loans obtained	15	154,202
Trade creditors		662,099
Other current creditors		597,649
Other current liabilities		2,484,972
		3,898,922
Total net assets derecognised		4,319,934
Total net assets of non-controlling interests derecognised		(571,288)
Total net assets after non-controlling interests derecognised		3,748,646
Acquisition price		8,580,809
Goodwill		4,832,163

d) Mergers

In May 2019 an absorption merger proceeded between the incorporating company S21 Sec Gestion, S.A. and the incorporated company Nextel, S.A., which the S21 Sec Gestion, SA incorporated, with retroactive accounting effects as from 1 January 2019, this company's entire operating activity, as well as Nextel's global transfer of its assets to book value. This merger had no impact on Sonaecom's consolidated accounts for the period ended at 30 June 2019.

4. Breakdown of financial instruments

At 30 June 2019 and 2018, the breakdown of financial instruments in accordance with the IFRS 9 is as follows:

						2019
	Financial assets measured at amortised cost	Financial assets at fair value through other comprehensive income	Financial assets at fair value through profit or loss	Total financial assets	Others not covered by IFRS 9	Total
Non-current assets Investments at fairvalue through other comprehensive income (note 10) Other non-current assets	5.738.194 5,738,194	40.117.853 40,117,853	88.159 88159	40.117.853 5,826,353 45,944,206	-	40,117,853 5.826.353 45,944,206
Current assets Trade debtors Other current debtors ncome tax receivable Other current assets	48.726.193 7,189,954 14.647.745			48.726.193 7,189,954 14.647.745	1919.925 2.454.093 5.948.951	48.726.193 9.109.879 2,454,093 20.596.696
Cash and cash equivalents (note 12)	210,969,333 281,533,225			210,969,333 281533.225	10.322.969	210,969,333 291856.194

						2018 (restated)
	Financial assets measured at amortised cost	Financial assets at fair value through other comprehensive income	Financial assets at fair value through profit or loss	Total financial assets	Others not covered by IFRS 9	Total
Non-current assets
Investments at fair value through other comprehensive income (note 10)		12.871.427		12,871,427		12.871.427
Other non-current assets (restated)	2,270,975			2,270,975		2,270,975
	2.270.975	12,871,427		15,142,402		15,142,402
Current assets
Trade debtors	45.091.533			45.091.533		45,091,533
Other current debtors (restated)	6.170.489			6.170.489	1,204,488	7,374,977
Income tax receivable					6,918,449	6,918,449
Other current assets	13,264,147			13,264,147	3,548,956	16,813,103
Cash and cash equivalents (note 12)	251.004.219			251,004,219		251,004,219
	315 530 388			315 530 388	11 671 893	327 202 281

				2019
	Liabilities recorded at amortised cost	Total financial liabilities	Others not covered by IFRS 9	Total
Non-current liabilities
Non-current loans net of short term position (note 15)	2,683,489	2.683.489	-	2,683,489
Non-current lease liabilities (note 16)	13,924,527	13,924,527		13.924.527
Other non-current liabilities	6,775,760	6,775,760	94.087	6,869,847
	23,383,776	23,383,776	94.087	23,477,863
Current liabilities
Current loans and other loans (note 15)	4,034,348	4,034,348		4,034,348
Trade creditors	23.830.830	23.830.830		23.830.830
Current lease liabilities (note 16)	3,293,066	3,293.066		3,293.066
Other creditors	5.333.183	5,333,183	9.436.007	14.769.190
Income tax payable			254.392	254,392
Other current liabilities	19.155.844	19.155.844	15,345,755	34,501,599
	55 647 271	55 647 771	25 036 154	80.683.425

				2018
				(restated)
	Liabilities recorded at	Total financial	Others not covered
	amortised cost	liabilities	by IFRS 9	Total
Non-current liabilities
Non-current loans net of short term position (note 15)	4,044,592	4.044.592		4,044,592
Non-current lease liabilities (note 16) (restated)	4,786,904	4,786,904		4,786,904
Other non-current liabilities	463.954	463.954	182.161	646.115
	9,295,450	9.295.450	182.161	9.477.611
Current liabilities
Current loans and other loans (note 15)	3.627.273	3.627.273		3,627,273
Trade creditors	24,719,979	24.719.979		24.719.979
Current lease liabilities (note 16) (restated)	3,351,649	3.351.649		3.351.649
Other creditors	12,669,385	12.669.385	6.104.033	18.773.418
Income tax payable			191.422	191.422
Other current liabilities	18,284,770	18,284,770	12.611.747	30.896.517
	62,653,056	62,653,056	18.907,202	81.560.258

Considering the nature of the balances, the amounts to be paid and received to/from 'State and other public entities' as well as specialised costs related to the share based plans were considered outside the scope of IFRS 9. On the other hand, the deferred costs/profits recorded in the captions other current assets/liabilitie were considered non-financial instruments.

The Board of Directors believes that, the breakdown of financial instruments recorded at amortised cost or registered at the present value of the payments does not differ significantly from their book value. This decision is based in the contractual terms of each financial instrument. In addition, other current financial liabilities correspond to assets and liabilities measured at amortised cost that will be satisfied in the short term.

5. Tangible assets

The changes in tangible assets and in the corresponding accumulated depreciation and impairment losses in the periods ended at 30 June 2019 and 2018 was as follows:

							2019
	Land, Buildings and other constructions	Plant and machinery	Vehicles	Fixtures and fittings	Other tangible assets	Work in progress	Total
Gross assets Balance at 31 December 2018 Additions	4,267,550 5,700	11,684,618 96,301	385,569	9,757,930 42,208	485,832 1,080	342,710 250,941	26,924,209 396,230
Disposals Effect of currency translation Transfers and write-offs	8.457 42,463	(40,936) 3.166 (397,617)		(505,065) 28,217 404,141	(945) 40 6,767	43 (162,074)	(546,946) 39,923 (106,320)
Discontinued units (note 3.c) Balance at 30 June 2019	(410.886) 3,913,284	(32.828) 11,312,704	385,569	(128.367) 9,599,064	492.774	(3.239) 428.381	(575.320) 26.131.776
Accumulated depreciation and impairment losses Balance at 31 December 2018	2,865,417	11,129,511	354.938	8,802,070	390.621		23,542,557
Depreciation for the period of the discontinued operations (note 26) Depreciation for the period Disposals	6,868 83,647	500 153,243	6.789	1,787 195,895	6.081		9,155 445.655
Effect of currency translation Transfers and write-offs	6,734 238	30.876) 2.518 (3,606)		(484.533) 21,679 (22,965)	(614) 16		(516.023) 30,947 (26,333)
Discontinued units (note 3.c) Balance at 30 June 2019	(139.139) 2,823,765	(31839) 11,219,451	361,727	(124.298) 8,389,635	396.104		(295.276) 23,190,682
Net value	1,089,519	93,253	23,842	1.209.429	96,670	428,381	2,941,094

							2018 (restated)
	Land, Buildings and other constructions	Plant and machinery	Vehicles	Fixtures and fittings	Other tangible assets	Work in progress	Total
Gross assets
Balance at 31 December 2017	4,261,366	10,090,749	27,398	8,997,214	453,821	227,465	24,058,013
Changes in consolidation perimeter (note 8)		600,161	21,054	287,671	321.299		1,230,185
Additions	17,927	11,563		137,596	5,796	ਰੂੰ, 997	268.879
Disposals				(3,499)			(3,499)
Effect of currency translation	(25,610)	2,311	717	(10,306)	(64		(32,952)
Transfers and write-offs	4,081	53,713		140,523	1,986	(200,235)	68
Balance at 30 June 2018	4,257,764	10,758,497	49,169	a 244,199	782,838	123,227	25.520.694
Accumulated depreciation and impairment losses
Balance at 31 December 2017	2,606,886	9,868,165	27,398	8.311.678	372,871		21,186,998
Changes in consolidation perimeter (note 8)		538.196	20,176	258,737	282,924		1,100,033
Depreciation for the period	90.477	40,855		157,299	3,016		291.647
Depreciation for the period of the discontinued operations (note 26)	13,998	1,001		8,978			23,977
Disposals				(2,954)			(2,954)
Effect of currency translation	(31,993)	2,059	688	(6,292)	(ea)		(35,607)
Transfers and write-offs	(29)	15		590			576
Balance at 30 June 2018	2,679,339	10.450.291	48,262	8,728,036	658,742		22,564,670
Net value	1,578,425	308.206	907	821.163	124,096	123,227	2,956,024

Depreciation, amortisation and impairment losses for the periods ended at 30 June 2018 can be detailed as follows:

	2019	2018
Tangible assets	445.655	291.647
Intangible assets (note 6)	4.557.191	3,563,572
Rights of use (note 7)	2.514.749	1,807,643
	7,517,595	5,662,862

At 30 June 2019 and 2018, the caption 'Tangible assets' does not include any asset pledged or given as a guarantee for loans obtained. The caption 'Tangible assets in progress' at 30 June 2018 can be decomposed as follows:

	2019	2018
Information systems / IT equipment	32,021	34,789
Other projects in progress	396,360	88,438
	428.381	123,227

During the periods ended at 30 June 2018, there are no commitments to third parties relating to investments to be made.

6. Intangible assets

In the periods ended at 30 June 2019, the changes occurred in intangible assets and in the corresponding accumulated amortisation and impairment losses, were as follows:

							2019
	Brands and patents and other rights	Software	Other intangible assets	in progress	Intangible assets generated assets - Software	Internally Internally generated assets . Intangible assets in progress	lota
Gross assets Balance at 31 December 2018	18,197,187	20,671,995	121,575	502.471	76.416.768	4.885.320	120.795.316
Additions	24,980	155,984		376.671		2,533,860	3,091,495
Effect of currency translation	ട് ഒരില്‍ട്	38,123			44,502		142.280
Transfers and write-offs	(22,417)	(2,701,713)	72,566	(74,303)	4.862.293	(4,862,293)	(2.725.867)
Discontinued units (note 3.c)	(444,552)	1,421,305	(183,898)	(79,487)	(11.797.296)	(77,664)	(11,161,592)
Balance at 30 June 2019	17.814.853	19,585,693	10.243	725.352	69.526.268	2.479,223	110.141,632
Accumulated amortisation and impairment losses Balance at 31 December 2018	12,045,087	18,468,935	89,568		60,815,993		91,419,583
Amortisation and impairment for the period (note 5)	1,139,403	610,785	18.797		2,788,206		4,557,191
Amortisation for the period of the discontinued operations (note 26)	275	234,581	67.443				302,299
Effect of currency translation	57,257	36,630			33,483		127,370
Transfers and write-offs	(22,286)	(3,026,290)	(18,796)		(2,000)		(3,069,372)
Discontinued units (note 3.c)	(442,315)	1.440.880	(109,266)		(9,747,432)		(8.858.133)
Balance at 30 June 2019	12,777,421	17,765,521	47,746		53,888,250		84,478,938
Net value	5,037,432	1,820,172	(37,503)	725.352	15.638.018	2.479.223	25,662,694

							2018
							(restated)
						Internally
	Brands and					Internally generated assets
	patents and other		Other intangible		Intangible assets generated assets -	Intangible assets
	rights	Software	assets	in progress	Software	in progress	Tota
Gross assets
Balance at 31 December 2017	11,433,736	17,155,261		140,852	70,061,829	5,314,343	104,106,021
Changes in consolidation perimeter (note 8)		1,064,260					1,064,260
Additions	169,570	228,665	52,929		11 732		462,896
Disposals		(23,696)		470,588		2,913,299	3,360,191
Effect of currency translation		208,528		(8,043)	(183,548)	8,043	24,980
Transfers and write-offs	(6,617)	1,322		(25,476)	3,045,537	(3,045,537)	(30,771)
Balance at 30 June 2018	11,596,689	18,634,341	52,929	577,920	72,935,549	5,190,149	108,987,577
Accumulated amortisation and impairment losses
Balance at 31 December 2017	11.130.078	16,248,484			51,836,956		79,215,518
Changes in consolidation perimeter (note 8)		1,006,801					1,006,801
Amortisation and impairment for the period (note 5)	158,205	97,833	6,851		3,300,683		3,563,572
Amortisation for the period of the discontinued operations (note 26)	338		8,286		418,435		427,059
Effect of currency translation	165,349	178,121			(222,371)		121,099
Disposals		(6,366)					(6,366)
Transfers and write-offs	(17,796)	27,399					9,603
Balance at 30 June 2018	11,436,174	17,552,271	15,137		55,333,704		84,337,286
Net value	160.515	1.082.069	37.792	577,920	17.601.846	5,190,149	24,650,291

At 30 June 2019 and 2018, the additions related with intangible assets in progress include capitalisations of personnel costs related to own work mainly related to IT software development and to the RAID and Lookwise products.

The assessment of impairment for the main tangible assets, in the various segments, is carried out as described in note 8 ('Goodwill'), to the extent that such assets are closely related to the segment and consequently cannot be analysed separately.

At 30 June 2019 it was understood that the assumptions made in the impairment tests carried at 31 December 2018 did not have material variations, there are no additional impairments.

7. Rights of use

For the periods ended at 30 June 2019, the changes occurred in the value of the rights of use, as well as its depreciations and amortisations and accumulated impairment losses, were as detailed below:

					2019
	Land, Buildings and other
	constructions	Equipament	Vehicles	Software	lotal
Gross assets Balance at 31 December 2018 (restated)	9,493,276	3,003,142	8,782,893	584,843	21,864,154
Additions	5,751,281	148,501	769,199	136,256	6,805,237
Effect of currency translation	32,534	1,164	10,525	2,022	46,244
Transfers and write-offs	(468,970)		(109,267)		(578,237)
Discontinued units (note 3.c)	(820,805)	(733.996)	(452.470)		(2,007,271)
Balance at 30 June 2019	13,987,316	2,418,811	9,000,880	723.121	26,130,127
Accumulated amortisation, depreciation and impairment losses
Balance at 31 December 2018 (restated)	3,105,851	1,360,827	3,887,430	386,388	8,740,496
Amortisation and depreciation for the period (note 5)	1,225,259	249,259	967,566	72,665	2,514.749
Amortisation and depreciation for the period for discontinued operations (note 26)	29.499	49,980	26,202		105,681
Effect of currency translation	17.049	1,014	5,742	1839	25.644
Transfers and write-offs
Transfers and write-offs	(286,593)		(58,880)		(345.473)
Discontinued operations (note 3.c)	(29,705)	(316,364)	(173.407)		(519,476)
Balance at 30 June 2019	4.061.360	1.344.716	4.654.653	460,892	10.521.621
Net value	9,925,956	1,074,095	4,346,227	262,228	15,608,506

					2018 (restated)
	Land, Buildings and other constructions	Equipament	Vehicles	Software	lota
Gross assets
Balance at 31 December 2017 (restated)	8.572.450	1.925.034	6.414.599	305.552	17,217.635
Additions	495.064	538.528	847.805		1,881,397
Effect of currency translation	(67,468)	266	(33,462)		(100.664)
Balance at 30 June 2018 (restated)	9.000.046	2.463.828	7.228.942	305,552	18.998.368
Accumulated amortisation, depreciation and impairment losses
Balance at 31 December 2017 (restated)	5.024.499	818.796	3,297,342	176.161	9,316,798
Amortisation and depreciation for the period (note 5)	935,729	148,127	666,951	56.836	1.807.643
Amortisation and depreciation for the period for discontinued operations (note 26)	4,272	91,791	53.348		149.411
Effect of currency translation	(27.091)	127	(23,514)		(50.478)
Balance at 30 June 2018 (restated)	5.937.409	1.058.841	3.994.127	232,997	11,223.374
Net value	3.062.637	1.404.987	3,234,815	72,555	7.774.994

8. Goodwill

For the periods ended at 30 June 2019 and 2018, the changes occurred in 'Goodwil' were as follows:

	2019	2018
Opening balance (restated)	36,289,522	23,351,829
Acquisition of Nextel		1,696,330
Other movements of the period	12,854	57,352
Closing balance	36,302,376	25,105,511

For the periods ended at 30 June 2018, the caption 'Other movements of the period' includes the effect of the financial update of the Goodwill.

As provided in IFRS 3, the provisional amounts recognistion date were retrospectively adjusted to reflect the new information obtained as described in Note 1, which led to the restatement of the opening balance of 2019.

Effects of the acquisition of subsidiaries in the consolidated financial statements

Nextel and Mxtel

The companies Nextel and Mxtel were acquired by the Sonaecom Group in June 2018 and have as main activity rendering and information systems consulting services, specialised in information security and management of telecommunications services.

Following the acquisition of this Group, Sonaecom recognised an amount of Goodwill (after adjustments to fair value) of Euro 1,641,824, which can be detailed as follows:

		Nextel and Mxtel
(Amounts expressed in Euro)	Notes	Balance value before acquisition	Adjustments to fair value	Fair value
Acquired assets Tangible assets Intangible assets Deferred tax assets Other non-current assets Trade debtors Other current debtors Other current assets Cash and cash equivalents	5 ნ 11	130.152 57.459 3,930,008 133,726 2,383,770 1,268,783 1,819,397 1,186,530 10,909,825	(2,191) 2,548,182 (1,684,536) (67,564) (239,019) 26.872 (73,807) 507,937	127,961 2,605,641 2,245,472 133.726 2,316,206 1,029,764 1.846,269 1,112,723 11,417,762
Acquired liabilities Loans obtained Trade creditors Other current creditors Other current liabilities Total net assets acquired Acquisition price Goodwill		4,676,304 1,455,111 522,300 1,899,286 8,553,001 2,356,824 4,053,149 1,696,325	(98,164) (26,798) (103,066) 681,464 453,436 54,501	4,578,140 1,428,313 419,234 2,580,750 9,006,437 2,411,325 4,053,149 1,641,824

An assessment of the fair value of assets acquired and liabilities assumed was made, resulting in a decrease in the amount of total assets and an increase in the total amounting liabilities of Euro 453,436, respectively, which includes the recognition of the customer portfolio in the amount of Euro 2,548,521.

As is usual in business combinations, also in the acquisition of these two subsidiaries, it was not yet possible to allocate, in accounting terms, the fair value of identified assumed, being a part of the acquisition cost recognised as Goodwill. Goodwill relates to elements that can not be reliably isolated and as synergies, skilled workforce, technological capabilities and market reputation.

In the period ended at 30 June 2019, the contribution of the net profit attributable to shareholders of Sonaecom was negative of Euro 19,835. In the case of Nextel, it was not possible to determine its contribution for the period ended at 30 June 2019, because since May 2019 it has been merged into S21 Sec Gestion, and the contribution presented prior to the merger. The respective contributions are as follows:

	Nextel	Mxte
	Contribution at	Contribution at
(Amounts expressed in Euro)	30 April 2019 (*)	30 June 2019
Total Revenues	3,690,536	73,663
Costs and losses
Cost of sales	(1,678,986)	(54,318)
External supplies and services	(209,364)	(15,624)
Staff expenses	(1,822,974)	(30,883)
Depreciations and amortisations	(385,842)	(1,097)
Other operating costs	(6,379)	(2,907)
	(413.009)	(31,166)
Financial results	(40,791)	1,403
Income tax
Net income for the period before non-controlling interests	(453,800)	(29,764)
Net income attributed to non-controlling interests	44.875	9.929
Net income attributed to shareholders of parent company	(408,925)	(19,835)

(*) At may 2019 the company was merged with S21 Sec Gestion and its contribution is, since that date, includedin the latter.

The contributions to Sonaecom's consolidated financial position at 30 June 2019, excluding the goodwill generated as a result of the acquisition of investments in these companies, are as follows:

	Nextel	Mxtel
(Amounts expressed in Euro)	Contribution at 30 April 2019 (*)	Contribution at 30 June 2019
Assets
Tangible assets	141,009	13,537
Intangible assets	1,895,327	ਰੇਤੋ 2
Rights of use	164,987	-
Deferred tax assets	2,245,472	-
Trade debtors	1,655,285	50,188
Other current debtors	892,179	34,769
Cash and cash equivalents	344,009	48,540
Other assets	2,254,073	206
Total assets	9,592,341	148,172
Liabilities
Non-current liabilities	1,269,730	31
Current liabilities	4,634,948	110,679
Total liabilities	5,904,678	110,710
Net assets	3,687,663	37,462

(*) At may 2019 the company was merged with S21 Sec Gestion and its contribution is, since that date, includedin the latter.

Excellium Group

The companies that are part of the Excellium Group were acquired by the Sonaecom Group in December 2018 and have as their main activity rendering of services within the field of IT and cybersecurity mainly for financial institutions.

The Excellium Group is constituted by the following entities: Excellium S.A., Excellium Services Belgium, S.A., Excellium Factory SARL, Suricate Solutions, S.A., Alfaros SARL, Suricate Solutions CI SARL, Suricate Solutions SN SARL.

As described in note 2, Sonaecom shares of the Excellium Group amount to 59.20%.

As a result of these acquisitions, the Group intially recognised a provisory Goodwill amount of Euro 11,051,218, which can be detailed as follows:

		Excellium Group
(Amounts expressed in Euro)	Notes	Balance value before acquisition	Adjustments to fair value	Fair value
Acquired assets Tangible assets Intangible assets lnvestments in associated companies and companies jointly controlled Goodwill Other non-current assets Trade debtors Other current debtors Other current assets Cash and cash equivalents	5 ნ 8	d51,534 1,080,653 34,893 150,000 41,800 2,754,330 90,115 1,688,788 2,125,602 8,917,715	(13,484) 3,966,683 (8,103) 15,248 28,000 1,241,239 1,955 5,231,539	938,050 5,047,336 26.790 150,000 41,800 2,769,578 118,115 2,930,027 2,127,558 14,149,254
Acquired liabilities Loans obtained Other financial liabilities Trade creditors Other current creditors Other current liabilities		3,089,140 409,904 2,069,025 603,212 1,076,044 7,247,325	10.153 56,401 1,558,128 1,624,682	3,089,140 409,904 2,079,178 659,613 2,634,172 8,872,007
Total net assets Total net assets acquired (59,2%) Inicial acquisition estimated price Adjustments to estimated price Financial update Goodwill		1,670,390 988,871	3,606,857 2,135,259	5,277,247 3,124,130 13,973,716 430,642 (229,010) 11,051,218

In the period ended at 30 June 2019, the Group made an assessment of the assets acquired and liabilities assumed, resulting in an increase in total assets and liabilities of Euro 1,624,682, respectively, which includes the recognition of the customer portfolio in the amount of Euro 3,945,593, and the adjustment of the total net assets acquired by the Group (59.2%) to Euro 2,135,259. The aquisition price was adjusted in ine with the deferred amount payable by 430,642 euros. The effects of fair value adjustments were restated at 31 December 2018 as provided in IFRS 3 Business Combinations.

The purchase price allocation is still subject to change until the end of one year starting from the date of acquisition, as permitted by IFRS 3 Business Concentrations. As is usual in business combinations, also in the aquisition of these eight subsidiaries, it was not yet possible to alccounting terms, the fair value of identified assets and liabilities assumed, being a part of the acquisition cost recognised as Godwill will be related to elements that can not be reliably isolated and quantified and include synergies, skilled workforce, technological capabilities and market reputation.

Excellium's acquisition price includes a contingent amount (Euro 6,973,716) payable over 2 years, depending on the company's performance.

In the period ended at 30 June 2019, the contribution of the Excellium Group to the net profit attributable to Sonaecom was negative of Euro 1,275,822. The respective contributions are as follows:

	Excellium Group
(Amounts expressed in Euro)	Contribution at 30 June 2019
Total Revenues Costs and losses	7,327,786
Cost of sales	(920,816)
External supplies and services Staff expenses	(2,811,781) (4,212,269)
Depreciations and amortisations	(1,432,241)
Other operating costs	(12,476) (2,061,797)
Financial results	(118,351)
Income tax
Net income for the period before non-controlling interests	(2,180,148)
Net income attributed to non-controlling interests	904,326
Net income attributed to shareholders of parent company	(1,275,822)

The contributions to Sonaecom's consolidated financial position at 30 June 2019, excluding the goodwill generated as a result of the acquisition of investments in these companies, are as follows:

	Excellium Group
(Amounts expressed in Euro)	Contribution at 30 June 2019
Assets
Tangible assets	981,916
Intangible assets	2,349,446
Goodwill	150,000
Trade debtors	1,594,699
Other current debtors	88,355
Cash and cash equivalents	246,579
Other assets	3,433,856
Total assets	8,844,851
Liabilities
Non-current liabilities	2,223,782
Current liabilities	7,583,563
Total liabilities	9,807,345
Net assets	(962,494)

At 30 June 2019 and 2018, the caption had the following composition by business area where the included:

2019	Technologies
	Telecomunications	Retail	Cybersecurity
Goodwill	21,551,521	1,165,721	13,585,134

2018	Technologies
	Telecomunications	Retail	Cybersecurity
Goodwill	21.501.367	1,165,721	2,438,423

Goodwill impairment is tested annually. In 2018, impairmed on intangible assets, including Goodwill, which were to determine the recoverable amount using the discounted cash flow method. The existence or not of impairment of the main amounts of interests in group companies recorded in the accompanying financial statements is made taking into account the cash generating units, based on the last business plans approved by the Group's Board of Directors made on an annual basis unless there are indications of impairment, which are prepared using cash flows projected for periods of 5 years.

The assumptions used are based on the Group's various businesses and the growth in the various geographic areas where the Group operates:

2019
Assumptions	Telecomunications	Retail	Cybersecurity	Others	Media
Basis of recoverable amount Discount rate Growth rate in perpetuity	Value in use 6.25%-17% 20%	Value in use 10.5% 3.0%	Value in use 6.75%-1125% 3.0%	Value in use 7%-13.75% 1%-2%	Value in use 7% 0.01%

2018
Assumptions	Telecomunications Retail		Cybersecurity	Others	Media
Basis of recoverable amount Discount rate Growth rate in perpetuity	Value in use 6.75%-16.75% 10%	Value in use 10.5% 3.0%	Value in use 7.5%-10.75% 3.0%	Value in use 9%-13.5% 1%-2%	Value in use 8.5% 0.01%

The average growth rate considered for the 5-year turnover was 7.47% for the Media sector, the average growth rate of turnover considered was around 2.58%.

The discount rates used are based on the weighted average capital costs estimated based on the segments where the companies are located. In Europe, the discount rates used are between 6.25% in Latin America rates are used between 11.25% and 13.75% and in Africa 17%.

The analysis of the impairment indices and the impairment projections and tests have not lead to clearance losses. For the sensitivity analysis made, required in the IAS 36 - Impairment of Assets did notlead to material changes in the recovery amounts, and therefore there would not be any additional material impairment.

At 30 June 2019 it was presumed that the assumptions used in the impairment tests at 31 december 2018 did not have significant changes, and such there would not be any additional impairment.

9. Investments in associated companies and companies jointly controlled

The associated companies and the companies jointly controlled, their head offices, percentage of ownership and value in profit and loss statement at 30 June 2019 and 2018 are as follows:

		Percentage of ownership			Value in profit and loss statement
		30 June 2019		30 June 2018		30 June 2019	30 June 2018
	Head Office	Direct	lota	Direct	Tota		(restated)
ZOPT, SGPS, S.A. ('ZOPT') (a)	Oporto	50.00%	50.00%	50.00%	50.00%	20,656,000	19,229,614
Unipress - Centro Gráfico, Lda. ("Unipress")	Vila Nova de Gaia	50.00%	50.00%	50.00%	50.00%	47,247	90,807
SIRS - Sociedade Independente de Radio difusão Sonora, S.A. ("Rádio Nova")	Oporto	50.00%	50.00%	50.00%	50.00%	25,411	2.145
Intelligent Big Data, S.L. ('Big Data') (b)	Gipuzcoa	50.00%	50.00%	50.00%	50.00%	(113)	(19
Fundo de Capital de Risco Armilar Venture Partners II (Armilar II)	ı_isbon	50.74%	50.74%	50.74%	50.74%	135,627	55,140,803
Fundo de Capital de Risco Armilar Venture Partners III (Armilar III) ( c)	Lisbon	42.73%	42.73%	42.64%	42.64%	(869,035)	(6,033,719)
Fundo de Capital de Risco Armilar Venture Partners Inovação e Internacionalização (AVPI +I) (d)	Lisbon	38.25%	38.25%	37.54%	37.54%	(264,496)	(1,921,467)
Secucloud Network GmbH ('Secucloud')	Hamburg	27.45%	27.45%	27.45%	27.45%	(524,314)	(464,133)
Probe.ly (e)	Lisbon	21.21%	21.21%	22.88%	22.88%	(8.071)	(42,580)
Suricate Solutions (f)	Luxembourg	20.00%	11.84%			16,356)
Alfaros SARL (f)	Tunisia	40.00%	23.68%			(1,035)
Total (note 21)						19,180,865	66,001,451

(a) Includes the incorporation of the results of the subsidiaries in proportion to the capital held.

(b) Company directly owned by S21 Sec Gestion.

(c) In April 2019 was subscribed an increased on capital.

(d) In January 2019 was subscribed an increased on capital.

(e) Following a round of financing, Bright made a capital increase but was diluted by the entry of other investors.

(f) Participation acquired in December 2018.

As a result of the legislation of the Venture Capital Funds, Sonaecom does not control them, as it does not have control over its management entity.

During the periods ended at 30 June 2019, the changes occurred in investments in associated companies jointly controlled, were as follows:

			30 June 2019			30 June 2018 (restated)
	Ownership value	Goodwill	Total investment	Ownership value	Goodwill	Total investment
Investments in associated companies and companies jointly
controlled
Balance at 1 January	686,566,587	92,566,110	779,132,697	679,091,048	92,644,319	771,735,367
Increases	450,212		450,212
Transfers				78,209	(78,209)
Equity method:
Effect on gains and losses (note 21)	19,018,646	-	19,018,646	83,086,623		83,086,623
Effect on reserves	(3,591,915)		(3,591,915)	(10,972,614)		(10,972,614)
IFRS16 impact - reserves				(6,944,555)		(6,944,555)
IFRS16 impact - effect on gains and losses (note 21)				237,114		237,114
Dividends	(35,491,559)		(35.491.559)	(17,255,883)		(17,255,883)
Return of invested capital				(16,477,366)		(16,477,366)
Others				(41,343,720)		(41.343.720)
	666,951,971	92,566,110	759,518,081	669,498,856	92,566,110	762,064,966
Registered in Provisions for other liabilities and charges
Balance at 1 January	(20,206,599)		(20,206,599)	(106,404)		(106,404)
Equity method
Effect on gains and losses (notes 17 and 21)	162,219		162,219	(17,322,286)		(17,322,286)
	(20.044.380)		(20,044,380)	(17,428,690)		(17,428,690)
Total investment in associated companies and companies jointly controlled net of impairment losses	646,907,591	92,566,110	739.473.701	652,070,166	92,566,110	744.636.276

During the period of 2019, there was a change of Euro 450,222 in associated and jointly controlled companies mainly due to the aquisition of two stakes In lanuary 2019 an increase of Euro 360,393 in the capital of Fundo ESV I+I occurred, which corresponds to an increase of the participation of 0.71%. In April 2019 there was a capital increase in the amount of Euro 89,919, which corresponds to an increase of the participation of 0.05%.

The caption 'Provisions for other risks and charges' in the amount of Euro 20,044,380 includes the amount of Euro 19,993,863 (Euro 17,324,412 in 2018) related to the incentive scheme payable to the Funds due to the fact that they exceeded the contractually defined level of return and the provision relating to Radio Nova and Big Data's income of Euro 50,517.

As evidenced in Note 1, the period ended at 30 June 2018 has been restated to adjust the extent that the level of return has been exceeded.

During the period ended a

t 30 June 2019 and 2018, Sonaecom received the amount of Euro 35,491,559 and Euro 17,255,883, respectively, referring to dividends from ZOPT SGPS.

ln accordance with the IFRS 11, the classification of investments in companies jointly controlled is determined based on the existence of an agreement that clearly demonstrate and regulate the joint control. Thus, at 30 June 2019 the Group held associated and jointly controlled companies, as decomposed below.

The division by company of the amount included in the investments in associated companies and join controlled is as follows:

			30 June 2019		30 June 2018 (restated)
	Ownership value	Goodwill	Total investment	Ownership value	Goodwill	Total investment
Investments in companies jointly controlled
Zopt	569,963,585	87,527,500	657,491,085	584,723,829	87,527,500	672,251,329
Unipress	541,613	321,700	863,313	575,307	321,700	897,007
ટામ્પ્ટ	(48,923)		(48,923)	(103,228)		(103,228)
Big Data	(1,592)		(1,592)	(1,050)		(1,050)
	570,454,683	87,849,200	658,303,883	585,194,858	87,849,200	673,044,058
Investments in associated companies
Armilar II	41,800,861		41,800,861	41,653,436		41,653,436
Armilar III	23,227,783		23,227,783	18,886,787		18,886,787
AVP +	13,672,451		13,672,451	7,509,777		7,509,777
Secucloud	(2,212,226)	4,419,742	2,207,516	(1,166,709)	4,419,742	3,253,033
Probe.ly	(43,640)	297,168	253,528	(7,983)	297,168	289,185
Suricate Solutions	2,198		2,198
Alfaros SARL	5,481		5,481			-
	76,452,908	4,716,910	81,169,818	66,875,308	4,716,910	71,592,218
Tota	646,907,591	92,566,110	739,473,701	652,070,166	92,566,110	744,636,276

The aggregated amounts of the main financial indicators of the entities can be resumed as follows:

2019 (Amounts expressed in thounsand Euro)
						Operational		Comprehensive
Entitu	% holding	Asset	Liabilitu	Equity	Revenue	results	Net results	income
ZOPT*	50.00%	4.366.942	2,154,063	2,212,879	781,737	114,021	79.926	41,803
Unipress	50.00%	2,115	1.032	1.083	1.259	98	94	94
SIRS	50.00%	484	588	(104)	599	57	51	51
Big Data	50.00%			5)		(0)	(0)	(0)
Armilar II	50.74%	120,714	17,655	103,059	441	326	334	334
Armilar III	42.73%	78.920	10,309	68,612	545	(2,450)	(2,428)	(2,428)
AVP I+I	38.25%	56,976	12,289	44,688	131	(1,013)	(1,002)	(1,002)
Secucloud	27.45%	3,399	4.701	(1,302)	1.233	(1,274)	(1,281)	(1,281)
Probe.ly	2121%	414	332	82	105	(5)	5	(5)
Suricate Solutions	11.84%	202	196	6	ರಿ8	(82)	(82)	(82)
Alfaros SARL	23.68%	36	28	8		(3	3	(3) . Canada Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara Cara

tatements (TFRS) as adopted by the European funds includes

The assessment of the existence, or not, of investments including goodwill recorded in the accompanying consolidated financial statements for the telecommunications sector (Zopt), is determinated taking into account several information, as business plans approved by the Board of Directors of NOS for five years, which implied average growth rate of operating margin amounts to 4% and its associated, and the average rating of external reviewers (researches).

	NOS SGPS
Assumptions
Basis of recoverable amount	Value in use
Discount rate	7.4%
Growth rate in perpetuity	13%

For other business sectors, including the companies jointly controlled, the assessment of whether or not impairment to the goodwill value exists is determined based on the considerations presented in note 8.

The analysis of the impairment indices and the impairment projections and tests have not lead to the recording of losses, during the periods ended at 30 June 2019 and 2018.

The sensitivity analysis made have not lead to material changes of the amounts to be recovered, so no additional impairments were recorded.

The consolidated financial statements of Zopt, at 30 June 2018 can be resumed as follows:

Condensed consolidated balance sheets

(Amounts expressed in thousands of Euro)	June 2019	June 2018 (Restated)
Assets
Tangible assets	1,070,745	1,055,882
Intangible assets	1,966,271	2,343,805
Rights of use	199199	201,823
Deferred tax assets	87,066	116,366
Other non-current assets	477,006	147,655
Non-current assets	3,800,287	3,865,531
Trade debtors	418,149	504,409
Cash and cash equivalents	34,454	8,305
Other current assets	114,052	88,329
Current assets	566,655	601,043
Total assets	4,366,942	4,466,574
l iahilities
Loans	1,076,257	1,124,836
Provisions	160.425	178,700
Other non-current liabilities	42,998	53,971
Non-current liabilities	1,279,680	1,357,507
Loans	311,111	259,543
Trade creditors	254,891	243,514
Other current liabilities	308,381	327,137
Current liabilities	874,383	830,194
Total liabilities	2,154,063	2,187,701
Shareholders' funds excluding non-controlling interests	1,158,528	1,173,930
Non-controlling interests	1,054,351	1,104,943
Total Shareholders' funds	2,212,879	2,278,873
Total Shareholders' funds and liabilities	4,366,942	4,466,574

Condensed consolidated statement of income by nature

(Amounts expressed in thousands of Euro)	June 2019	June 2018 (Restated)
Total revenue	781.737	772.286
Costs and losses
Direct costs and External supplies and services	(306.618)	(307,772)
Depreciation, amortisation and impairment losses	(210.832)	(227,130)
Other operating costs	(150,266)	(126,954)
	(667.716)	(665,625)
Gains/ (losses) in associated companies	(1.685)	(7,869)
Financial results	(12.352)	(17,459)
Income taxation	(20.058)	(11.369)
Consolidated net income/(loss) for the period	79.926	72.819
Consolidated net income/(loss) for the period attributed to non-controlling interests	38.123	34.880
Attributed to shareholders of the parent company	41803	37.944

The consolidated financial statements of ZDPT have a significant exposure to the African market, particularly through financial holdings that the Group holds in associated companies operating in the Angolan markets, which are engaged in providing satellite and fiber television services. The net book value of the associates in the financial statements of ZOPT at 30 June 2019 amounts to approximately Euro 92 million.

During the last quarter of 2017, Angola was considered a hyperinflationary economy, and the individual financial statements of the investees in Angola were restated (for consolidation purposes) in accordance with IAS 29 - Financial Reporting in Hyperinfationary Economies. During the first quarter of 2018, the effect of hyperinflation on the Angolan subsidiaries was adjusted, while the kwanza recorded an exceptional devaluation against the euro of approximately 30%, which generated the recognition of foreign exchange losses on these subsidiaries. During the second quarter of 2019, the effect of the hyperinflation was once more adjusted, taking into account the fluctuation of kwanza.

The Group made impairment tests for those assets, which are denominated in the currencies of those countries, Kwanzas and Meticals, respectively, considering the business plans (internal valuation using the discounted to researches) approved by the Board of Directors for a five years period, which include average growth rates of revenue for that period of 10.7% (Angola) and 3.2% (Mozambique). These revenue growth rates reflects: (i) the best estimate for the customer base, reflecting an expectation of new clients and churn estimated prudent, and (ii) an annual price increase which the nature of the activity carried out by the companies, especially in Angola, assumes it is not expected that companies will be able to reflect in their prices the total inflation in the country.

In 2018, following the recommendation of the INACOM (regulatory entity of the communication sector in Angolan subsidiaries did not carry out any price increase. Business plans consider annual price growth of 16%, 11% and 2021 to 2023 respectively.

The business plans consider yet a growth rate in perpetuity of 6.5% (Mozambique) and a discount rate (wacc') in perpetuity of 17.5% (Angola) and 21% (Mozambique). The discount rate, over the period 2019 to 2023 ranged from a maximum of 34.0% to a minimum of 17.5% (in 2023), for Angola, and from a maximum of 21.0% (2023) in Mozambique, in line with the most appropriate inflation forecasts (source: International Monetary Fund (FMI)) and assumes the current structure of the market in terms of competition.

The impairment tests caried out in 2018, based on the assumptions above, disregarding the adjustment to the effects of hyperinflation in the amount of financial investment, support the value of the assets, so no additional imparments were recorded in relation to the effect of the hyperinflationary economic conditions of uncertainty in these markets, particularly in the foreign exchange market and the limitation of currency transfer and INACOM's recommendation not to have price increases on TV and internet packages (particularly in Angola), introduces an additional degree of variability to the assumptions, which could significantly impact the estimates considered, in terms of the ability to reflect the rate in price increases.

At 30 June 2019 it was understood that the assumptions made in the impairment tests carried out in 2018 did not change significantly.

At the end of January 2019, ZAP announced a price increase from 26 February 2019 onwards. This increase in prices is higher than that used in the projections.

The Board of Directors believes that the assumptions used in the business plans and appropriate, and that the situations of high inflation and lower capacity of the company to reflect a higher price increase correspond to non-expected extreme situations.

Zopt Group provision's a)

The legal and fiscal claims described below are provisioned in the consolidated accounts of Zopt, given the level of risk identified.

Future credits transferred 1

Future credits transferred: for the financial year ended at 31 December 2010, NOS SA was notified of the Report of Tax Inspection, where it is considered that the increase, when calculating the the uear 2008, in the amount of 100 million euros, with respect to initial price of future credits transferred to securitization, is inappropriate. Given the principle of periodisation of taxable income, NOS SA was subsequently notified of the improper deduction of the amount of 20 million euros in the calculation of taxable income between 2009 and 2013. Given that the increase made in 2008 was not accepted due to not complying with Article 18 of the uears following, the deduction corresponding to credits generated in that year, will eliminate the calculation of taxable income, to meet the annual amortisation hired as part of the operation (20 million per year for 5 years). NOS SA challenged the decisions regarding the 2009 to 2013 fiscal year and will appeal for the decision regarding the 2008 to 2013 fiscal year. Regarding the year 2008, the Administrative and Fiscal Court of Porto has already decided unfavourably, in March 2014. The company has appealed.

2. Supplementary Capital

The fiscal authorities believe that NOS SA has broken the principle of full competition under the terms of (1) of Article 58 of the Corporate Tax Code (CIRC) - currently Article 63 -, by granting supplementary capital to its subsidiary NOS Towering been remunerated at a market interest rate. In consequence, it has been notified, with regard to the years 2004, 2007 of corrections to the determination of its taxable income in the total amount of 20.5 million euros. NOS SA contested the decision with regard to all the above-mentioned years. As for the year 2004, the Court has decided favourably, This decision is concluded (favourably, originating a reversal of provisions, in 2016, in the amount of 1.3 million euros plus interest. As for the years 2006 and 2007, the Porto Fiscal and Administrative Court has already decided unfavourably. As for the Court decided favourably, having been carried on by the Tax Authorities, which meant the provision reversal of one million euros in 2018.

1. Extraordinary contribution toward the fund for the compensation of the universal service of electronic communications (CLSU):

The Extraordinary contribution toward the for the compensation of the universal service of electronic communications (CLSU) is legislated in Articles 17 to 22 of Law no 35/2012, of 23 August. From 1995 until June 2014, MED, SA (former PTC) was the sole provider for the universal service of electronic communications, having been designated and the Portuguese government, i.e. without a tender procedure, which constitutes an illegality, by the European Court of Justice who, through its decision taken in June 2014, condemned the Portuguese State to pay a fine of 3 million euros. In accordance with Article 18 of the abovementioned Law 35/2012, of 23 August, the net costs incurred by the operator responsible for providing the universal service, approved by ANACOM, must be shared between other companies who provide, in national territory public communication networks and publications services. NOS is therefore within the scope of this extraordinary contribution given that MEO has being requesting the payment of CLSU to the compensation fund of the several periods during which it was responsible for providing the services. In accordance with the law, the activated to compensate the net costs of the electronic communications universal service, relative to the designation of the provider by tender, whenever, cumulatively (i) there are net costs considered excessive, the amount of which is approved by ANACOM, following an audit to their preliminary calculation and support documents, which are provided by the universal service provider, and (i) the universal service provider requestes the Government compensation for the terms previously mentioned.

In 2013, ANACOM deliberated to approve the final results of the CLSU audit presented by MED, relative to the period from 2007 to 2009, in a total amount of 66.8 million euros, a decision that was contested by NOS. In January 2015, ANACOM issued the settlement notes in the amount of 18.6 million euros related to NOS Madeira and NOS Acores which were object of judicial challenge and for which guaratees were presented by NOS SGPS to avoid Tax Execution Proceedings. The guarantees have been accepted by ANACOM.

In 2014, ANACOM deliberated to approve the final results of the CLSU audit by MED, relative to the period from 2010 to 2011, in a total amount of 47.1 million euros, a decision also contested by NOS. In February 2016, ANACOM issued the settlement notes in the amount of 13 million euros, related to NOS Madeira and NOS Acores which were also contested and for which guarantees were also presented by NOS SGPS in order to avoid the promotion of respective tax enforcement processes the guarantees have been accepted by ANACOM.

In 2015, ANACOM deiberated to approve the final results of the audit to CLSU presented by MEO relative to the period from 2022 to 2013, in the amount of 26 million euros, respectively, and as it happened with the others resolutions, it was contested by NOS. In December 2016, the notices of settlement were issued relating to NOS, SA, NOS Madeira and NOS Açores, corresponding to that period, totaling 13.6 million euros that were contested by NOS and for which guarantees have been already presented by NOS SGPS in order to avoid the promotion of the respective proceedings of tax execution. The guarantees were also accepted by ANACOM.

In 2016, ANACOM approved the results of the CLSU presented by MED related to the period between January and June 2014, for a total amount of 7.7 million euros that was contested by NOS, in standard terms.

In 2017, NOS, SA, NOS Madeira and NOS Acores were notified of the decision of ANACOM concerning the entities that are obliged to contribute toward the compensation fund and the setting of the values of contributions corresponding to ELSU that have to be compensated and relating to the months of 2014 in which MEO still remained as provider of the Universal Service, which establishes for all these companies a contribution totaling close to 2.4 million euros. In December 2017, the settlement notes relating to NOS, SA, NOS Madeira and NOS Açores, concerning that period, were issued in the amount of approximately 2.4 million euros, which were challenged by NOS and for which guarantees have also been presented by NOS SGPS, in order to avoid the r tax enforcement procedures. The guarantees were also accepted by ANACOM.

lt is the opinion of the Board of Directors of NOS that these extraordinary contributions to Universal Service (not designated through a tender procedure) flagrantly violate the Directive of Universal Service. Moreover, considering legal framework since NOS began its activity, the request payment of the extraordinary contribution violates the protection of confidence, recognised on a legal and constitutional level in Portuguese domestic law. For these reasons, NDS will challenge either the approval of audit results of the net cost of universal service related to the liquidation of each extraordinary contribution, being the Board of Directors conviction it will be successful in all challenges, both future and already undertaken.

Legal actions and contingent assets and liabilities of Zopt Group

4. Legal actions with regulators

NOS SA, NOS Açores and NOS Madeira brought actions for judicial review of ANACOM's decisions in respect of the Annual Fee of Activity (for 2009, 2011, 2017, 2014, 2015, 2014, 2015, 2017 and 2018) as Electronic Communications Services Networks Supplier, and furthermore the refund of the amounts that meanwhile were paid within the scope of the mentioned acts of settlement was requested. The settlements for the year 2018 were impugned in the first semester of 2019.

The settlement amounts are, respectively, as follows:

• NOS SA: 2009: 1,861 thousand euros, 2010: 6,00 thousand euros, 2011: 6,049 thousand euros, 2013: 7,270 thousand euros, 2014: 7,426 thousand euros, 2015: 7,253 thousand euros, 2016: 8,242 thousand euros, 2017: 9,099 thousand euros and 2018: 10,303 thousand euros;
• NOS Açores: 2009: 29 thousand euros, 2010: 60 thousand euros, 2011: 95 thousand euros, 2012: 95 thousand euros, 2013: 104 thousand euros, 2014: 107 thousand euros, 2015: 98 thousand euros, 2016: 105 thousand euros and 2018: 111 thousand euros;

• • NOS Madeira: 2009: 40 thousand euros, 2011: 130 thousand euros, 2011: 130 thousand euros, 2012: 132 thousand euros, 2013: 149 thousand euros, 2014: 165 thousand euros, 2015: 177 thousand euros, 2016: 177 thousand euros and 2017: 187 thousand euros and 2018: 205 thousand euros.

This fee is a percentage decided annually by ANACOM (in 2009 it was 0.5826%) of operators' electronic communications revenues. NOS SA, NOS Acores and NOS Madeira in the contests they promote claim, namely: i) addition to defects of unconstitutionality, and illegality, related to the inclusion in the cost accounting of ANACOM of the regulator, due to judicial proceedings against the latter (including these appeals of the activity rate) and il) that only revenues from the electronic communications business per se, subject to regulation by ANACOM, should be considered for the purposes of the percentage and the calculation of the fee payable, and that revenues from television content should be excluded.

Four sentences on the matter were given, i.e. in September 2017, in April 2018 and in May 2018, respectively, within the scope of the contestation of the annual rate of 2009, 2010 (NOS Comunicações) and 2012 (Ex-ZUN and also Ex-Optimus). The first judgment ruled in tavour of the respective contestation, only based on lack of prior hearing, but orderest. ANACOM submitted an appeal concerning that decision, but the Court of Appeal declined it by decision in July 2013. The three remaining decisions also, in turn, ruled in favour of the respective contestations, but, this time for fundamental reasons, annulled the contested act by unlawfulness with the legal consequences, namely imposing the refund of the tax that was paid but still not refunded to NOS and ordering ANACOM to pay compensatory interest. This decisions were the subject of an appeal from ANACOM to the Tribunal Central Administrativo - Sul (Central Administrative Court - South), where they are pending.

The remaining proceedings are awaiting trial and/or decision.

During the first quarter of 2017, NOS was notified by ANACOM of the initiation of an infraction process related to communications of prices update at the end of 2016. On this date, it is impossible to determine what the scope of the infraction proceedings is to be.

1. Tax Authorities

During the course of the 2003 to 2019 financial years, some companies of the NOS Group were the subject of tax inspections for the 2001 to 2016 financial years. Following these inspections, NOS SGPS, as the controlling company of the Tax Group, and companies not covered by Tax Group, were notified of the corrections made to the Group's tax losses, to VAT and stamp tax and to make the payments related to the corrections made to the above exercises. The total amount of the notifications unpaid is about 16 million euros, added interest, and charges. Note that the corrections were unfounded, and contested the amounts mentioned. The Group provided the bank guarantees demanded by the tax authorities in connection with these proceedings.

As belief of the Board of Directors of the Group, supported by our lawyers, the risk of loss of these proceedings is not likely and the outcome thereof will not affect materially the consolidated position.

• 1. Actions by MEO against NOS S.A., NOS Madeira and NOS Acores and by NOS S.A. against MEO
  2. · In 2011, MEO brought actions against NOS SA, in the ludicial Court of Lisbon, a claim for the compensation of 10.3 million Euros, as compensation for alleged unauthorised portability of NOS SA in the period between March 2009 and July 2011. NOS SA presented its defence and reply, and the Court ordered an expert opinion, which was, meanwhile, deemed without effect. The discussion and trial hearing took place at the end of April and beginning of May 2016, and a judgment was rendered in September of the same year, which considered the action to be partially justified, based not on the occurrence of improper portability, which the Court has determined to restrict itself to those which do not correspond to the will of the proprietor, but of mere delay in sending the documentation related to the portabilities by the Recipient Carrier (NOS) to the Holding Provider (MEO). In that regard, it sentenced NOS to the payment of approximately 5.3 million Euros to MEC, a decision of which only NOS appealed to the Lisbon Court of Appeal. MEO, on the other hand, was satisfied and did not appeal against the part of the sentence that acquitted NOS of the requests for compensation that it formulated - in the amount of approximately 5.0 million euros - regarding alleged improper portabilities. This Court, in the first quarter of 2018, upheld the decision of the Court of First Instance, except for interests, in which gave reason to the claims of NOS, in the sense that they should be accounted from the citation to the action and not from the due date of the invoices. NOS filed an extraordinary appeal with the Supreme Court of Justice, that found that the facts as established by the Court of First Instance and confirmed by the Court of Appeal were insufficient to resolve the substance. As a result, the Supreme Court of Justice ordered the defend the

facts. The case will go to the Court of Appeal so that the Court, if it considers that it has the conditions to do so, expands the factual fact in the terms intended by the Supreme Court of Justice.

• • MEO made three court notices to NOS SA (April 2013, July 2015 and March 2016), three to NOS Acores (March and June 2013 and May 2016) and three to NOS Madeira (March and June 2015), in order to stop the prescription of alleged damages resulting from claims of undue portability, absence of response time to them by MED and alleged illegal refusal of electronic portability requests.

MEO doesn't indicate in all notifications the amounts in which it wants to be financially compensated, realising only part of these, in the case of NOS SA, in the amount of 26 million euros (from August 2011 to May 2014), in the case of NOS Acores, in the amount of 195 thousand euros and NOS Madeira, amounting to 817 thousand euros.

At the beginning of July 2018, NOS, SA was notified of the filing by MEO of a lawsuit concerning portability compensations in which MED claims from NOS the right, in this respect, to approximately 26.8 million euros intending to proceed with the special judicial notification sent to the NOS in July 2015, as mentioned above. NOS is contesting the action during October 2018.

• In 2011, NOS SA brought action in the Lisbon Judicial Court against MEO, claiming payment of 2.4 million euros, for damages suffered by NOS SA, arising from violations of the Portability Regulation by MEO, in particular, the large number of unjustified refusals of portability requests by MED in the period between February 2011. The court declared the compulsory performance of expert evidence of technical nature. At the same time, it was requested by the Court an economic and financial expert analysis, which has already started. The related expert report has already been made available to the Court and parties. Therefore, awaits the scheduling of the court hearing.

lt is the understanding of the Board of Directors of NOS, supported by lawyers who monitor the process, that there is, in substance, good chance of NOS SA winning the action, because MED has already been convicted for the same offense, by ANACOM. Nevertheless, it is impossible to determine the outcome of the action.

7. Action brought by DECO

In March 2018, NOS was notified of a lawsuit brought by DECO against NOS, MED and NOWO, in which a decaration of nullity of the obligation to pay the price increases imposed on customers at the end of 2016 is requested. In April and May 2018, the operators, including NDS, lodged a defense and are awaiting further developments in the process. The Board of Directors of NOS 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 NOS Group's financial statements.

ထဲ Interconnection tariffs

At 30 June 2019, accounts receivable and accounts payable include 37,139,253 euros and 43,475,093 euros, respectively, resulting from a dispute between the subsidiary NOS SA and, esserviços de Comunicação e Multimédia, S.A. (previously named TMN – Telecomunicações Móveis Nacionais, S.A.), in relation of interconnection tariffs of 2001. In what concerns to that dispute, the result were totally favourable to NOS S.A., having already become final.

9. Contractual penalties

The general conditions that affect the agreement and this contract between NOS and its clients, establish that it the products and services provided by the client can no longer be used prior to the end of the client is obliged to pay damages immediately to compensation for the set of advantages which, from the agreed duration of the contract. Until 31 December 2014, the revenue from penalties, in the inherent uncertainties, was only recognised at the time of receipt, and at 30 June 2019, the amounts receivable by NOS Madeira and NOS Acores from these invoiced compensations amounted to 53,301 thousand euros. During the period ended at 30 June 2019, receipts in the amount of the amounts outstanding as of 31 March 2014 were recognised as revenues.

From 1 January 2015, revenue from penalties is recognised taking into account an estimated collectability rate taking into account the Group's collection history. The penalties invoiced as accounts receivable and the uncollectible calculated values of these amounts are recorded as impairment by deducting the revenue recognised at the time of invoicing.

The Board of Directors of Sonaecom believes that the processes described above that may result in contingencies affecting the accounts of the ZOPT group are duly provisioned, taking into account the consolidated accounts of Sonaecom.

b) Other commitments Zopt Group

In December 2015, NOS signed a contract with Sport Lisboa e Benfica TV, SA regarding the television rights of home matches of football NOS' league, broadcasting rights and distribution of Benfica TV Channel. The contract began in 2016/2017 sports season, had an initial duration of three years, and might be renewed by decision of either party up to a total of 10 sports seasons, with the overall financial consideration reaching the amount of 400 million euros, divided into progressive annual amounts.

Also in December 2015, NOS signed a contract with Sporting Clube de Portugal - Futebol SAD and Sporting and Communication Platforms, S.A. which includes the following rights:

• 1) TV broadcasting rights and multimedia home games of Sporting SAD;
• 2) The right to explore the static and virtual advertising at Stadium José Alvalade;
• 3) The right of transmission and distribution of Sporting TV Channel;
• 4) The right to be its main sponsor.

The contract will last 10 years concerning the rights indicated in 1) and 2) above, starting in July 2018, 12 seasons in the case of the rights stated in 3) starting in July 2017 and 22 and a half seasons in the rights mentioned in 4) beginning in January 2016, with the overall financial consideration amounting to 446 million euros, divided into progressive annual amounts.

Also in December 2015, NOS SA has signed contracts regarding the television rights of home senior tee following sports clubs:

• 1) Associação Académica de Coimbra Organismo Autónomo de Futebol, SDUQ, Lda
• 2) Os Belenenses Sociedade Desportiva, SAD
• 3) Clube Desportivo Nacional Futebol, SAD
• 4) Futebol Clube de Arouca Futebol, SDUQ, Lda
• 5) Futebol Clube de Paços de Ferreira, SDUQ, Lda
• 6) Marítimo da Madeira Futebol, SAD
• 7) Sporting Clube de Braga Futebol, SAD
• 8) Vitória Futebol Clube, SAD

The contracts will begin in the 2019/2020 sports seasons, with the exception of the contract with Sporting Clube de Braga - Futebol, SAD which lasts 9 seasons.

During the year of 2016, NOS SA has signed contracts regarding the television rights of home senior team football games with the following sports clubs:

• 1)
• 2) Clube Futebol União da Madeira, Futebol, SAD
• 3) Grupo Desportivo de Chaves Futebol, SAD
• 4)
• 5)
• 6) Sport Clube de Freamunde Futebol, SAD
• 7)
• 8) Futebol Clube de Penafiel, SDUQ, Lda
• 9) Portimonense Futebol, SAD

The contracts will begin in the 2019/2020 sports season and last up to 3 seasons.

In May 2016, NOS and Vodafone have agreed on reciprocal availability, for several sports content (national and international) owned by the companies, directly by the transferring party or indirectly through the transfer to channels of content, in order to assure to both companies, directly by the assigning party or indirectly through the transfer to third party content distribution channels or models, the availability of broadcasting rights of the sports clubs home football games, as well as the broadcasting and distribution rights of sports clubs channels, whose rights are owned by each of the companies in each moment. The agreement came into force from the beginning of the sports season 16/17, assuring access to Benfica's channel and Benfica's home football games to NOS and Vodafone's clients, independent from these football games are broadcast.

Considering that the contract signed alowed for the possibility of extending the other operators, in July 2016 MEO and Cabovisão joined the agreement, ending the lack of availability of Porto Canalin the NOS's channel grid, assuring that every Pay TV dient can have access to every relevant sports content, regardless of which operator they use.

Following the agreement signed with the remaining operators, as a counterpart of the reciprocal provision of rights, the global costs are shared according with retailer telecommunications revenues and Pay TV market shares.

The estimated cash flows are estimated as follows:

2018/19	following
Euro 115.6 million	Euro 870.8 million
Euro 68.1 million	Euro 488.2 million

"Includes games and channels broadcasting rights, advertising and others.

NOS and Vodafone Portugal celebrated on 29 September 2017 an agreement of infrastructure development and sharing with a nationwide scope. This partnership allows the two Operators to provide their commercial offers under a the beginning of 2018.

The agreement covers the reciprocal sharing of dark fibre in approximately 2.6 million homes in which each of the entities shares with the other one an equivalent investment value, in other words, they share similar goods. It is assumed that both companies retain full autonomy, independence, and confidentiality concerning the design of the management of the customers' database and the choice of technological solutions they might decide to implement, that did not on the consolidated financial statements (according to IAS 16, this exchange of similar non-monetary assets will be presented on a net basis).

The partnership was also widened to the mobile infrastructure and the minimum share of 200 mobile towers was agreed upon.

10. Investments at fair value through other comprehensive income

At 30 June 2019 and 2018, this caption was composed as follows:

	2019	2018
Arctic wolf	7,751,174	3,830,113
Cellwise	5,357,593
ViSenze	5,260,238	।
CB4	4,368,720	-
Case on IT	2,930,744	2,280,000
Reblaze	2,352,438
Nextail	2,300,000	2,300,000
Ometria	2,228,029	854.165
ciValue	1,970,097	-
StyleSage	1,848,578	1,680,538
Jscrambler	1,250,000	1,250,000
Whitefantasy	640,804
Fyde	443,687	-
Others	1,415,751	676,611
	40,117,853	12,871,427

At 30 June 2019 these investments correspond to shareholdings in which the Group has no significant influence.

According to IFRS 9 these investments at fair value through other consolidated compehensive income 'as they are held as long-term strategic investments and these investments will be sold in the short and medium term, and, so, were irrevocably designated at fair value trough other comprehensive income. For investments with a maturity of less than a year the acquision costs were considered as a reasonable approximation of their fair with a maturity greater than a year the subsequent changes in fair value are presented through other comprehensive income.

In the periods ended at 30 June 2019, the change in 'investments at fair value through other comprehensive income' was as follows:

	2019	2018
Opening balance	28,101,682	5,480,963
Acquisitions	12.016.171	7,390,464
Closing balance	40,117,853	12.871.427

Arctic Wolf

Arctic Wolf, a US based company, is a global pioneer in the SOC-as-a-Service market with cutting-edge managed detection and response (MDR), wich provides a unique combination of technology and services for clients to quickly detect and contain threats.

Cellwise

Cellwise provides network orchestration and automation solutions for global telecom operators.

ViSenze

ViSenze is a company that delivers intelligent image recognition solutions that shorten the path to action as consumers search and discover on the visual web.

CB4

CB4 provides a patented artificial intelligence software solutional retailers to identify and correct critical in-store operational problems.

Case on IT

The product of the company called Medukis a machine learning solution for the measurement, prediction and analysis of landline, mobile and television services quality.

Reblaze

The company provides propriety security technologies in a unified platform, shielding assets from threat.

Nextail

This company developed a cloud-based platform that combines artificial intelligence and prescriptive analytics to upgrade retailers' inventory management processes and store operations.

Ometria

Ometria is a engish company based Al powered custom with the vision to become the central hub that powers all the communication between retailers and their customers.

ciValue

ciValue is a disruptive provider of cloud-based Precision Marketing and Supplier Advertising Platforms for Retailers.

Style Sage

The company is a strategic analytics SaaS platform that helps fashion, home and brands with critical pre, in and post season decisions globally.

Jsrambler

The main activity of the company is develop a security solution to protect Web and Mobile Aplications (Javascript code).

Whitefantasy

The company develops digital solutions and dedicates its activity to computer programming activities.

Fyde

The Fyde app allows users to securely surf the internet and access corporate resources on any device with performance optimized over traditional solutions like VPN, SWG or NAC.

11. Deferred taxes

Deferred tax assets at 30 June 2018, amounted to Euro 10,984,389 and Euro 10,802,239 respectively, and arose, mainly, from tax losses caried forward, from tax benefits, from differences between the accounting and tax amount of some fixed assets and from others temporary differences.

The balance of deferred tax assets by nature at 30 June 2019 and 2018 is as follows:

	2019	2018
Tax losses	4.503.199	4.441.774
Tax provisions not accepted and other temporary differences	1,443,465	1,978,943
Tax benefits	5.037.725	4.381.522
	10,984,389	10,802,239

The changes in deferred tax assets in the periods ended at 30 June 2019 and 2018 were as follows:

	2019	2018 restated)
Opening balance	10,275,910	7,324,057
lmpact on results:
Record of deferred tax assets related to tax losses of the period	69,488	107,118
Record / (reverse) of deferred tax assets related to tax losses from previous periods	(107,003)	74,117
Record / (reverse) / use of tax benefits	1,309,212	(307,434)
Record/ (reverse) of tax provisions not accepted and other temporary differences for the period	(474,132)	(435,894)
Record / (reverse) of temporary differences fromthe previous periods	2,856	49,774
	800,421	(512,319)
lmpact on results of the discontinued operations
Discontinued operations (note 26)	(22,425)	(109,753)
	(22,425)	(109,753)
lmpact on reserves:
Exchange variations	53,891	ಲ್ಲಿ ಇತ್ಯಾತಿ ಕಾರ್ಯಕ್ಕೆ ಇತ್ತಿದ್ದ ಮತ್ತು ಸಾಮಾನ್ಯ ಅವರ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡಿ ಮಾಡ
Effect of application of IFRS 15		104,307
	53,891	170,246
Other without impact on results:
Alienation of companies (note 3.c)	(123,408)
Changes in the consolidation perimeter (note 8)		3,930,008
	708,479	3.478.182
Closing balance	10,984,389	10,802,239

At 30 June 2019 and 2018, assessments of the deferred tax assets to be recovered and recognised were made. Potential deferred tax assets were recorded to the extent that future taxable profits were expected against which the tax losses and deductible tax differences could be used. These assessments were made based on the most recent business plans duy the Board of Directors of the Group companies, which are periodically reviewed and updated. The main criteria used in those business plans are described in note 8. For the companies that are included in the Special Group Taxation Regime, the assessment was made taking into account the business plan of the Sonae Group, as from 2018 onwards the tax losses generated by the companies dominated within the group are partially offset by the dominant entity of the group. With respect to the unsettled companies in the year, they will be offset as the Group recovers, taking into account its future taxable income.

At 30 June 2019, the caption 'tax benefits' includes mainly amounts related with the Conventional Remuneration of Capital in the amount of Euro 1,732,500 and amounts related to tax credits in the amount of Euro 2,362,941.

The rate used at 30 June 2019 and 2018, in Portuguese companies, to calculate the deferred tax losses caried forward was 21%. The rate used in 2018 to calculate the temporary differences in Portuguese companies, including provisions not accepted and impairment losses, was 22.5%. It wasn't considered the state surcharge, as it was understood to be unlikely the taxation of temporary differences during the estimated period when the referred rate will be applicable. Tax benefits, related to deductions from taxable income, are considered at 100%, and in some cases, their full acceptance is dependent on the authorities that concede such tax benefits. For foreign companies it was used the rate in force in each country. Brazil 34%, Mexico 30%, USA 28.5%, Spain 25%, Egypt 22.5%.

In accordance with the tax returns and other information prepared by the companies that have registered tax assets, the detail of such deferred tax assets, by nature, at 30 June 2019 was as follows:

												2019
Nature	Companies included in the tax group	Digitmarket	S21 Sec Portugal	We Do Brasil	We Do USA	We Do Egipto	We Do España	We Do Mexico	521 Sec Gestion	S21 Sec Labs	Total	Total Sonaecom Group
Tax losses:
To be used until 2021								44,957			44,957	44,957
To be used until 2022								30,864			30,864	30,864
To be used until 2023							-	207,920			207,920	207,920
To be used until 2025							-	75,792			75,792	75,792
To be used until 2026			44,759				-	336,955			381,714	381,714
To be used until 2027			63,869				-	128,605		45,833	238.307	238,307
To be used until 2028								88,092	612,877	12.017	712,986	712,986
To be used until 2029									253.352		253,352	253,352
To be used until 2030					125,598					54,052	179,650	179.650
To be used until 2033					96,635						96,635	96,635
To be used until 2034					532,766						532,766	532,766
To be used until 2035					649,416						649,416	649,416
To be used until 2036					1,132,816						1,132,816	1,132,816
Unlimited							188,807				188,807	188,807
Tax losses			108,628		2,537,231		188,807	913,185	866,229	111,902	4,725,982	4,725,982
Tax provisions not accepted and other temporary differences	776,257	3,624		331,673	270,281	8,915		108,819			723,312	1,499,569
Tax benefits	2,370,263	141,750	162.773		126.216				2,245,472		2,676,211	5.046.474
Others				(82,947)	(144,700)			(59,989)			(287,636)	(287,636)
Total	3,146,520	145,374	271,401	248,726	2,789,028	8,915	188,807	962,015	3,111,701		111,902 7,837,869	10.984.389

At 30 June 2019 and 2018, the Group has other situations where potential deferred tax assets could be recognised, but since it is not expected that sufficient taxable profits will be generated in the future to cover those losses were not recorded:

	2019	2018
Tax losses	11.464.060	9.651.733
Temporary differences (provisions not accepted for tax purposes and other temporary diferences)	24.553.885	23,632,418
Others	16.959.438	14.518.820
	52.977.383	47,802,971

At 30 June 2019 and 2018, the caption "Temporary differences" includes deferred to impairment of financial investments that can not be recorded.

At 30 June 2019 and 2018, tax losses for which deferred tax assets were not recognised have the following due dates:

Due date	2019	2018
2018		180,606
2019	3,485	38,117
2020	124,861	130,651
2021	253,595	267,723
2022	471,974	454,395
2023	192,453	187,196
2024	221,501	78,923
2025	207,290	184,209
2026	912,260	812,029
2027	427,399	ਤਰਰੇ ਤੇ ਤੋਂ ਤੋਂ ਤੋਂ ਤੇ ਤੇ ਤੇ ਤੇ ਤੇ ਤੇ ਤੇ ਤੇ ਤੇ ਤੇ ਤੇ ਤੇ ਤੇ ਤੇ ਤੇ ਤੇ ਤੇ ਕੇ ਤੇ ਕੇ ਤੇ ਕੇ ਤੇ ਕੇ ਤੇ ਕੇ ਇੱਕ ਵਿੱਚ ਇੱਕ ਵਿੱਚ ਇੱਕ ਵਿੱਚ ਇੱਕ ਵਿੱਚ ਇੱਕ ਵਿੱਚ ਇੱਕ ਵਿੱਚ ਇੱਕ ਵਿੱਚ ਇੱਕ ਵਿੱਚ ਇੱਕ
2028	278,961	88,740
2029	927,478	878,680
2030	50,704	50,704
2032	58,164
2033	116,222	-
2034	121,450	-
2035	82,607	-
2037	180,835	732,878
2038	595,583	276,624
Unlimited	6,237,238	4,890,923
	11,464,060	9,651,733

The year 2029 and following years are applicable to the subsidiaries in which the reporting period of tax losses is greater than twelve years.

The movement that occurred in deferred tax liabilities in the periods ended at 30 June 2018 were as follows:

	2019	2018
Opening balance	(13,930,732)	(10,243,448)
Temporary differences between accounting and tax result	224,528	(1,314,426)
Sub-total effect on results (note 22)	224.528	(1,314,426)
Closing balance	(13,706,204)	(11,557,874)

The reconciliation between the earnings before taxes recorded for the periods ended at 30 June 2019 is as follows:

	2019	2018 (restated)
Earnings before tax	10,374,935	62,630,088
Income tax rate (21%)	(2,178,736)	(13,152,318)
Autonomous taxation and surchage (restated)	(210,548)	(2,839,463)
Tax provision	681,370	295,926
Accounting adjustments not accepted	(1,661,344)	(136,635)
Temporary differences and tax losses of the period without record of deferred tax assets (restated)	(1,472,302)	(895,474)
Utilization of tax losses and tax benefits without record of deferred tax assets in previous periods	413,763	31.306
Deffered tax assets of temporary differences of previous periods	2,856	49,774
Effect of the existence of different tax rates from those in force in Portugal	151,314	151,084
Effect of the untaxed equity method (restated)	4,225,935	4,191,671
Consolidation adjustments (restated)	(412,207)	(402,740)
Deffered tax assets from tax losses of previous periods	(107,003)	74.117
Record/(reverse) of deffered tax assets related to tax benefits (restated)	1,448,113	(307,434)
Income taxation recorded in the period (note 22)	881,211	(12,940,186)

The tax rate used to reconcile the tax expense and the accounting profit is 21% in 2019 and 2018 because it is the standard rate of the corporate income tax in Portugal, country where almost all of the income of Sonaecom group are taxed.

Portuguese Tax Authorities can review the income tax returns of the Company and of its subsidiaries with head office in Portugal for a period of four years (five years for Social Security), except when tax losses have been generated or when any review, claim or impugnation is in course, in which circumstances, the periods are extended The Board of Directors believes that any correction that may arise as a result of such review would not have a significant impact on the accompanying consolidated financial statements.

Supported by the Group's lawyers and Tax consultants, the Board of Directors believes that the revisioned in the consolidated financial statements, associated to probable tax contingencies that should have been registered in the accompanying financial statements, at 30 June 2019.

12. Cash and cash equivalents

At 30 June 2019 and 2018, this caption can be detailed as follows:

	2019	2018
Cash	50,004,700	18,845
Bank deposits repayable on demand	160.935.695	200,739,742
Treasury applications	28,938	50,245,632
Cash and cash equivalents	210.969.333	251,004,219
Bank overdrafts (note 15)		(310)
	210,969,333	251,003,909

13. Share capital

At 30 June 2019 and 2018, the share capital of Sonaecom was comprised by 311,340,037 ordinary of Euro 0.74 each.

At those dates, the Shareholder structure was as follows:

		2019		2018
	Number of shares	%	Number of shares	%
Sontel BV	194.063 119	62.33%	194.063.119	62.33%
Sonae SGPS	81.022.964	26.02%	81.022.964	26.02%
Shares traded on the Portuguese Stock Exchange ('Free Float')	30,682,940	9,86%	30,682,940	9.86%
Own shares (note 14)	5,571,014	179%	5,571,014	1.79%
	311,340,037	100.00%	311,340,037	100.00%

All shares that comprise the share capital of Sonaecom, are authorised, subscribed and paid. All shares have rights and each share corresponds to one vote.

14. Own shares

During the period ended at 30 June 2019, Sonaecom did not actions, whereby the amount held to date, is of 5,571,014 own shares representing 1.79% of its share capital, at an average price of Euro 1.3798.

15. Loans

At 30 June 2019 and 2018, the caption loans had the following breakdown:

a) Medium and long-term loans

						Amount outstanding
				Type of
Company	lssue denomination	Limit	Maturity	reimbursement	2019	2018
S21 Sec Gestion*	Bank loan		May-20	Parcel		63,141
S21 Sec Gestion*	Bank loan		Mar-20	Parcel		77,912
S21 Sec Gestion*	Bank loan		Mar-20	Parcel		77,183
S21 Sec Gestion*	Bank loan		Jun-20	Parcel		100,749
S21 Sec Gestion*	Bank loan		Jun-19	Parcel		100,000
S21 Sec Gestion*	Bank loan		Apr-20	Parcel		125,000
S21 Sec Gestion*	Bank loan		Apr-21	Parcel	69,008	150,509
S21 Sec Gestion*	Bank loan		May-23	Parcel	150,000	200,000
Excellium Services	Bank loan		Sep-22	Parcel	689,101
					908,109	894,494
Nextel*	Reimbursable grants		Jul-21	Parcel		1,316,877
S21 Sec Gestion*	Reimbursable grants		Jun-25	Parcel	1,425,092	946,889
S21 Sec Labs	Reimbursable grants		Jun-24	Parcel	350.288	733,762
					1,775,380	2,997,528
Saphety	Minority Shareholder loans					152,122
	Interests incurred but not due yet					448
					2,683,489	4,044,592

* Includes debt initially contracted by Nextel, merged into S21 Sec Gestion in May 2019, with retroactive effect to January 2019.

The average interest rate on these bank loans at 30 June 2019 was 1.62%.

b) Short-term loans

						Amount outstanding
				Type of
Company	Issue denomination	Limit	Maturity	reimbursement	2019	2018
S21 Sec Gestion*	Bank loan		Jul-18	Parcel		5,586
S21 Sec Gestion*	Bank loan		Nov-18	Parce		45,293
S21 Sec Gestion *	Bank loan		Jul-18	Parcel		48,557
S21 Sec Gestion*	Bank loan		Dec-18	Parce		100,000
S21 Sec Gestion*	Bank loan		Dec-18	Parcel		346,542
521 Ser Gestion*	Bank loan		May-20	Parcel	50,000	50,000
S21 Sec Gestion*	Bank loan		Mar-20	Parcel	77,199	75,734
S21 Sec Gestion*	Bank loan		May-20	Parcel	63,141	79,312
S21 Sec Gestion*	Bank loan		Jun-20	Parcel	81,532	80,198
S21 Sec Gestion*	Bank loan		Jun-20	Parcel	100,749	99,250
S21 Sec Gestion*	Bank loan		Mar-20	Parcel	77,912	101,807
S21 Sec Gestion*	Bank loan		Apr-20	Parcel	125,000	125,000
Excellium Services	Bank loan		lun-20	Parce	298,872
					874,405	1,157,279
Excellium Services	Overdraft facilities	2,000,000	Jun-20	Parce	1,555,787
					1,555,787
Nextel*	Reimbursable grants		Dec-18			1,270,924
S21 Sec Gestion*	Reimbursable grants		Jun-20		1,188,708	718,383
S21 Sec Labs	Reimbursable grants		Jun-20		408,121	461,483
					1,596,829	2,450,790
Others	Bank overdrafts (note 12)					310
Others	Interests incurred but not due yet				7,327	18,894
					4 034 348	3.627.273

* Includes debt initially contracted by Nextel, merged into S21 Sec Gestion in May 2019, with retroactive effect to January 2019.

Grants

At 30 June 2019 the Group had grants obtained from dependent entities of the Basco Government, CDTI and Ministerio de Ciencia y Tecnologia'. These subsidies are recorded at amortised cost in accordance with the method of effective interest rate and have the following repayment plan:

	2019
2019	770,442
2020	898,940
2021	439,726
2022	378,575
2023 and follows	884,526
	3,372,209

These subsidies bear interest at rates between 0% and 4%.

Given the nature of debts, there are no financial covenants.

Bank credit lines of short-term portion

Sonaecom has also a short term bank credit line, in the form of current or overdraft account commitment, in the amount of Euro 1 million.

S21 Sec Gestión has also a short term bank credit line, in the form of current or overdraft account commitment, in the amount of Euro 500,000.

Excellium Services has two credit lines, in the form of current account, in the amount of 1 milion each.

All these bank credit lines of short-term portion bear interest at market to the Euribor for the respective term, and were all contracted in Euro.

At 30 June 2019 and 2018, the available bank credit lines of the Group were as follows:

						Maturity
			Amount			More than 12
Company	Credit	Limit	outstanding	Amount available	Until 12 months	months
2019
Sonaecom	Authorised overdrafts	1,000,000		1,000,000	X
S21 Sec Gestion*	Authorised overdrafts	500,000		500,000	x
Excellium Services	Overdraft facilities	2,000,000	1,555,787	444,213	×
S21 Sec Gestion *	Bank loan		77,927			x
S21 Sec Gestion *	Bank loan		77,199			x
S21 Sec Gestion *	Bank loan		125,000			x
S21 Ser Gestion *	Bank loan		63,141			x
S21 Sec Gestion*	Bank loan		100,613			x
S21 Sec Gestion*	Bank loan		150,661			x
S21 Ser Gestion *	Bank loan		200,000			x
Excellium Services	Bank loan		987.973			×
		3,500,000	3,338,301	1,944,213
2018
Sonaecom	Authorised overdrafts	1.000.000		1,000,000	×
Nextel	Authorised overdrafts	500,000		500,000	x
Nextel	Bank loan		5,586		x
Nextel	Bank loan		48,557		x
Nextel	Bank loan		45,293		X
Nextel	Bank loan		346,542		x
Nextel	Bank loan		200,000		x
Nextel	Bank loan		179,719			x
Nextel	Bank loan		152,915			X
Nextel	Bank loan		250,000			X
Nextel	Bank loan		142,453			x
Nexte	Bank loan		200,000			x
Nextel	Bank loan		230,708			x
Nextel	Bank loan		250,000			x
		1,500,000		1,500,000

* Includes debt initially contracted by Nextel, merged into S21 Sec Gestion in May 2019, with retroactive effect to January 2019.

At 30 June 2019 and 2018, there is no interest rate he total gross debit is exposed to changes in market interest rates.

Others

At 30 June 2019 and 2018, debts to credit institutions (nominal values) related to non-current loans had the following repayment plan:

	Between 12 and 24 months	Between 24 and 36 months	Between 36 and 48 months	Between 48 and 60 months	Between 60 and 72 months
2019
Other loans
Reimbursements	217,418	385,331	280,360	25,000
Interests	17,895	8,993	2,255	118	-
	235,313	394,324	282,615	25,118	-
2018
Other loans
Reimbursements	447,309	294.480	77,705	50,000	25,000
Interests	14,228	3.933	1.434	709	118
	461,537	298,413	79,139	50,709	25,118

16. Non-current lease liabilities

At 30 June 2019 and 2018, this caption was composed of accounts payable to tangible assets suppliers related to lease contracts.

At 30 June 2019 and 2018, the payment of these amounts was due as follows:

	2019		(restated)
		Present value of lease		Present value of lease
	Lease payments	payments	Lease payments	payments
2018			2,104,072	1,974,144
2019	2,649,113	2,385,282	2,656,493	2,487,716
2020	4,259,089	3,827,852	1,731,431	1,634,133
2021	3,456,375	3,134,788	1,145,164	1,096,944
2022	2,515,637	2,277,047	509,771	487,905
2023	1,832,934	1,662,896	179,312	167,469
2024	1,537,203	1,419,688	150,000	142,806
2025	1,479,699	1,411,361	150,000	147,436
2026	433,644	399,175
2027	433,644	414,441		-
2028	289,096	285,063		-
	18,886,434	17,217,593	8,626,243	8,138,553
Interests	(1,668,841)		(487,690)
	17,217,593	17,217,593	8,138,553	8,138,553
Short-term liability (note 18)		(3,293,066)		(3,351,649)
	17,217,593	13,924,527	8,138,553	4,786,904

17. Provisions and accumulated impairment losses

The changes in provisions and in accumulated impairment losses in the periods ended at 30 June 2019 and 2018 were as follows:

	Opening balance	Increases	Decreases	Utilisations and Transfers	Discontinued units (Note 3.c)	Closing balance
2019 Accumulated impairment losses on trade debtors	5,055,966	141,524	(150,000)	(55,846)	(307,419)	4,684,225
Accumulated impairment losses on other current debtors Accumulated impairment losses on inventories	ਦਰ ਤੇਤਰ 40,000				(2,340)	56,999 40.000
Provisions for other liabilities and charges	23,615,649	262,054	(1,126,595)	(34,639)	(271,518)	22,444,951
2018	28,770,954	403,578	(1,276,595)	(90,485)	(581,277	27,226,175
Accumulated impairment losses on trade debtors	4,156,097	67,556	(21,345)	40,006		4,242,314
Accumulated impairment losses on other current debtors	131,419	502		(72,394)		59.527
Accumulated impairment losses on inventories	40.000					40.000
Provisions for other liabilities and charges	3.603.145	17,574,297	(471,182)	(243.110)		20,463,150
	7.930.661	17.642.355	(492.527)	(275,498)		24,804,991

Reinforcements and reductions values of the accumulated impairment losses on receivable accounts and provisions for libilities and charges, at 30 June 2019 and 2018, are detailed as follows:

			2018
		2019		(restated)
Accumulated impairment losses on accounts receivables	Increases	Decreases	Increases	Decreases
Continuing units - registered in the 'Provisions and accumulated impairment losses' (increases) and in 'Other operating costs' (decreases)	141,524	(150,000)	59,398	(21,545)
Discontinued units (note 26)			8,660
Total increases/(decreases) of accumulated impairment losses on accounts receivables	141,524	(150,000)	68,058	(21,345)
Provisions for other liabilities and charges	Increases	Decreases	Increases	Decreases
Recorded in the income statement, under the caption "Income Tax ' (note 22)	56,856	(738,226)	86,594	(382,519)
Recorded in 'Fixed Assets' regarding to the provision for dismantling and abandonment of offices net value recorded in 'Other financial expenses' related to the financial update of the provision for dismantling as foreseen in IAS 16 - 'Fixed Assets' (note 1.c)	96	(3,463)	644
Recorded in the income statement in 'Gains and losses of associated companies jointly controlled related to the registration of the provision resulting from the application of the equity method (note 8)	113	(25,410)	19	(2,145)
Recorded in the income statement under 'Gains and losses on associated companies and companies jointly controlled', concerning the provision relating to the incentive in favor of Armilar (restated)	120,362	(257,285)	17,324,412
Recorded in the income statement 'Staff expenses' related to the provisions for severance payments			7.207	(86,518)
Other increases and decreases - recorded in 'Provisions and impairment losses' (increases) and in 'Other operating costs' (decreases)	84,627	(102,211)	155.421
Total increases/(decreases) of provisions for other liabilities and charges	262,054	(1,126,595)	1/.5/4.29/	(471,182)
Total recorded in the income statement in 'Provisions and impairment losses' (increases) and in 'Other operating revenue' (decreases)	226,151	(252,211)	214,819	(21,345)

At 30 June 2019 and 2018, the breakdown of the provisions for other liabilities and charges is as follows:

	2019	2018
Several contingencies	1,706,388	2,283,420
Legal processes in progress	284,247	40,063
Dismantlement	40,952	54.113
Other responsibilities (note 9)	20,413,364	18,085,554
	22,444,951	20,463,150

At 30 June 2019 and 2018, the value of provisions for dismantlement is recorded at its present value, accordingly with the dates of its utilisation in accordance with IAS 37 - 'Provisions, Contingent Liabilities and Contingent Assets'.

The caption "Several contingencies' relates to conting from transactions carried out in previous years and for which an outflow of funds is probable.

In relation to the provisions recorded for legal process and other responsabilities, given the uncertainty of such proceedings, the Board of Directors is unable to estimate, with reliability, the moment when such provisions will be used and therefore no financial update was carried out.

At 30 June 2019, under the caption "Other responsabilities" are included the amount of Euro 19,993,863 related to the incentive in favour of Armilar, as the funds have exceeded the detined return barrier (Euro 17,324,412 at 30 June 2018, the caption "Uther responsabilities" also included the provisions on amount of Euro 27,195 associated with severance payment.

18. Current lease liabilities

At 30 June 2019, the caption 'Current lease liabilities' includes the amount of Euro 3,351,649 in 2018) related to the short term parcel of the lease contracts (note 16).

19. External supplies and services

'External supplies and services' for the periods ended at 30 June 2018 had the following composition:

	2019	2018
		restated)
Subcontracts	8,085,888	7,061,041
Specialised works	3,501,033	2,914,912
Travelling costs	2,511,128	2,124,777
Advertising and promotion	2,463,008	2,107,492
Communications	652,405	569,554
Rents (restated)	536,249	437,523
Maintenance and repairs	509,612	210,732
Fees	440,725	548,380
Fuels	346,085	239,362
Energy	167,076	171,336
Commissions	59,320	107,374
Others	850,475	308,545
	20,123,004	16,801,028

20. Financial results

Net financial results for the periods ended at 30 June 2019 and 2018 were detailed as follows ((costs) / gains):

	2019	2018
		(restated)
Financial expenses:
Interest expenses:	(432,052)	(187,526)
Bank loans	(20,761)	(601)
Leasing	(286,439)	(146,169)
Otherinterests	(124,852)	(40,756)
Foreign exchange losses	(1,446,542)	(2,016,384)
Other financial expenses	(263,611)	(143,161)
	(2,142,205)	(2,347,071)
Financial income:
Interest income	242,197	246,403
Foreign exchange gains	1,303,633	2,133,811
Others financial gains	188,451	2,905
	1,734,281	2,383,119

21. Gains and losses on Investments

Gains and losses on investments for the periods ended at 30 June 2019 and 2018 are as follows ((costs) / gains):

	2019	2018 (restated)
Financial results of associated companies and companies jointly controlled:
Gains and losses related with the aplication of the equity method (note 9)	19,180,865	66.001.451
	19.180.865	66.001.451

22. Income taxation

Income taxes recognised during the periods ended at 30 June 2018 were as follows ((costs) / gains):

	2019	2018 (restated)
Current tax	(825,108)	(11,409,367)
Tax provision net of reduction (note 17)	681,370	295.926
Deferred tax assets (note 11)	800.421	(512.319)
Deferred tax liabilities (note 11)	224.528	(1,314,426)
	881,211	(12,940,186)

23 Related parties

During the periods ended at 30 June 2019, the balances and transactions maintained with related parties were mainly associated with the normal operational activity of the Group and to the concession and obtainment of loans.

The most significant balances and transactions with related parties, during the periods ended at 30 June 2018 were as follows:

					Balances at 30 June 2019
	Accounts receivable	Accounts payable	Other assets		Other liabilities Treasury applications
Parent company (Sonae SGPS)	2.382.736	7,033,321	1,458,849	46.003
Companies jointly controlled	179,179	330,176	14	1,000	4,700
Associated companies	25		1.300.056
Other related parties	18,665,648	321,401	515,318	4,545,725
	21,227,589	7,684,898	3,274,237	4,592,729	4,700

					Balances at 30 June 2018 (restated)
	Accounts receivable	Accounts payable	Other assets		Other liabilities Treasury applications
Parent company (Sonae SGPS)	1,593,498	11,268.149	78.589	46.893
Companies jointly controlled	408,082	459.625	4.965		3,700
Associated companies			1,414,358
Other related parties	18.491.787	801.933	429.274	3.645.287
	20.493.367	12.529.707	1,927,186	3,692,180	3.700

					Transactions at 30 June 2019
		Sales and services Supplies and services	Interest and similar	nterest and similar	Supplementary
	rendered	received	income	expense	income
Parent company (Sonae SGPS)	1.411	47,015	175,760
Companies jointly controlled	10,686	201,694	83		127,000
Associated companies		414	15.416
Other related parties	23.412.133	915.233	8,552	દિર	119,007
	23,424,229	1,164,356	199,812	દિર	246,007

					Transactions at 30 June 2018
		Sales and services Supplies and services	Interest and similar	nterest and similar	Supplementary
	rendered	received	income	expense	income
Parent company (Sonae SGPS)	180,311		150,191
Companies jointly controlled	57.655	223.249	98		77.833
Other related parties	21,289,345	516.798	13.479		33,368
	21.527.311	740.047	163.768		111,201

During the period ended at 30 June 2019, the company distributed dividends in the amount of Euro 9,074,572 to Sonae SGPS (Euro 2,997,850 at 30 June 2018) and Euro 21,735,069 to Sontel BV (Euro 7,180,335 at 30 June 2018).

During the period ended at 30 June 2019, the company recognised the amount of Euro 35,491,559 related to dividends of Zopt (Euro 17,255,883 in 2018).

The transactions between Group companies were eliminated in consolidation process and therefore are not disclosed in this note. All the above transactions were made at market prices. Both accounts receivable with related parties will be paid in cash and have no guaranties attached. During the periods ended at 30 June 2019 and 2019, no impairment losses have been recognised as accounts receivable of related parties.

24. Guarantees provided to third parties

Guarantees provided to third parties at 30 June 2019 and 2018 were as follows:

Lompany	Beneficiary	Description	2019	2018
S21 Sec Gestion and WeDo	Administrador de Infraestructuras Ferroviarias; AENA; Arrow Ecs Internet Security, S.L.; Asociacion Navarra de Informatica Municipal; Autoridad Territorial del Transporte de Gipuzkoa; Ayuntamiento de Basauri; Aquntamiento de Getxo; Aquntamiento de Rivas; Aquntamiento de Vitoria; Ayuntamiento Vitoria-Gazteiz; Banco de España; Barcelona Serveis Municipals; Bic Gipuzkoa Berrilan, Sa; Canal de Isabel II; Centro Informatico Municipal de Bilbao SA; Comunidad de Madrid; CTT Expresso - Serviços Postais e Logística, S.A.; Emirates Telecommunications Corporation; Euskal Telebista Completion of S.A; Euskaltel S.A.; Eusko Jaurlaritzaren Informatika Elkartea; Eusko Legebiltzarra; Eusko Trenbideak-Ferrocarriles Vascos, S.A; Fábrica Nacional da Moeda y Timbre; Generalitat Valenciana; Gobierno Vasco; Instituto de Mayores y Servicios Sociales; Instituto Nacional de Ciberseguridad de España, SA; Izfe; Metro Madrid; Ministerio De Energía, Turismo Y Agenda Digital; National Intelligence Centre; Osakidetza; Parlamento Vasco; Red Nacional de los Ferrocarriles Españoles;Solred S.A.; SPRI - Agencia vasca de desarrollo empresarial; Tunisie Telecom; Universidad del País Vasco	work to be done	1,288,141	509,736
S21 Sec Labs	Agencia para o Desenvolvimento e Coesao, I.P.; Centro para Desarrollo lnovretail, S21 Sec Gestion and Tecnológico Industrial; Ingenieria de Sistemas para la Defensa de España; Ministerio de Economia y Competitividad; Ministerio de Industria; Ministerio de Industria, Energia y Turismo	Grants	1,700,794	656,057
Sonaecom	Direção de Contribuições e Impostos and Autoridade Tributária e Aduaneira (Portuguese tax authorities)	IRC, IS, IVA - Tax assessment	3,563,875	2,311,861
Several	Others		1,342,148	815,084
			7,894,958	4,292,738

In addition to these guarantees were set securities up for the current fiscal processes. Sonae SGPS became consigner of Sonaecom SGPS surety to the amount of Euro 27,546,999 and Sonaecom SGPS become cosigner of Público for the amount of Euro 564,900.

At 30 June 2019, the Board of Directors of the Group believes that the court proceedings and ongoing tax assessments in progress will not have significant impacts on the consolidated financial statements.

25. Information by business segment

During the periods ended on 30 June 2019 and 2018 were identified the following business segments:

– Media;

• Technologies; and
• Holding activities.

These segments were identified taking into considerations: the fact of being group units that develop activities where we can separately identify revenues and expenses, for which financial is separately developed and their operating results are regularly reviewed by management and over which decisions are made. For example, decisions about allocation of resources, for having similar products/services and also taking into consideration the shold (in accordance with IFRS 8).

Excluding the ones mentioned above, the remaining activities of the Group have been classified as unallocated.

Inter-segment transactions during the periods ended on 30 June 2019 and 2018 were eliminated in the consolidation process. All these transactions were made at market prices.

lnter-segment transfers or transactions were entered under the normal commercial terms and conditions that would also be available to unrelated third parties and were mainly related to interest on treasury applications and management fees.

Overall information by business segment at 30 June 2018, prepared in accordance with the same accounting policies and measurement criteria adopted in the preparation of the consolidated financial statements, can be summarised as follows:

	Media		Technologies Holding Activities		Subtota		Eliminations and others		Total
	June 2019	June 2018 (restated)	June 2019	June 2018 (restated)	June 2019	June 2018 (restated)	June 2019	June 2018 (restated)	June 2019	June 2018 (restated)	June 2019	June 2018 (restated)
Revenues:
Sales and services rendered (restated)	7,951,258	7,637,249	92,817,593	71,553,515	179,537	284,097	100,948,388	79,474,861	(405,537)	(507,546)	100,542,851	78,967,315
Reversal of provisions (restated)			259,861	21,345			259,861	21,345	(7,650)		252,211	21,345
Other operating revenues (restated)	316.607	365,413	855,314	321,977	1.066	11,587	1,172,987	698,977	10.415	1,949	1183.402	700,926
Total revenues	8,267,865	8,002,662	93,932,768	71,896,837	180.603	295,684	102,381,236	80,195,183	(402,772)	(505,597)	101,978,464	36,570,293
Depreciation and amortisation (restated)	(507,061)	(586,748)	(6,805,315)	(5,075,426)	(16,871)	(16,208)	(7,329,247)	(5,678,382)	(188,348)	15,520	(7,517,595)	(5,662,862)
Provisions and impairment losses (restated)		(15,000)	(203,367)	(78,996)	(22,784)	(120,823)	(226,151)	(214,819)			(226,151)	(214,819)
Net operating income / (loss) for the segment	(1,405,662)	(1,783,348)	(6,489,822)	(1,467,621)	(679,432)	(696,815)	(8,574,916)	(3,947,784)	176,910	540.373	(8,398,006)	(3,407,411)
Interest income (restated)	2,664	18,976	49,890	86,976	456,428	473,925	508,982	579,877	(266,785)	(333.474)	242,197	246,403
Interest expenses (restated)	(13,197)	(17,662)	(695,841)	(497,632)	(1,560)	(1,850)	(710,598)	(517,144)	278,546	329,616	(432,052)	(187,528)
Gains and losses in associated companies (restated)	(1,308,459)	92,953	(166,676)	46,678,883	20,656,000	19,229,615	19,180,865	66,001,451			19,180,865	66,001,451
Other financial results (restated)	(2,075)	(2,669)	(194,629)	20,521	201,464	(40,227)	4,760	(22,375)	(222,829)	(452)	(218,069)	(22,827)
Income taxation (restated)	723,069	(25,530)	(101,873)	(12,909,769)	47,372	1,887	668,568	(12,933,413)	212,643	(6,773)	881,211	(12,940,186)
Consolidated net income/(loss) for the period (restated)	(2,003,660)	(1,717,280)	(7,598,951)	31,911,358	20,680,272	18.966.536	11,077,661	49,160,613	178,485	529,289	11,256,146	49,689,902
Consolidated net income/(loss) for the period of discontinued operations			5,228,516	208,599			5,228,516	208.599			5,228,516	208,599
Attributable to: Shareholders of parent company (restated) Non-controlling interests (restated) Assets:	(2,003,660)	(1,717,280)	(1,346,764) (1,023,671)	31,990,068 129,888	20,680,272	18,966,536	17,329,848 (1,023,671)	49,239,324 129,888	134,145 44,340	530,334 (1,045)	17,463,993 (979,331)	49,769,658 128,843
Tangible and intangible assets and goodwill (restated)	2,395,655	2,206,673	89,843,832	69,778,190	87,884	120,360	92,327,371	72,105,223	(11,812,701)	(11,618,403)	80,514,670	60,486,820
Inventories	380,957	138,549	25,336	370.953			406,293	509,502			406,293	509.502
Investiments in associated companies and companies jointly controlled (restated)	(828,034)	881,614	102,802,082	88,916,629	657,491,089	672.251.332	759,465,137	762,049,575	52,944	15,391	759,518,081	762,064,966
Otherinvestments	47,947	47,947	40.069.906	12,823,480	57,965,419	47,703,406	98.083.272	60.574.833	(57,965,419)	(47,703,406)	40.117.853	12.871.427
Other non-current assets (restated)	963,248	32,109	14,445,765	12,694,576	106,244,928	126.970.146	121,653,941	139,696,831	(104,843,199)	(126,623,617)	16,810,742	13.073.214
Other current assets of the segment (restated)	9,070,221	5,609,425	79,857,219	131,815,457	213,821,324	202,440,847	302,748,764	339,865,729	(10,892,570)	(12,663,448)	291,856,194	327,202,281
Liabilities:
Liabilities of the segment (restated)	9,949,055	9,378,267	159,550,076	149,057,344	2,257,077	2,398,960	171,756,208	112,449,845	(31,443,765)	10,609,048	140,312,443	123.058.893

During the periods ended at 30 June 2019 and 2018, the inter-segments sales and services were as follows:

	Multimedia	Information Systems	Holding Activities
2019
Multimedia		119,672	-
Information Systems	35,000		79,905
Holding Activities		2,709
External trade debtors	7,916,258	92,695,212	99,632
	7,951,258	92,817,593	179,537
2018
Multimedia		163.447	-
Information Systems			237,931
Holding Activities		1,047
External trade debtors	7,637,249	71,389,022	46,165
	7.637.249	71,553,515	284.097

During the periods ended at 30 June 2019, sales and services rendered of the segments of Multimedia and Activities Holding were obtained predominantly in the Portuguese market, this market represents approximately 100% of revenue.

Regarding the Information Systems' segment, the Portuguese market is also dominant, representing 53.1% in 2018), followed by the Spanish market with a share of 14.28% of revenue (10.40% in 2018).

The consolidated financial statements of NOS at 30 June 2018 incorporated in the consolidated financial statements of Sonaecom through ZOPT by the equity method (note 9), can be summarised as follows:

Condensed consolidated balance sheets

(Amounts expressed in thousands of Euro)	June 2019	June 2018 (restated)
Assets
Tangible assets	1,034,592	1,012,782
Intangible assets	1,182,273	1,180,492
Rights of use	199,199	201,823
Deferred tax assets	77,441	108,366
Other non-current assets	25,664	28,881
Non-current assets	2,519,169	2,532,344
Trade debtors	418,149	498,401
Cash and cash equivalents	11,310	3,116
Other current assets	114,043	88,318
Current assets	543,502	589,835
Total assets	3,062,671	3,122,179
Liahilities
Loans	1,076,257	1,124,836
Provisions	125,094	143,369
Other non-current liabilities	24,006	27,676
Non-current liabilities	1,225,357	1,295,881
Loans	311,111	259,543
Trade creditors	254,891	243,511
Other current liabilities	308,335	326,953
Current liabilities	874,337	830,007
Total liabilities	2,099,694	2,125,888
Shareholders' funds excluding non-controlling interests	ರ್ಕಿ,ಇತ್ಯಾ	988,967
Non-controlling interests	7,038	7,324
Total Shareholders' funds	962,977	996,291
Total Shareholders' funds and liabilities	3,062,671	3,122,179

Condensed consolidated statements of income by nature

(Amounts expressed in thousands of Euro)	June 2019	June 2018 (restated)
Total revenue	781.737	772,287
Costs and losses
Direct costs and External supplies and services	(306,653)	(307,796)
Depreciation, amortisation and impairment losses	(200,461)	(216,620)
Other operating costs	(150,263)	(132,900)
	(657,377)	(657,316)
Gains/ (losses) in associated companies	1,289	(5,727)
Financial results	(12,354)	(16,917)
Income taxation	(23,351)	(12,993)
Consolidated net income/(loss) for the period	89,946	79,334
Consolidated net income/(loss) for the period attributed to non-controlling interests	(250)	(465)
Attributed to shareholders of the parent company	90,196	79.799

26. Discontinued units

The net income from the discontinued operations can be detailed as follows:

(Amounts expressed in Euro)	March 2019	June 2018
		(restated)
Services rendered	2,067,305	3,714,409
Other operating revenues		183,766
	2,067,305	3,898,175
External supplies and services	(554,167)	(1,299,637)
Staff expenses	(779,237)	(1,566,012)
Depreciation and amortisation	(417,135)	(600,447)
Provisions and impairment losses		(8,660)
Other operating costs	(11,452)	(12,418)
	(1,761,991)	(3,487,174)
Other financial expenses	(9,481)	(9,901)
Other financial income	(31,759)	(51,026)
Current income / (loss)	264,074	350,074
Income taxation	(67,484)	(141,475)
Consolidated net income/(loss) for the period of discontinued operations	196,590	208,599
Gain/ (loss) resulting from the alienation	5,031,926	-
Attributed to:
Non-controlling interests (discontinued operations)	(225,239)	27,129

The net income at 31 March 2019 corresponds to the net income from the Saphety Group, amounting to Euro 196,590, and othe gain resulting from the alienation of the Group, in the amount of the net amount of the non-controlling interests is Euro 4,832,163, as stated in note 3.c.

27. Earnings per share

Earnings per share, basic and diluted, are calculated net income attributable to the Group (Euro 17,463,993 in 2019 and Euro 49,769,658 in 2018) by the average number of shares outstanding during the period ended 30 June 2019, net of own shares (305,769,023 in 2019 and 2018).

28. Staff expenses

For the periods ended at 30 June 2019 and 2018, the caption 'Staff expenses' is as follows:

	2019	2018 (restated)
Remuneration	32,064,928	23,750,857
Remuneration Charges	5,997,796	4,577,346
Medium Term Incentive Plan	440,456	362.180
Works for the Company	(2,720,549)	(2,298,167)
Others	1,560,295	1,221,017
	37,342,926	27,613,233

29. Medium Term Incentive Plans

In June 2000, Sonaecom Group created a discretionary Medium Term Incentive Plan, for more senior employees, based on Sonaecom options and shares and Sonae-SGPS, S.A. shares, being on 10 March 2014, Sonaecom shares plans were fully converted into Sonae SGPS shares. The exercise of the rights occurs after their attribution, provided that the employee stays in the company during that period.

The 2018 plan was delivered in march 2019 to the Sonaecom's Directors.

The 2015 plan was delivered in March 2019 to Saphety's employees and in April 2019 for the remaining employees.

Accordingly, the plans outstanding at 30 June 2019 are as follows:

			Vesting period		30 June 2019
	Share price 28 June 2019	Award date	Vesting date	Aggregate number of participations	Number of shares
Sonae SGPS shares 2016 Plan	0.850	Mar-17	Mar-20	2	257,712
2017 Plan	0.850	Mar-18	Mar-21	2	215,096
2018 Plan	0.850	Mar-19	Mar-22	n	269,796

During the period ended on 30 June 2019, the movements that occurred in the plans can be summarised as follows:

		Sonae SGPS shares
	Number of participants	Number of shares
Outstanding at 31 December 2018:
Still deferred	173	2,309,348
Total	173	2,309,348
Movements in the period:
Awarded	2	257,038
Overdue (1)	(161)	(1,725,175)
Cancelled / corrected / transfers (2)	(8)	(98,607)
Outstanding at 30 June 2019:
Still deferred	ნ	742,604
Total	б	742,604
1-1 - 1 - 1

(1) Of the overdue shares, 562,939 were delivered in cash

(2) Corrections are made based on the dividend paid and by the exit of the employees during the plan period.

The responsibility of the plans was recognised under the caption 'Other non-current liabilities'.

Share plans costs are recognised in the accounts over the award and the vesting date of those shares. The costs recognised for the open plans and for the plans veriods and in the period ended at 30 June 2019 were as follows:

	Value
Costs recognised in previous years	1,434,110
Costs recognised in the period	440,456
Costs of plans vested in the period	(1,620,187)
Total cost of the plans	254,379
Recorded in 'Other current liabilities'	160,292
Recorded in 'Other non-current liabilities	94,087

30. Subsequent events

On 10 July 2019, Sonae IN, and in accordance with your active portfolio management strategy, has reached an agreement with Mobileum, lnc. ("Mobileum"), to sell the entire share capital and voting rights of WeDo Consulting - Sistemas de Informação, S.A. ("WeDo").

The closing of transaction was subject to the fulfillment of a set of requirements agreed between the parties, which were met until the August 13th, the date in which the sale was completed and announced.

The transaction price comprises a fixed amount of USD 70 Milion and a variable and deferred amount, depending on the performance of the combined businesses, until 31 December 2021, with a maximum value of USD 27 Million.

At 30 June 2019, the WeDo and its subsidiaries contribution to the Sonaecom Consolidated was Euro 77.213.393 in total Assets, Euro 24,897,802 in total Liabilities and Euro 26,012,223 in total Sales and services rendered .

These financial consolidated presentations have been approved by the Executive Board and authorised to be issued on 26 July 2019, being, however, subject to approval by the Shareholders' General Meeting.

These financial statements are a translation of financial statements originally issued in accordance with International Financial Reporting Standards (IAS / IFRS) as adopted by the European Union and the format and disclosures required by those Standards, some of which may not conform to or be required by generally accepted accounting principles in the event of discrepancies, the Portuguese language version prevails.

9.3. Sonaecom separate financial statements

Statement of financial position

For the periods ended at 30 June 2019 and 2018 (restated – note 1) and for the year ended at 31 December 2018 (restated – note 1)

(Amounts expressed in Euro)	Notes	June 2019 (not audited)	June 2018 (not audited and restated)	December 2018 (restated)
Assets
Non-current assets
Tangible assets	1.a, 1.f, 1.t and 2	5,966	6,780	6,994
Intangible assets	1.b, 1.t and 3	2,110	2,828	2,480
Rights of use	1.f and 4	79,807	110,752	95,280
Investments in Group companies	1.c and 6	62,823,215	56,680,401	64,307,037
Companies jointly controlled	1.d and 7	597,666,944	597,666,944	597,666,944
Other non-current assets	1.c, 1.e, 1.n, 5, 8 and 22	216,286,116	232,872,508	215,399,891
Deferred tax assets	1.m and 9	101,016	120,643	117,821
Total non-current assets		876,965,174	887,460,856	877,596,447
Current assets
Income tax receivable	1.m and 5	650,600	793,569	650,600
Other current debtors	1.e, 1.g, 5, 10 and 22	507,234	580,569	430,783
Other current assets	1.e, 1.n, 5 and 22	131,307	537,360	193,376
Cash and cash equivalents	1.e, 1.h, 5, 11 and 22	212,532,182	200,529,349	212,722,898
Total current assets		213,821,323	202,440,847	213,997,657
Total assets		1,090,786,497	1,089,901,703	1,091,594,104
Shareholder' funds and liabilities
Shareholders' funds
Share capital	12	230,391,627	230,391,627	230,391,627
Own shares	1.r and 13	(8,441,804)	(8,441,804)	(8,441,804)
Reserves	1.q	832,770,588	850,151,304	850,151,304
Net income / (loss) for the period		د د, 809, 008	15,401,617	16,865,415
Total Shareholders' funds		1,088,529,419	1,087,502,744	1,088,966,542
Liabilities
Non-current liabilities
Provisions for other liabilities and charges	1.1 and 15	372,763	390,489	349,979
Non-current lease liabilities	1.e, 1.f, 5 and 16	69,583	81,921	69583
Other non-current liabilities	1.e. 1.n. 1.u and 5	94,087	123,672	155,717
Total non-current liabilities		536,433	596.082	575,279
Current liabilities
Income tax payable	1.m) and 5	22,040
Other creditors	1.e, 1.g, 5, 17 and 22	1,228,021	1,195,912	1,255,174
Current lease liabilities	1.e, 1.f, 5 and 16	12,338	30,709	27,844
Other current liabilities	1.e. 1.n. 1.u and 5	458,246	576.256	769,265
Total current liabilities		1,720,645	1,802,877	2,052,283
Total liabilities		2,257,078	2,398,959	2,627,562
Total Shareholders' funds and liabilities		1,090,786,497	1,089,901,703	1,091,594,104

The notes are an integral part of the financial statements.

The Chief Accountant

Income statement by nature

For the periods ended at 30 June 2019 and 2018 (restated – note 1) and for the year ended at 31 December 2018 (restated – note 1)

(Amounts expressed in Euro)	Notes	June 2019 (not audited)	April to June 2019 (not audited)	June 2018 (not audited and restated)	April to June 2018 (not audited and restated)	December 2018 (restated
Services rendered	1.0 and 22	179,537	89,768	284.097	142,049	496.953
Other operating revenues	1.o and 22	1,066	(82,770)	11,587	5,521	65,440
		180,603	6.998	295.684	147,570	562.402
External supplies and services	1.f, 18 and 22	(336,564)	(154,688)	(329,982)	(173,977)	(640,581
Staff expenses	1.u and 25	(461,131)	(138,236)	(502,495)	(180,032)	1.054,569
Depreciation and amortisation	1.a. 1.b. 1.f. 2. 3 and 4	(16,871)	(8,430)	(16,208)	(8,870)	(33.059
Provisions and impairment losses	1.I., 1.t and 15	(22,784)	(22,784)	(120,823)	(120,823)	(93,720)
Other operating costs		(22,686)	(11,440)	(22,991)	(11,453)	(47,097
		(860,036)	(335,578)	(992,499)	(495,155)	1,869,026
Gains and losses on Group companies and companies jointly controlled	1.d. 1.o. 6, 7 and 19	34,007,737	34,351,999	15,664,696	17,214,625	16,748,327
Other financial expenses	1.c, 1.f 1.i, 1.j, 1.s, 1.t, 20 and 22	(32,256)	(13,307)	(42,421)	(19,844)	(97,944
Other financial income	1.f, 1.s, 11, 20 and 22	465,588	213,010	474.270	231,882	1,076,619
Earnings before taxes		33,761,636	34.223.122	15,399,730	17,079,078	16,420,378
Income taxation	1.m, 9 and 21	47,372	26,790	1887	(6,284)	445,037
Net income / (loss) for the period		33,809,008	34,249,912	15,401,617	17,072,794	16,865,415

The notes are an integral part of the financial statements.

The Chief Accountant

Statement of comprehensive income

For the periods ended at 30 June 2019 and 2018 (restated – note 1) and for the year ended at 31 December 2018 (restated – note 1)

(Amounts expressed in Euro)	Notes	June 2019 (not audited)	April to June 2019 (not audited)	June 2018 / (not audited and restated)	April to June 2018 (not audited and restated)	December 2018 (restated)
Net income / (loss) for the period		33.809.008	34.249.912	15.401.617	17.072.794	16,865,415
Comprehensive income for the period		33.809.008	34,249,912	15,401,617	17.072.794	16,865,415

The notes are an integral part of the financial statements.

The Chief Accountant

Statement of changes in Equity

For the periods ended at 30 June 2019 and 2018 (restated – note 1)

(Amountsexpressed in Euro)							Reserves
	Share capital (note 12)	Own shares (note 1.rand 13)	Share premium	Legal reserves	Own shares reserves	Otherreserves	Total reserves (note 1.q)	Net income / (loss)	Total
2019 Balance at 31 December 2018 (restated) Appropriation of the result of 2018	230,391,627	(8,441,804)	775,290,377	17.701.887	8,441,804	48.717.236	850,151,304	16.865.415	1,088,966,542
Transfer to legal reserves and other reserves				843.305		16.022.110	16.865.415	(16,865,415)	-
Dividend Distribution (Note 22)						(34,246,131)	(34,246,131)		(34,246,131)
Comprehensive income for the period ended at 30 June 2019								33.809.008	33.809.008
Balance at 30 June 2019	230.391627	(8,441,804)	775,290,377	18.545.192	8.441.804	30.493.215	832,770,588	33.809.008	1,088,529,419

(Amounts expressed in Euro)							Reserves
	Share capital (note 12)	Own shares (note 1.rand 13)	Share premium	Legal reserves	Own shares reserves	Other reserves	Total reserves (note 1.q)	Net income / (loss)	Total
2018
Balance at 31 December 2017	230,391,627	(8,441,804)	775,290,377	16,913,362	8.441,804	45,050,162	845,695,705	15,770,507	1,083,416,035
Appropriation of the result of 2017
Transfer to legal reserves and other reserves				788.525		14,981,982	15,770,507	(15,770,507)
Dividend Distribution (Note 22)						(11,313,454)	(11,313,454)		(11,313,454)
Impact of the application of IFRS 16 (restated)						(1,454)	(1,454)		(1,454)
Comprehensive income for the period ended at 30 June 2018 (restated)								15,401,617	15,401,617
Balance at 30 June 2018 (restated)	230,391,627	(8,441,804)	775,290,377	17,701,887	8,441,804	48,717,236	850.151.304	15,401,617	1,087,502,744

The notes are an integral part of the financial statements.

The Chief Accountant

Cash flow statement

For the periods ended at 30 June 2019 and 2018 (restated – note 1)

(Amounts expressed in Euro)	Notes		June 2019 (not audited)		June 2018 (not audited and restated)
Operating activities
Receipts from trade debtors		222,208		255,329
Payments to trade creditors		(384,165)		(388,206)
Payments to employees		(712,190)		(630.491)
Cash flows from operating activities		(874,147)		(763,368)
Payments / receipts relating to income taxes		(437)		(66,832)
Other payments / receipts relating to operating activities		(100,003)		73,558
Cash flows from operating activities (1)			(974,587)		(756,642)
Investing activities
Receipts from:
Financial investments	6 and 8	2,000,000
Interest and similar income	20	408,141		538,160
Loans granted	8	11,060,000		10,837,414
Dividends	22	35,491,559		17,255,883
Payments for:
Financial investments	6 and 8	(13,881,413)		(6,818,889)
Tangible assets	2			(2,616)
Cash flows from investing activities (2)			35,078,287		21,809,952
Financing activities
Payments for:
Interest and similar expenses	20	(31,239)		(96,513)
Dividends Paid	22	(34,246,131)		(11,313,454)
Leases		(17,046)		(15,164)
Cash flows from financing activities (3)			(34,294,416)		(11,425,131)
Net cash flows (4)=(1)+(2)+(3)			(190,716)		9.628.179
Cash and cash equivalents at the beginning of the period	11		212,722,898		190,901,170
Cash and cash equivalents at period end	11		212,532,182		200,529,349

The notes are an integral part of the financial statements.

The Chief Accountant

Notes to the cash flow statement

For the periods ended at 30 June 2019 and 2018

	Notes	June 2019 (not audited)	June 2018 (not audited)
1. Acquisition or sale of subsidiaries or other businesses activities
a) Receipts from other business activities
Loan repayment from Sonae Investment Management - Software and Technology, SGPS, S.A.	8	11.060.000	10,837,414
Reimbursement of supplementary capital from Sonae Investment - Software and Technology, SGPS, S.A.	8	2,000,000
		13,060,000	10.837.414
b) Payments from other business activities
Supplementary capital to Sonae Investment Management - Software and Technology, SGPS, S.A.	8	13.881.413	6.818.889
		13,881,413	6,818,889
c) Dividends received
ZOPT, SGPS, S.A.	22	35,491,559	17,255,883
		35.491.559	17 255 883

	Notes	June 2019 (not audited)	June 2018 (not audited)
2. Description of non-monetary financing activities
a) Bank credit obtained and not used		1.000.000	1,000.000
b) Purchase of company through the issue of shares		Not applicable	Not applicable
c) Conversion of loans into shares		Not applicable	Not applicable

The notes are an integral part of the financial statements.

The Chief Accountant

9.4. Notes to the separate financial statements of Sonaecom

SONAECOM, SGPS, S.A., (hereinafter referred to as 'the Company' or 'Sonaecom') was established on 6 June 1988, under the name Sonae – Tecnologias de Informação, S.A. and has its head office at Lugar de Espido, Via Norte, Maia-Portugal. The corporate purpose of the Company is the management of shareholdings, as an indirect form of economic activities.

Sonaecom is owned directly by Sontel BV and Sonae SGPS, SA, and Efanor Investimentos SGPS, S.A. the ultimate controlling company.

By public deed of 30 September 1997, the scission-fusion of Pargeste, SGPS, S.A., was carried out, and the company started to include the financial participations in the companies related to the communication and information technologies of the spun-off company.

At 3 November 1999, the Company's share capital was increased, its Articles of Association were modified and its name was changed to Sonae.com, SGPS, S.A.. Since then the Company's corporate object has been the management of investments in other companies. Also on 3 November 1999, the Company's share capital was re-denominated to euro, being represented by one hundred and fifty million shares with a nominal value of EUR 1 each.

At 1 June 2000, the Company carried out a Combined Share Offer, involving the following:

• · A Retail Share Offer of 5,430,000 shares, representing 3.62% of the share capital, made in the domestic market and aimed at: (i) employees of the Sonae Group; (ii) customers of the companies controlled by Sonaecom; and (iii) the general public;
• · An Institutional Offering for sale of 26,048,261 shares, representing 17.37% of the share capital, aimed at domestic and foreign institutional investors.

In addition to the Combined Share Offer, the Company's share capital was increased under the terms explained below. The new shares were fully subscribed for and paid up by Sonae-, SGPS, S.A. (a Shareholder of Sonaecom, hereinafter referred to as 'Sonae'). The capital increase was subscribed for and paid up on the date the price of the Combined Share Offer was determined, and paid up in cash, 31,000,000 new ordinary shares of 1 Euro each being issued. The subscription price for the new shares was the same as that fixed for the sale of shares in the aforementioned Combined Share Offer, which was EUR 10.

In addition, in this period, Sonae sold 4,721,739 Sonaecom shares under an option granted to the banks leading the Institutional Offer for Sale and 1,507,865 shares to Sonae Group managers and to the former owners of the companies acquired by Sonaecom.

By decision of the Shareholders' General Meeting held on 17 June 2002, Sonaecom's share capital was increased from Euro 181,000,000 to Euro 226,250,000 by public subscription reserved for the existing Shareholders, 45,250,000 new shares of 1 Euro each having been fully subscribed for and paid up at the price of Euro 2.25 per share.

At 30 April 2003, the Company's name was changed by public deed to Sonaecom, SGPS, S.A..

By decision of the Shareholders' General Meeting held on 12 September 2005, Sonaecom's share capital was increased by Euro 70,276,868, from Euro 226,250,000 to Euro 296,526,868, by the issuance of 70,276,868 new shares of 1 Euro each and with a share premium of Euro 242,455,195, fully subscribed by France Telecom. The corresponding public deed was executed on 15 November 2005.

By decision of the Shareholders' General Meeting held on 18 September 2006, Sonaecom's share capital was increased by Euro 69,720,000, to Euro 366,246,868, by the issuance of 69,720,000 new shares of 1 Euro each and with a share premium of Euro 275,657,217, subscribed by 093X -Telecomunicações Celulares, S.A. (EDP) and Parpública -Participações Públicas, SGPS, S.A. (Parpública). The corresponding public deed was executed on 18 October 2006.

By decision of the Shareholders General Meeting held on 16 April 2008, bearer shares were converted into registered shares.

At 5 February 2014, Sonaecom made public the decision to launch a general and voluntary tender offer for the acquisition of shares representing the share capital.

The offer was general and voluntary, with the offered obliged to acquire all the shares that were the object of the offer and were, until the end of the respective period, subject to valid acceptance by the recipients.

The period of the offer, during which sales orders were received, ran for two weeks, beginning at 6 February and ending on 19 February 2014. At 20 February 2014, the results of the offer were released. The level of acceptance reached 62%, corresponding to 54,906,831 Sonaecom shares.

In 2014 Sonaecom reduced its share capital to EUR 230,391,627.

Following this result, Euronext Lisbon announced Sonaecom exclusion from the PSI-20 from 24 February 2014 forward.

The financial statements are presented in Euro, rounded to the unit.

1. Basis of presentation

The accompanying financial statements have been prepared with an on a going concern basis, based on the Company's accounting records in accordance with International Financial Reporting Standards (IFRS), as adopted and effective in the European Union on 1 January 2019 and in accordance with the IAS 34 - Interim Financial Reporting. These financial statements were prepared based on historical cost, except for the revaluation of certain financial instruments.

Sonaecom adopted IFRS for the first time according to SIC 8 (First-time adoption of IAS) on 1 January 2003.

The following standards, interpretations, amendments and revisions have been approved ('endorsed') by the European Union, and have mandatory application to the financial years beginning on or after 1 January 2019 and were first adopted in the period ending at 30 June 2019:

Standard / Interpretation	Effective date (annual
	periods beginning on
	or after)
IFRS 16 - Leases	1-Jan-19
This new standard replaces IAS 17 with a significant impact on accounting by lessees who are now required to recognize a lease liability reflecting future lease payments and a "right of use" asset for all leases, except for certain short- term leases and for low value assets. The definition of a lease has also been moditied, based on the "right to control the use of an identified asset." With regards to the transition regime, the new standard may be applied retrospectively or a modified retrospective approach can be followed.
Amendments to IFRS 9 - Prepayment features with negative compensation	1-Jan-19
The objective of the amendments to IFRS 9 is examine whether amortized cost measurement would provide relevant and useful information for instruments that contain summetric prenaument ontions and otherwise have contractual

cash flows that are solely payments of principal and interest.

IFRS 16 is now defined as the new accounting record of leases, both from the lessor's point of view and from the lessee's perspective, by introducing a new accounting regime for the lessee, which determines the registration of a right of use over leased assets and a lease liability relating to rental payable for all lease contracts.

The Company analysed all the contracts that contain the use of assets in order to identify the underlying conditions, the contract period, the nature of the rent payable and the interest rates implicit in the contracts.

On the date of transition to IFRS 16, the Company applied retrospectively to the beginning of each of the lease contracts analysed, with application on 1 January 2018 and restatement of the comparative amounts of the financial statements.

From the analysis of the contracts, the impact of the adoption of IFRS 16 in the financial statements at 30 June 2018 and 31 December 2018 was as follows:

(Amounts expressed in Euro)	June 2018 (reported)	IFRS 16	June 2018 (restated)
Balance
Non-current assets
Rights of use		110.752	110.752
Non-current liabilities
Non-current lease liabilities		81921	81921
Current liabilities
Current lease liabilities		30.709	30.709
Shareholders' funds
Reserves	850.152.758	(1,454)	850,151,304
Profit and Loss
External supplies and services	(345,146)	15 164	(329,982)
Depreciation and amortisation	(2,470)	(13,738)	(16,208)
Other financial expenses	(40,571)	(1,850)	(42,421)

(Amounts expressed in Euro)	December 2018 (reported)	IFRS 16	December 2018 (restated)
Balance
Non-current assets
Rights of use		95.280	95.280
Non-current liabilities
Non-current lease liabilities		69583	69.583
Current liabilities
Current lease liabilities		27,844	27,844
Shareholders' funds
Reserves	850.152.758	(1,454)	850,151,304
Profit and Loss
External supplies and services	(672,791)	32,210	(640,581)
Depreciation and amortisation	(3,849)	(29,210)	(33,059)
Other financial expenses	(94,251)	(3,693)	(97,944)

No impact is expected from the adoption of the remaining standards.

The following standards, interpretations, amendments and revisions have not been approved (endorsed) by the European Union until 30 June 2019:

Standard / Interpretation	Effective date
	(annual periods
	beginning on
IFRS 17 - Insurance contracts	1-Jan-21
This new standard replaces IFRS 4 and applies to all entities that issue
insurance contracts, reinsurance contracts and investment contracts with
discretionary participation characteristics. IFRS 1/ is based on the current
measurement of technical liabilities at each reporting date. The current
measurement can be based on a complete "building block approach" or
"premium allocation approach". The recognition of the technical margin is
difterent depending on whether it is positive or negative. II-RS1/ is
retrospective application.
Amendments to references to the conceptual	1-lan-20
framework in IFRS standards
Amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 8, IAS 34, IAS 34, IAS 37, IAS
38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32. in order to clarify the
application of the new definitions of asset / liability and expenditure / income,
in addition to some of the characteristics of the financial information. These

These standards have not yet been approved ('endorsed') by the European Union and, as such, were not adopted by the company for the period ended at 30 June 2019, because their application is not mandatory.

The accounting policies and measurement criteria adopted by the Company at 30 June 2019 are comparable with those used in the preparation of 30 June 2018 financial statements.

Main accounting policies

The main accounting policies used in the preparation of the accompanying financial statements are as follows:

a) Tangible assets

Tangible assets are recorded at their acquisition cost less accumulated depreciation and less estimated accumulated impairment losses.

Depreciations are calculated on a straight-line monthly basis as from the date the assets are available for use in the necessary conditions to operate as intended by the management, by a corresponding charge to the profit and loss statement caption 'Depreciation and amortisation'.

Impairment losses detected in the realisation value of tangible assets are recorded in the period in which they arise, by a corresponding charge to the caption 'Depreciation and amortisation' of the profit and loss statement.

changes are retrospective, except if impractical.

The annual depreciation rates used correspond to the estimated useful life of the assets, which are as follows:

	Years of useful life
Buildings and others constructions	20
Fixtures and fittings	4

Current maintenance and repair costs of tangible assets are recorded as costs in the period in which they occur. Improvements of significant amount, which increase the estimated useful life of the assets, are capitalised and depreciated in accordance with the estimated useful life of the corresponding assets.

b) Intangible assets

Intangible assets are recorded at their acquisition cost less accumulated amortisation and less estimated accumulated impairment losses. Intangible assets are only recognised, if they were identifiable and if it is likely that they will bring future economic benefits to the Company, if the Company controls them and if their cost can be reliably measured.

Intangible assets correspond, essentially, to software and industrial property.

Amortisations are calculated on a straight-line monthly basis, over the estimated useful life of the assets (one to five years) as from the month in which the corresponding expenses are incurred.

Amortisation for the period is recorded in the profit and loss statement under the caption 'Depreciation and amortisation'.

Impairment losses detected in the realisation value of intangible assets are recorded in the year in which they arise, by a corresponding charge under the caption 'Depreciation and amortisation' in the profit and loss statement.

c) Investments in group companies and other non-current assets

Sonaecom has control of subsidiaries in situations that cumulatively fulfils the following conditions: i) has power over the subsidiary; ii) is exposed to, or has rights to, variable results via its relationship with the subsidiary; and iii) is able to use its power over the investee to affect the amount of your results. Financial investments in equity investments in group companies, are recorded under "Investments in group companies', at cost of acquisition.

The acquisition cost is the amount of cash and cash equivalents paid or the fair value of other consideration given to acquire an asset at the time of acquisition or establishment or, where

applicable, the amount attributed to that asset when initially recognised in accordance with the specific requirements of IFRS 3.

The consideration transferred may include assets or liabilities of the acquirer that have carrying amounts that differ from their fair value at the acquisition date (for example, nonmonetary assets or a business of the acquirer). If so, the acquirer must re-measure the assets and liabilities transferred at their fair value at the acquisition date and recognise the resulting gains or losses, if any, in the income statement. However, sometimes the transferred assets or liabilities remain in the entity acquired after the completion of the business and therefore the buyer retains control over them. In this situation, the acquirer shall measure those assets and liabilities at their carrying amounts immediately before the acquisition date and shall not recognise any gain or loss in the income statement for assets or liabilities it controls both before and after the completion of the deal.

Loans and supplementary capital granted to affiliated companies with maturities, estimated or defined contractually, greater than one year, are recorded, at their nominal value, under the caption 'Other non-current assets'.

Investments and loans granted to group companies are evaluated whenever an event or change of circumstances indicates that the recorded amount may not be recoverable, or impairment losses recorded in previous years no longer exist.

Impairment losses estimated for investments and loans granted to Group companies are recorded, in the period that they are estimated, under the caption 'Other financial expenses' in the profit and loss statement.

The expenses incurred with the acquisition of investments in Group companies are recorded as cost when they are incurred.

d) Investments in companies jointly controlled

Investments in companies jointly controlled (companies in which the Company has, direct or indirect, 50% of the voting rights in the Shareholders' General Meeting of or in which it has the control over the financial and operating policies), are recorded under the caption 'Investments in companies jointly controlled, at acquisition cost in accordance with IAS 27, as such, Sonaecom presents, separately, consolidated financial statements in accordance with IAS / IFRS.

Loans and supplementary capital granted to companies jointly controlled, with maturities, estimated or defined contractually, greater than one year, are recorded, at their nominal value, under the caption 'Other non-current assets'.

lmpairment losses estimated for investments and loans granted to companies jointly controlled are recorded, in the period that they are estimated, under the caption 'Other financial expenses' in the profit and loss statement.

The expenses incurred with the acquisition of investments in companies jointly controlled are recorded as cost when they are incurred.

e) Financial instruments

Financial assets

The Company classifies its financial assets into the following categories: financial assets at fair value through profit or loss, financial assets measured at amortised cost, financial assets at fair value through other comprehensive income. Its classification depends on the entity's business model to manage the financial assets and the contractual characteristics in terms of the cash flows of the financial asset.

Changes to the classification of financial assets can only be made when the business model is changed, except for financial assets at fair value through other comprehensive income, as equity instruments, which can never be reclassified to another category.

(i) Financial assets measured at amortised cost

Financial assets measured at amortised cost are those that are part of a business model with the purpose to hold financial assets in order to receive contractual cashflows, although these contractual cash flows can only be capital repayments and interest payments of capital in debt.

(ii) Financial assets at fair value through other comprehensive income

This category may include financial assets that qualify as debt instruments (contractual obligation to deliver cash flows) or equity instruments (residual interest in an entity);

a) Of debt instruments, this category includes financial assets that correspond only to the payment of nominal value and interest, for which the business model followed by the management is the receipt of contractual cash flows or on time sale;

b) Of equity instruments, this category includes the percentage of interest held in entities over which the Company does not exercise control, joint control or significant influence, and which the Company irrevocably chose on the date of initial recognition to designate at fair value through other comprehensive income.

At 30 June 2019, the Company did not hold assets classified at fair value through other comprehensive income.

(iii) Financial assets at fair value through profit or loss

This category includes debt instruments and equity instruments that do not meet the criteria for qualification as financial assets at amortised cost and which the Company has not classified as financial assets through other comprehensive income at the time of initial recognition. This category also includes all financial instruments whose contractual cash flows are not exclusively capital and interest.

As 30 June 2019, the Company did not hold assets classified at fair value through profit or loss.

Gains and losses resulting from the change in the fair value of assets measured at fair value through profit or loss are recognised in income for the year in which they occur in the respective caption "Losses / (gains) on financial assets", which include income amounts interest and dividends.

Financial assets are recognised in the Company's statement of financial position on the trade or contracting date, which is the date on which the Company undertakes to acquire or dispose of the asset. At the initial moment, except for trade accounts receivable, financial assets are recognised at fair value plus directly attributable transaction costs, except for assets at fair value through profit or loss in which transaction costs are immediately recognised in the income statement. Trade accounts receivable, at the initial time, are recognised at their transaction price, as defined in IFRS 15.

Financial assets are derecognised when: (i) the contractual rights of the Company expire upon receipt of their cash flows; (ii) the Company has transferred substantially all the risks and benefits associated with its detention; or (iii) notwithstanding that it retains a portion, but not substantially all the risks and rewards associated with its detention, the Company has transferred control over the assets.

Financial assets at amortised cost are subsequently measured in accordance with the effective interest rate method and deducted from impairment losses. Interest income on these financial assets is included in "Interest earned on assets at amortised cost" in financial income.

Financial assets at fair value through other comprehensive income, which are debt instruments, are subsequently measured at fair value through fair value changes recognised in other comprehensive income, except for variations related to

the recognition of impairment, interest income and gains/(losses) due to foreign exchange differences, which are recognised in income for the year. Financial assets at fair value through other comprehensive income are subject to impairment.

Financial assets at fair value through other comprehensive income that are equity instruments are measured at fair value on the date of initial registration and subsequently, the fair value changes are recorded directly in the other comprehensive income, in the equity. Future reclassification is not possible, even after derecognition of the investment. Dividends obtained from these investments are recognised as gains, in results for the year, on the date they are attributed.

Financial assets and liabilities are offset and presented at net value, when and only when the Company has the right to offset the amounts recognised and intends to settle at the net value.

Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified according to the contractual substance regardless of their legal form. Equity instruments are contracts that show a residual interest in the Company's assets after deducting liabilities. The equity instruments issued by the company are recorded at the amount received, net of the costs incurred with their issuance. Financial liabilities are derecognised only when they are extinguished, that is, when the obligation is settled, cancelled or expired.

Financial liabilities are classified into two categories:

(iii) Financial liabilities at amortised cost

(iv)Financial liabilities at fair value through profit or loss

In accordance with IFRS 9, financial liabilities are classified as subsequently measured at amortised cost, except for:

f) Financial liabilities at fair value through profit or loss. These liabilities, including derivatives that are liabilities, should subsequently be measured at fair value;

g) Financial liabilities that arise when a transfer of a financial asset does not meet the conditions for derecognition or when the continued involvement approach is applied;

h) Financial guarantee contracts;

i) Commitments to grant a loan at a lower interest rate than the market;

j) The contingent consideration recognised by a purchaser in a business combination to which IFRS 3 applies. This contingent consideration should be subsequently measured at fair value, with changes recognised in profit or loss.

The Company's financial liabilities include: loans obtained (note i), accounts payable and derivative financial instruments (note k).

f) Rights of use and leasing

A lease is defined as a contract, or part of a contract, that transfers the right to use a good (the underlying asset) for a period of time in exchange for a value.

At the beginning of each contract, it is evaluated and identified whether or not the contract contains a lease. This evaluation involves an exercise of judgment as to whether each contract depends on a specific asset, if the companies of Sonaecom group obtain substantially all the economic benefits from the use of that asset and whether they have the right to control the use of the asset.

All contracts that constitute a lease are accounted for on the basis of a single recognition model in the balance sheet as the IAS 17 established for financial leases.

At the date of commencement of the lease, the Company recognises the liability related to lease payments (i.e. the lease liability) and the asset that represents the right to use the underlying asset during the lease period (i.e. the right of use or "ROU ").

The interest on the lease liability and the depreciation of the ROU are recognised separately.

Lease liabilities are remeasured if certain events occur (such as a change in the lease period, a change in future payments that result from a change in the reference rate or rate used to determine such payments). This remeasurement of the lease liability is recognised as an adjustment in the ROU.

Rights of use (assets)

The Company recognises the right to use the assets at the start date of the lease (that is, the date on which the underlying asset is available for use).

The right to use the assets is recorded at acquisition cost, less accumulated depreciation and impairment losses and adjusted for any new measurement of lease liabilities. The cost of the right to use the assets includes the recognised amount of the lease liability, any direct costs incurred initially and payments already made prior to the initial rental date, less any incentives received.

Unless it is reasonably certain that the Company obtains ownership of the leased asset at the end of the lease term, the recognised right to use the assets is depreciated on a straight-

line basis over the shorter of its estimated useful life and the term of the lease.

Usage rights are subject to impairment.

Lease liabilities

At the date of commencement of the lease, the Company recognises the liabilities measured at the present value of the future payments to be made until the end of the lease.

Lease payments include fixed payments (including fixed payments on the substance), less any incentives to receive, variable payments, dependent on an index or rate, and expected amounts to be paid under residual value guarantees. The lease payments also include the exercise price of a call option if it is reasonably certain that the Company will exercise the option and penalties for termination of the lease if it is reasonably certain that the Company will terminate the lease.

Variable payments that do not depend on an index or a rate are recognised as an expense in the period in which the event giving rise to them occurs.

In calculating the present value of the lease payments, the Company uses the incremental loan rate at the start date of the lease if the implied interest rate is not readily determinable.

After the starting date of the lease, the value of the lease liability increases to reflect the increase in interest and reduces the payments made. In addition, the book value of the lease liability is remeasured if there is a change, such as a change in the lease term, fixed payments or the purchase decision of the underlying asset.

g) Other current debtors

'Other current debtors' are initially recognised at fair value and are subsequently measured at amortised cost, net of impairment adjustments. Impairment losses of 'Other current debtors' are recorded in accordance with the principles described in the policy in note 1.t. The identified impairment losses are recorded in the income statement and other comprehensive income in 'Provisions and impairment losses' and subsequently reversed on the net income.

h) Cash and cash equivalents

Amounts included under the caption 'Cash and cash equivalents' correspond to amounts held in cash and term bank deposits and other treasury applications with a maturity of less than three months, where the risk of any change in value is insignificant.

The cash flow statement has been prepared in accordance with IAS 7 -'Statement of Cash Flow', using the direct method. The Company classifies, under the caption 'Cash and cash equivalents', investments that mature in less than three months, for which the risk of change in value is insignificant. The caption 'Cash and cash equivalents' in the cash flow statement also includes bank overdrafts, which are reflected in the statement of financial position caption 'Short-term loans and other loans'.

The cash flow statement is classified by operating, financing and investing activities. Operating activities include collections from customers, payments to suppliers, payments to personnel and other flows related to operating activities.

Cash flows from investing activities include the acquisition and sale of investments in associated, subsidiary companies and companies jointly controlled as well as receipts and payments resulting from the purchase and sale of fixed assets.

Cash flows from financing activities include payments and receipts relating to loans obtained and finance lease contracts, as well as cash flows from the shareholders' transactions in quality of shareholders.

All amounts included under this caption are likely to be realised in the short term and there are no amounts given or pledged as guarantee.

i) Loans

Loans are initially recorded as liabilities by fair value and subsequently mensured by the 'amortised cost'. Any expenses incurred in setting up loans are recorded as a deduction to the nominal debt and recognised during the period of the financing, based on the effective interest rate method. The interests incurred but not yet due are added to the loans caption until their payment and are classified in current liabilities except when the company has an unconditional right to defer payment for at least 12 months.

j) Financial expenses relating to loans

Financial expenses relating to loans are generally recognised as expenses at the time they are incurred. Financial expenses related to loans for the acquisition, construction or production of assets are capitalised as part of the cost of the assets. These expenses are capitalised starting from the time of preparation for the construction or development of the asset and are interrupted when the assets are ready to operate, at the end of the production or construction phases or when the associated project is suspended.

k) Derivatives

The Company only uses derivatives in the management of its financial risks to hedge against such risks. The Company does not use derivatives for trading purposes.

The cash flow hedges used by the Company are related to:

(i) Interest rate swaps operations to hedge against interest rate risks on loans obtained. The amounts, interest payment dates and repayment dates of the underlying interest rate swaps are similar in all respects to the conditions established for the contracted loans. Changes in the fair value of cash flow hedges are recorded in assets or liabilities, against a corresponding entry under the caption 'Hedging reserves' in Shareholders' funds.

(ii) Forward's exchange rate for hedging foreign exchange risk. The values and times periods involved are identical to the amounts invoiced and their maturities.

In cases where the hedge instrument is not effective, the amounts that arise from the adjustments to fair value are recorded directly in the profit and loss statement.

At 30 June 2019 and 2018, the Company did not have any derivatives.

I) Provisions and contingencies

Provisions are recognised when, and only when, the Company has a present obligation (either legal or implicit) resulting from a past event, the resolution of which is likely to involve the disbursement of funds by an amount that can be reasonably estimated.

Provisions are reviewed at the statement of financial position date and adjusted to reflect the best estimate at that date.

Provisions for restructurings are only registered if the Company has a detailed plan and if that plan has already been communicated to the parties involved.

Contingent liabilities are not recognised in the financial statements but are disclosed in the notes, except if the possibility of a cash outflow affecting future economic benefits is remote.

Contingent assets are not recognised in the financial statements but are disclosed in the notes when future economic benefits are likely to occur.

m) Income Tax

Income tax' expense represents the sum of the tax currently payable and deferred tax. Income tax is recognised in accordance with IAS 12 – 'Income Taxes'.

Sonaecom Group has been covered, since January 2008, by the special regime for the taxation of groups of companies, from which, the provision for income tax is determined on the basis of the estimated taxable income of all the companies covered by that regime. However, in the period ended in 2015, the

Sonaecom Group, no longer has an independent group of companies covered by the special regime for taxation as start to integrate the special regime for taxation of groups of Sonae SGPS companies.

Therefore, since 1 January 2015, Sonaecom Group is under the special regime for the taxation of groups of companies, from which Sonae, SGPS is the dominant company. In 2017, due to change of RETGS policy, the tax losses generated by the companies controlled in the tax group (RETGS) determine their allocation to the tax losses of the group, so that, since 2017, only the parent company has recognised the amounts corresponding to such tax losses, without giving rise to any financial. From fiscal year 2018 onwards these tax losses generated by the companies controlled within the group were offset by the Group's dominant entity. With respect to tax losses generated by the dominated companies not compensated in the period, they will be compensated as the Group recovers, taking into account the future taxable profits of the Group, and the amount to be compensated is registered in non-current assets in an account receivable from the Group. Each company records the income tax on its individual accounts, and the tax recorded is recorded against the group companies account. The special regime for the taxation of groups of companies covers all direct or indirect subsidiaries, and even through companies resident in another Member State of the European Union or the European Economic Area, only if, in the last case, there is an obligation of administrative cooperation, on which the Group holds at least 75% of their share capital, where such participation confers more than 50% of voting rights, if certain requirements are met.

Deferred taxes are calculated using the liability method and reflect the timing differences between the amount of assets and liabilities for accounting purposes and the respective amounts for tax purposes.

'Deferred tax assets' are only recognised when there is reasonable expectation that sufficient taxable profits shall arise in the future to allow such deferred tax assets to be used. At the end of each period the recorded and unrecorded deferred tax assets are revised and they are reduced whenever their realisation ceases to be probable, or increased if future taxable profits are, likely, enabling the recovery of such assets (note 9).

Deferred taxes are calculated with the tax rate that is expected to be in force at the time the asset or liability will be used based on decreed tax rate or substantially decreed tax rate at relate date.

Whenever deferred taxes derive from assets or liabilities directly registered in Shareholders' funds, its recording is also made under the Shareholders' funds caption. In all other

situations, deferred taxes are always recorded in the profit and loss statement.

n) Accrual basis

Expenses and income are recorded in the period to which they relate, regardless of their date of payment or receipt. Estimated amounts are used when actual amounts are not known.

The captions 'Other non-current assets', 'Other current assets', 'Other non-current liabilities' and 'Other current liabilities' include expenses and income relating to the current period, where payment and receipt will occur in future periods, as well as payments and receipts in the current period but which relate to future periods. The latter shall be included by the corresponding amount in the results of the periods to which they relate to.

The costs attributable to current period and whose expenses will only occur in future periods are estimated and recorded under the caption 'Other current liabilities' and 'Other noncurrent liabilities', when it is possible to estimate reliably the amount and the timing of occurrence of the expense. If there is uncertainty regarding both the date of disbursement of funds, and the amount of the obligation, the value is classified as Provisions (note 1.l).

o) Revenue

Revenue includes the fair value of the consideration received or receivable for the sale or rendering of services resulting from the normal activity of the company. The revenue is recognised net from taxes and taking into account the amount of any trade discounts and volume rebates allowed by the Company.

Dividends

Dividends are recognised when the Shareholders' rights to receive such amounts are appropriately established and communicated.

p) Fair value

The measurement of fair value presumes that an asset or liability is changed in an orderly transaction between market participants to see the asset or transfer the liability at the measurement date, under current market conditions. The measurement of fair value is based on the assumption that the transaction of sell the asset or transfer the liability may occur:

(i) In the main asset and liability market, or

(ii) In the main asset and liability does not exist in the market in which an orderly transaction would take place for the asset or liability

The Company uses appropriate valuation techniques to the circumstances and for which there is sufficient data to measure fair value, maximizing the use of observable relevant data and minimizing the use of unobservable data.

All assets and liabilities measured at fair value or for which disclosure is mandatory are classified according to a fair value hierarchy, which allocates the data to be used in the fair value measurement, into three levels detail below:

Level 1 - Unadjusted quoted prices for identical assets and liabilities in active markets, which the entity can access at the measurement date;

Level 2 - Valuation techniques that use inputs that are not quoted are directly or indirectly observable;

Level 3 - Valuation techniques that use inputs not based on observable market data, ie, based on unobservable data.

The measurement of fair value is classified fully at the lowest level of the input that is significant for the measurement as a whole.

q) Reserves

Legal reserve

Portuguese commercial legislation requires that at least 5% of the annual net profit must be appropriated to a legal reserve, until such reserve reaches at least 20% of the share capital. This reserve is not distributable, except in case of liquidation of the Company, but may be used to absorb losses, after all the other reserves are exhausted, or to increase the share capital.

Own shares reserve

The own shares reserve reflects the acquisition value of the own shares and follows the same requirements of legal reserve.

Other reserves and Shares Premium

This caption includes retained earnings from previous years that are available for distribution and the Shares Premium.

Additionally, the increments resulting from the application of fair value through equity components, including its implementation through net results, shall be distributed only when the elements that gave rise to them are sold, liquidated or exercised or when they finish their use, in the case of tangible or intangible assets. Therefore, at 30 June 2019, Sonaecom, have free reserves distributable amounting approximately Euro 61 million. To this effect were considered as distributable increments resulting from the application of fair value through equity components already exercised during the period ended at 30 June 2019.

r) Own shares

Own shares are recorded as a deduction of Shareholders' funds. Gains or losses related to the sale of own shares are recorded under the caption 'Other reserves'. While shares are owned for

the Company must maintain an unavailable reserve equivalent to its book value.

s) Balances and transactions in foreign currency

The euro is the functional currency of presentation. All transactions in foreign currency are translated for the functional currency at the exchange rate of the transaction date. At each closing date, the exchange restatement of outstanding balances is carried out, applying the exchange rate in effect at that date.

Favourable and unfavourable foreign exchange differences resulting from changes in the rates in force at transaction date and those in force at the date of collection, payment or at the statement financial position date are recorded as income and expenses in the profit and loss statement in financial results.

The following rates were used for the translation into Euro:

		2019		2018
	30 June	Average	30 June	Average
Pounds Sterling	1.1154	1.1452	11286	11368
American Dollar	0.8787	0.8853	0.8578	0.8264

t) Assets impairment

Whenever the book value of an asset is greater than the amount recoverable, an impairment loss is recognised and recorded in the profit and loss statement under the caption 'Depreciation and amortisation' in the case of tangible assets and intangible assets for the other assets under the caption 'Provisions and impairment losses', in relation to the other assets.

Non-financial assets impairment

Impairment tests are performed for assets with undefined useful life at the date of each statement of financial position and whenever an event or change of circumstances indicates that the recorded amount of an asset may not be recoverable.

lmpairment tests are performed for assets with defined useful lives and investments in associates whenever there is evidence that their book value is higher than the recoverable value.

The recoverable amount is the greater of the net selling price and the value of use. Net selling price is the amount obtained upon the sale of an asset in a transaction within the capability of the parties involved, less the costs directly related to the sale. The value of use is the present amount of the estimated future cash flows expected to result from the continued use of the asset and of its sale at the end of its useful life. The recoverable amount is estimated for each asset individually or, if this is not possible, for the cash-generating unit to which the asset belongs.

For investments in associated companies of the group and for assets with defined useful lives, the recoverable amount, calculated in terms of value in use, is determined based on the most recent business plans duly approved by the Company's Board of Directors. For Investments in companies jointly controlled, the recoverable amount is determined taking into account various information such as the most recent business plans duly approved by the Company's Board of Directors and the average of evaluations made by external analysts (researches).

Non-financial assets, for which impairment losses have been recorded, are reviewed at each reporting date for reversal of these losses.

Financial assets impairment

The Company assesses at each reporting date the existence of impairment in financial assets at amortised cost. The expected loss results from the difference between all contractual cash flows that are due to an entity in accordance with the contract and all the cash flows that the entity expects to receive, discounted at the original effective interest rate.

The objective of this impairment policy is to recognise expected credit losses over the duration of financial instruments that have undergone significant credit risk increases since initial recognition, assessed on an individual or collective basis, taking into account all reasonable and sustainable information, including prospects. If, at the reporting date, the credit risk associated with a financial instrument has not increased significantly since the initial recognition, the Company measures the provision for losses relating to that financial instrument by an amount equivalent to the expected credit losses within a period of 12 months. If there has been an increase in credit risk, the Company calculates the impairment corresponding to expected losses for all contractual flows until the maturity of the asset.

Regarding accounts receivable from related entities, which are not considered as part of the financial investment in these entities, credit impairment is assessed according to the following criteria: i) if the balance receivable is immediately due, ii) if the balance a low risk, or (iii) if it has a maturity of less than 12 months. In cases where the amount receivable is immediately payable and the related entity is able to pay, the probability of default is close to 0% and therefore the impairment is considered equal to zero. In cases where the receivable balance is not immediately due, the related entity's credit risk is assessed and if it is "low" or if the maturity is less than 12 months, then the Group only assesses the probability

u) Medium-term incentive plans

The accounting treatment of Medium Term Incentive Plans is based on IFRS 2 – 'Share-based Payments'.

Under IFRS 2, when the settlement of plans established by the Company involves the delivery of Sonaecom's own shares, the estimated responsibility is recorded, as a credit entry, under the caption 'Reserves – Medium Term Incentive Plans', within the caption 'Shareholders' funds' and is charged as an expense under the caption 'Staff expenses' in the profit and loss statement.

The quantification of this responsibility is based on its fair value at the attribution date and is recognised over the vesting period of each plan (from the award date of the plan until its vesting or settlement date). The total responsibility, at any point in time, is calculated based on the proportion of the vesting period that has 'elapsed' up to the respective accounting date.

When the responsibilities associated with any plan are covered by a hedging contract, i.e., when those responsibilities are replaced by a fixed amount payable to a third party and when Sonaecom is no longer the party that will deliver the Sonaecom shares, at the settlement date of each plan, the above accounting treatment is subject to the following changes:

(i) The total gross fixed amount payable to third parties is recorded in the balance sheet as either 'Other non-current liabilities' or 'Other current liabilities':

(ii) The part of this responsibility that has not yet been recognised in the profit and loss statement (the 'unelapsed' proportion of the cost of each plan) is deferred and is recorded, in the statement of financial position as either 'Other non-current assets' or 'Other current assets';

(iii) The net effect of the entries in (i) and (ii) above eliminate the original entry to 'Shareholders' funds'; and

(iv) In the profit and loss statement, the 'elapsed' proportion continues to be charged as an expense under the caption 'Staff expenses'.

At 30 June 2019 and 2018 there are no outstanding hedge agreements.

For plans settled in cash, the estimated liability is recorded under the statement of financial position captions 'Other noncurrent liabilities' and 'Other current liabilities' by a corresponding entry under the profit and loss statement caption 'Staff expenses', for the cost relating to the vesting period that has 'elapsed' up to the respective accounting date. The liability is quantified based on the fair value of the shares as of each statement of financial position date. When the

liability is covered by a hedging contract, recognition is made in the same way as described above, but with the liability being quantified based on the contractually fixed amount.

Equity-settled plans to be liquidated through the delivery of shares of Sonae SGPS are recorded as if they were settled in cash, which means that the estimated liability is recorded under the statement of financial position captions 'Other non-current liabilities' and 'Other current liabilities' by a corresponding entry under the profit and loss statement caption 'Staff expenses', for the cost relating to the deferred period elapsed. The liability is quantified based on the fair value of the shares as of each statement of financial position date.

At 30 June 2019, the plans granted during the year 2017, 2018 and 2019 are not covered, by the contract and so a liability is recorded at fair value was record. The responsibility of all plans is recorded under the captions 'Other non-current liabilities' and 'Other current liabilities'. The cost is recognised on the income statement under the caption 'Staff expenses'.

v) Subsequent events

Events occurring after the date of the statement of financial position which provide additional information about conditions prevailing at the time of the statement of financial position (adjusting events) are reflected in the financial statements. Events occurring after the statement of financial position date that provide information on post- statement of financial position conditions (non-adjusting events), when material, are disclosed in the notes to the financial statements.

w) Judgements and estimates

The most significant accounting estimates reflected in the consolidated financial statements of the periods ended at 30 June 2019 and 2018 are as follows:

(i) Useful lives of tangible and intangible assets (notes 1.a and 1.b);

(ii) Impairment analysis of investments in group companies and joint ventures and of other tangible and intangible assets;

(iii) Recognition of impairment losses on assets (Trade debtors and inventories), provisions and analysis of contingent liabilities; and

(iv) Recoverability of deferred tax assets (note 9).

Estimates used are based on the best information available during the preparation of the financial statements and are based on the best knowledge of past and present events. Although future events are neither foreseeable nor controlled by the Company, some could occur and have impact on such estimates. Changes to the estimates used by the management that occur after the approval date of these consolidated financial statements, will be recognised in net income, in

accordance with IAS 8 - 'Accounting Policies, Changes in Accounting Estimates and Errors', using a prospective methodology.

Impairment of financial assets

The determination of impairment on financial assets involves significant estimates. In calculating this estimate, management assesses, among other factors, the duration and extent of the circumstances under which the recoverable amount of these assets may be lower than their book value. The balances of "Other current debtors" and "Other Current Assets" are valued for factors such as default history, current market conditions, and estimated prospective information by reference to the end of each reporting period, the most critical evaluation elements for the purpose of analysing estimated credit losses.

Rights of use

The Company determines the end of the lease as the noncancellable part of the lease term, together with any periods covered by an option to extend the lease if it is reasonably certain that it will be exercised, or any periods covered by an option to terminate the lease agreement, if it is reasonably certain that it will not be exercised.

The Company has the option, under some of its lease agreements, to lease its assets for additional periods. Sonaecom evaluates the reasonableness of exercising the option to renew the agreement. That is, the Company considers all the relevant factors that create an economic incentive for the renewal exercise. After the starting date, the Company reevaluates the termination of the contract if there is a significant event or changes in circumstances that are under control and affect its ability to exercise (or not exercise) the renewal option (e.g. a change in the strategy of the business).

x) Financial risk management

The Company's activities expose it to a variety of financial risks such as market risk, liquidity risk and credit risk.

These risks arise from the unpredictability of financial markets, which affect the capacity to project cash flows and profits. The Company's financial risk management, subject to a long-term ongoing perspective, seeks to minimise potential adverse effects that derive from that uncertainty, using, every time it is possible and advisable, derivative financial instruments to hedge the exposure to such risks (note 1.k).

The Company is also exposed to equity price risks arising from equity investments, although they are usually maintained for strategic purposes.

Market risk

a) Foreign exchange risk

Foreign exchange risk management seeks to minimise the volatility of investments and transactions made in foreign currency and contributes to reduce the sensitivity of results to changes in foreign exchange rates.

Whenever possible, the Company uses natural hedges to manage exposure, by offsetting credits granted and credits received expressed in the same currency. When such procedure is not possible, the Company adopts derivative financial hedging instruments (note 1. k).

Considering the reduced values of assets and liabilities in foreign currency, the impact of a change in exchange rate will not have significant impacts on the financial statements.

b) Interest rate risk

In the period ended at 30 June 2019, Sonaecom has no indebtedness. However, as all Sonaecom's borrowings (note 14) are at variable rates, interest rate swaps and other derivatives are used to hedge future changes in cash flow relating to interest payments, when it is considered necessary. Interest rate swaps have the financial effect of converting the respective borrowings from floating rates to fixed rates. Under the interest rate swaps, the Company agrees with third parties (banks) to exchange, in pre-determined periods, the difference between the amount of interest calculated at the fixed contract rate and the floating rate at the time of re-fixing, by reference to the respective agreed notional amounts.

The counterparties of the derivative hedging instruments are limited to highly rated financial institutions, being the Company's policy, when contracting such instruments, to give preference to financial institutions that form part of its financing transactions.

In order to select the counterparty for occasional operations, Sonaecom requests proposals and indicative prices from a representative number of banks in order to ensure adequate competitiveness of these operations. In determining the fair value of hedging operations, the Company uses certain methods, such as option valuation and discounted future cash flow models, using assumptions based on market interest rates prevailing at the statement of financial position date.

Comparative financial institution quotes for the specific or similar instruments are used as a benchmark for the valuation.

The fair value of the derivatives contracted, that are not considered as fair value hedges or the ones that are considered not sufficiently effective for cash flow hedge, are recognised under statement financial position and changes in the fair value

of such derivatives are recognised directly in the profit and loss statement for the period.

Sonaecom's Board of Directors approves the terms and conditions of the financing with significant impact in the Company, based on the analysis of the debt structure, the risks and the different options in the market, particularly as to the type of interest rate (fixed / variable). Under the policy defined above, the Executive Committee is responsible for the decision on the occasional interest rate hedging contracts, through the monitoring of the conditions and alternatives existing in the market.

At 30 June 2019 and 2018, are not contracted any derivatives instruments of hedging of the interest rate changes.

Liquidity risk

The existence of liquidity in the Company requires the definition of some policies for an efficient and secure management of the liquidity, allowing us to maximise the profitability and to minimise the opportunity costs related with that liquidity.

The liquidity risk management has a threefold objective: (i) Liquidity, i.e., to ensure the permanent access in the most efficient way to obtain sufficient funds to settle current payments in the respective dates of maturity as well as any eventual not forecasted requests for funds, in the deadlines set for this; (ii) Safety, i.e., to minimise the probability of default in any reimbursement of application of funds; and (iii) Financial efficiency, i.e., to ensure that the Company maximises the value / minimise the opportunity cost of holding excess liquidity in the short term.

The main underlying policies correspond to the variety of instruments allowed, the maximum acceptable level of risk, the maximum amount of exposure by counterparty and the maximum periods for investments.

The existing liquidity should be applied to the alternatives and by the order described below:

(i) opportunity cost of amortisation and the opportunity cost related to alternative investments;

(ii) Consolidated management of liquidity – the existing liquidity in Group companies, should mainly be applied in Group companies, to reduce the use of bank debt at a consolidated level; and

(iii) Applications in the market.

The applications in the market are limited to eligible counterparties, with ratings previously established by the

Board of Directors and limited to certain maximum amounts by counterparty.

The definition of maximum amounts intends to assure that the application of liquidity in excess is made in a prudent way and taking into consideration the best practices in terms of bank relationships.

The maturity of applications should equalise the forecasted payments (or the applications should be easily convertible, in case of asset investments, to allow urgent and not estimated payments), considering a threshold for eventual deviations on the estimates. The threshold depends on the accuracy level of treasury estimates and would be determined by the business. The accuracy of the treasury estimates is an important variable to quantify the amounts and the maturity of the applications in the market.

Taking into account the low value of the liabilities of the company is understood that the liquidity risk is very low.

Credit risk

The Company's exposure to credit risk is mainly associated with the accounts receivable related to current operational activities, cash investments and other non-current assets supplies.

(i) Cash and cash equivalents

Sonaecom holds financial assets arising from its relationship with subsidiary and with financial institutions (note 11). There is a credit risk associated with the potential pecuniary default of the Financial Institutions that are counterparts in these relationships, however, in general, the exposure related to this type of financial assets is widely diversified and of limited duration in time.

Credit risk associated with relationships with financial institutions is limited by the management of risk concentration and a rigorous selection of counterparties with a high prestige and national and international recognition and based on their respective ratings, taking into account the nature, maturity and size of operations.

The Company uses credit assessment agencies and has specific departments for credit control, collection and litigations' management, as well as credit insurance, which help to mitigate such risk. The management of this risk is aimed at ensuring the effective collection of its credits within the established deadlines without affecting the financial balance of the Company.

(ii) Loans granted to related parties

There are no impairment losses for Loans granted to related parties.

Loans granted to related parties (note 8) are considered to have low credit risk and, therefore, impairment losses recognised during the year are limited to estimated credit losses at 12 months. These financial assets are considered to have "low credit risk" when they have a low impairment risk and the borrower has a high capacity to meet its contractual cash flow liabilities in the short term.

(iii) Other current debtors

To measure the expected credit losses, the unpaid amounts and contractual assets were grouped based on the common credit risk characteristics and the days of late payment. The expected loss rates are based on the sales payment profiles over a period of 36 months (3 years) before 31 December 2018, and the corresponding historical credit losses verified during this period. Historical loss rates are adjusted to reflect current and prospective information on macroeconomic factors that affect customers' ability to settle outstanding amounts.

As such, the impairment losses at 30 June 2019 were determined taking into account these assumptions of IFRS 9.

Considering the aforementioned policies, the Board of Directors does not foresee the possibility of any occurrence of any material breach of contractual obligations.

The amounts related to cash and cash equivalents, other noncurrent assets (loans granted) and other third party debts presented in the financial statements, which are net of impairment, represent the maximum exposure of the Company to credit risk.

Capital risk

Sonaecom's capital structure, determined by the ratio of equity and net debt, is managed in a way that ensures the continuity and development of its operating activities, maximises shareholder returns and optimizes the cost of financing.

Sonaecom periodically monitors its capital structure, identifying risks, opportunities and necessary adjustment measures in order to achieve the referred objectives.

In 2019, Sonaecom reported a negative average gearing (accounting) of 20.5%. The average gearing in market values in 2019 was negative in 29.2%.

2. Tangible assets

The changes in tangible assets and in the corresponding accumulated depreciation and impairment losses in the periods ended at 30 June 2019 and 2018 was as follows:

							2019
	Buildings and	Plant				Other
	other constructions	and machinery	Vehicles		Tools Fixtures and fittings	tangible assets	Total
Gross assets
Balance at 31 December 2018	347,208	43.858	22.060	171	248.961	104	662,362
Balance at 30 Junho 2019	347,208	43.858	22.060	171	248.961	104	662,362
Accumulated depreciation and impairment losses
Balance at 31 December 2018	343,709	43.858	22.060	171	245.466	104	655,368
Depreciation for the period	247				781		1,028
Balance at 30 Junho 2019	343,956	43.858	22.060	171	246.247	104	656,396
Net value	3.252				2.714		5.966

							2018
	Buildings and	Plant				Other
	other constructions	and machinery	Vehicles		Tools Fixtures and fittings	tangible assets	Total
Gross assets
Balance at 31 December 2017	347,208	43.858	22.060	171	247,788	104	661.189
Balance at 30 June 2018	347,208	43,858	22,060	171	247,788	104	661.189
Accumulated depreciation andimpairment losses
Balance at 31 December 2017	341953	43.858	22.060	171	244.152	104	652,298
Depreciation for the period	1.477				634		2,111
Balance at 30 June 2018	343,430	43.858	22,060	171	244,786	104	654.409
Net value	3.778				3.002		6,780

3. Intangible assets

The changes in intangible assets and in the corresponding accumulated amortisation and impairment losses in the periods ended at 30 June 2019 and 2018 was as follows:

			2019
	Brands patents and other rights	Software	Total
Gross assets
Balance at 31 December 2018	9.931	195,879	205,810
Balance at 30 June 2019	9,931	195,879	205,810
Accumulated amortisation and impairment losses
Balance at 31 December 2018	9,896	193,434	203,330
Amortisation for the period	23	347	370
Balance at 30 June 2019	و.919	193,781	203,700
Net value	12	2,098	2,110

			2018
	Brands patents and other rights	Software	Total
Gross assets
Balance at 31 December 2017	ਰੋਂ 8559	195,879	205,738
Balance at 30 June 2018	ಕೆ.859	195,879	205,738
Accumulated amortisation and impairment losses
Balance at 31 December 2017	9,812	192,739	202,551
Amortisation for the period		347	ਤੇ ਉਹ
Balance at 30 June 2018	9,824	193,086	202,910
Net value	35	2,793	2,828

4. Rights of use

For the periods ended at 30 June 2019, the changes occurred in the value of the rights of use, as well as its depreciations and amortisations and accumulated impairment losses, were as detailed below:

		2019
	Vehicles	Total
Gross assets
Balance at 31 December 2018 (restated)	154,723	154,723
Balance at 30 June 2019	154,723	154.723
Accumulated depreciation and impairment losses
Balance at 31 December 2018 (restated)	59.443	59,443
Depreciation for the period	15,473	15,473
Balance at 30 June 2019	74.916	74.916
Net value	79,807	79,807

		2018 (restated)
	Vehicles	Total
Gross assets
Balance at 31 December 2017	50.659	50,659
Additions	104.064	104,064
Balance at 30 June 2018	154.723	154,723
Accumulated depreciation and impairment losses
Balance at 31 December 2017	30.233	30,233
Depreciation for the period	13.738	13,738
Balance at 30 June 2018	43.971	43,971
Net value	110,752	110,752

5. Breakdown of financial instruments

At 30 June 2019 and 2018, the breakdown of financial instruments, according to IFRS 9, was as follows:

				2019
	Assets measured at amortised cost	Total financial assets	Others not covered by IFRS9	Total
Non-current assets
Other non-current assets (note 8)	15,100,475	15,100,475	201,185,641	216,286,116
	15,100,475	15,100,475	201,185,641	216,286,116
Current assets
Income tax receivable			650,600	650.600
Other trade debtors (note 10)	441,434	441,434	65.800	507,234
Other current assets	87,011	87,011	44,296	131.307
Cash and cash equivalents (note 11)	212,532,182	212,532,182		212,532,182
	213,060,627	213.060.627	760,696	213,821,323

				2018
	Assets measured at amortised cost	Total financial assets	Others not covered by IFRS9	Total
Non-current assets
Other non-current assets (note 8)	232.872.508	232,872,508		232,872,508
	232.872.508	232.872.508		232,872,508
Current assets
Income tax receivable			793.569	793.569
Other trade debtors (note 10)	497.019	497,019	83,550	580,569
Other current assets	485,093	485,093	52,267	537,360
Cash and cash equivalents (note 11)	200529349	200,529,349		200,529,349
	201,511,461	201,511,461	929,386	202,440,847

				2018
	Liabilities recorded at amortised cost	Total financial liabilities	Others not covered by IFRS 9	Total
Non-current liabilities
Non-current lease liabilities (note 16) (restated)	81,921	81,921		81,921
Other non-current liabilities			123,672	123,672
	81921	81,921	123,672	205,593
Current liabilities
Other creditors (note 17)	1,144,641	1,144,641	51.271	1,195,912
Current lease liabilities (note 16) (restated)	30.709	30.709		30.709
Other current liabilities	377,732	377,732	198,524	576,256
	1,553,082	1,553,082	249.795	1,802,877

Considering the nature of the balances, the amounts to be paid and received to/from 'State and other Public Entities' as well as the specialised costs with the action plan, given their nature, were considered as financial instruments not covered by IFRS 9. On the other hand, the deferred costs/profits recorded in the cartent and non-current assets and liabilities, were considered as nonfinancial instruments.

The Sonaecom's Board of Directors believes that, the breakdown of financial instruments recorded at amortised cost or registered at the present value of the payments does not differ significantly from their book value in the contractual terms of each financial instrument.

6. Investments in Group companies

At 30 June 2019 and 2018, this caption included the following investments in Group companies:

Lompany	2019	2018
Sonae Investment Management - Software and Technology, SGPS, S.A. ("Sonae IM")	52.241.587	52.241.587
Público - Comunicação Social S.A. ("Público")	32.537.204	23.305.000
PCJ - Público Comunicação e Jornalismo S.A. ('PCJ')	17.690.000	15.690.000
Sonaecom - Serviços Partilhados S.A. ('Sonaecom SP')	4.050.000	2,050.000
	106.518.791	93,286,587
Impairment losses (note 15)	(43,695,576)	(36.606.186)
Total investments in Group companies	62,823,215	56.680.401

The changes that occurred in investments in this caption during the periods ended at 30 June 2018 were as follows:

Lompany	Balance at 31 December 2018	Additions	Disposals	Balance at 30 June 2019
Sonae IM	52.241.587		-	52.241.587
Público	32.537.204		-	32.537.204
PCJ	17.690.000		-	17.690.000
Sonaecom SP	4.050.000			4,050,000
	106.518.791			106,518,791
Impairment losses (note 15)	(42,211,754)	(1,706,822)	223,000	(43,695,576)
Total investments in Group companies	64,307,037	(1,706,822)	223,000	62,823,215

Company	Balance at 31 December 2017	Additions	Disposals	Balance at 30 June 2018
Sonae IM	52,241,587		-	52,241,587
PCJ	15.690,000			15,690,000
Público	23,305,000			23,305.000
Sonaecom Sp	2.050.000			2,050,000
	87,286,587		-	93,286,587
Impairment losses (note 15)	(35,015,000)	(1,591,186)		(36.606.186)
Total investments in Group companies	52,291,587	(1,591,186)		56,680,401

In the period ended 30 June 2019, the amount of EUR 1,706,822 of increases corresponds to the impairments in Público. The amount of EUR 223,000 of disposals is related to the reversal of impairment in PCJ (note 15).

In the period ended 30 June 2018, the amount of EUR 1,591,186 of increases corresponds to the impairments in Público (note 15).

At 30 June 2019 and 2018, the main financial information regarding the subsidiaries and jointly controlled directly owned by the company is as follows (values in accordance with IFRS standards):

(Amounts expressed in thounsand Euro)				2019			2018
Company	Head office	% holding	Shareholders' funds	Net profit / (loss)	% holding	Shareholders' funds	Net profit / (loss)
ZOPT (a) (note 7)*	Matosinhos	50%	2.212.879	79.926	50%	4.466.574	72.819
Sonae IM	Maia	100%	151.345	(563)	100%	154.584	29,386
РСЈ	Maia	100%	4.354	87	100%	1878	97
Sonaecom SP	Maia	100%	4.966	331	100%	2.336	60
Público	Maia	100%	1,926	(1,087)	100%	269	(1,798)

(a) Consolidated Financial Statements. Amounts of 30 June 2018 have been restated.

* At 30 June 2019, the market capitalization of NOS amounted to 2,978 million euros.

The measurement of the existence or not of inpairment of interests in group companies recorded in the accompanying financial statements is made taking into account the cash generating units, based on the last business plans approved by the Group's Board of Directors made on an annual basis unless there are indications of impairment, which are prepared using cash flows projected for periods of 5 years.

At 30 June 2019 and 2018, the assumptions used on the subsidiaries' various businesses and the growth in the various geographic areas where the subsidiaries operates:

2019	Technologies				Media
Assumptions	Telecomunications	Retail	Cybersecurity	Others
Basis of recoverable amount	Value in use	Value in use	Value in use	Value in use	Value in use
Discount rate	6.25%-17.0%	10.5%	6.75%-11.25%	7.0%-13.75%	7.0%
Growth rate in perpetuity	2.0%	3.0%	3.0%	1.0%-2.0%	0.01%

2018	Technologies				Media
Assumptions	Telecomunications	Retail	Cybersecurity	Others
Basis of recoverable amount	Value in use	Value in use	Value in use	Value in use	Value in use
Discount rate	6.75%-16.75%	10.5%	7.5%- 10.75%	9.0%-13.5%	8.5%
Growth rate in perpetuity	1.0%	3.0%	3.0%	1.0%-2.0%	0.01%

The average growth rate considered for the 5-year turnover was 6.3% for the Media sector, the average growth rate of the considered volume was about 2.6%. The discount rates used on the weighted average capital costs estimated based on the segments and geographies where the companies are included. In Europe, discount rates are used between 6.25% and 10.5%, in Asia 10.25%, in Latin America rates are used between 11.25% and in Africa 17%.

The analysis of the impairment indices and the impairment projections and tests have not lead to clearance losses, during the period ended at 30 June 2019, beyond registered in the income statement (note 15).

At 30 June 2019 it was presumed that the assumptions used in the impairment tests at 31 December 2018 did not change significantly, and such there would not be any additional impairment.

7. Investments in companies jointly controlled

At 30 June 2019 and 2018, this caption included the following investments in companies jointly controlled and was as follows:

Company	2019	2018
ZOPT SGPS S.A. ('ZOPT')	597,666,944	597,666,944

The changes that occurred in this caption during the periods ended at 30 June 2019 and 2018 were as follows:

Lompany	Balance at 31 December 2018	Additions	Disposals	Transfers	Balance at 30 June 2019
ZOPT	597,666,944				597.666.944
Company	Balance at 31 December 2017	Additions	Disposals	Transfers	Balance at 30 June 2018
ZOPT	597,666,944				597,666,944

ZDPT is a joint venture of Sonaecom, Kento Holding Limited and Unitel International Holdings of holding for participation in NOS SGPS, SA ("NOS"). At the period at 30 June 2019 ZOPT held 52.15% of participation in NOS.

The recoverable amount of this asset and the average valuation made by external analysts (researches) was about 5% above its book value, and the existence or not of impairment was determined taking into account various information such as the business plan approved by the Board of Directors of NOS, which presents an implicit average growth rate of the operating margin of 4%.

	NOS SGPS 7
Assumptions
Basis of recoverable amount	Value in use
Discount rate	7.2%
Growth rate in perpetuitų	13%

The consolidated financial statements of ZOPT have a significant exposure to the African market, particularly through financial holdings that Group holds in associated companies operating in the Angolan and Mozambican markets, which are engaged in providing satellite and fiber television services. The net book value of the associates in the financial statements of ZOPT at 30 June 2019 amounts to approximately EUR 92 million.

At 30 June 2019 it was understood that the assumptions made in the impairment tests carried out in 2018 did not change significantly.

8. Other non-current assets

At 30 June 2019 and 2018, this caption can be decomposed as follows:

2019	2018
14,815,000	21,187,586
	70,000
14,815,000	21,257,586
115,000,000	115,000,000
86,185,641	95,355,508
2,007,796	7,240,000
2,850,000	2,850,000
206,043,437	220.445.508
220,858,437	241,703,094
(4,857,796)	(9,046,994)
285,475	216,408
216,286,116	232,872,508

During the periods ended at 30 June 2019, the movements that occurred under the caption 'Medium and long-term bans granted' to Group companies and companies jointly controlled were as follows:

				2019
Company Sonae IM	Opening balance 25.875.000	Increases	Decreases (11,060,000)	Closing balance 14,815,000
	25,875,000	-	(11,060,000)	14,815,000

				2018
Company	Opening balance	Increases	Decreases	Closing balance
Sonae IM	32,025,000		(10,837,414)	21,187,586
РСЈ	70.000			70.000
	32,095,000		(10,837,414)	21,257,586

In the period ended at 30 June 2019, the value of EUR 11,060,000 of decreases in Sonae IM corresponds to the loan repayment.

In the period ended at 30 June 2018 the amount of EUR 10,837,414 of decreases in Sonae IM correspond to the loan repayment.

During the periods ended at 30 June 2019 the movements in the caption 'Supplementary Capital' were as follows:

				2019
Company	Opening balance	Increases	Decreases	Closing balance
ZOPT	115.000.000			115,000,000
Sonae IM	74.304.228	13,881,413	(2,000,000)	86.185.641
Público	2.007.796			2.007.796
РСЈ	2.850.000		-	2.850.000
	194,162,024	13,881,413	(2,000,000)	206,043,437

				2018
Company	Opening balance	Increases	Decreases	Closing balance
ZOPT	115,000,000		-	115,000,000
Sonae IM	88.536.618	6.818.890	-	95,355,508
Público	7,240,000			7,240,000
PCJ	2.850.000			2,850,000
	213,626,618	6.818.890	-	220,445,508

In the period ended at 30 June 2019, the amount of EUR 13,881,413 of increases corresponds to the granting of supplementary capital by Sonaecom to Sonae IM and the amount of EUR 2,000,000 correspond to the reimbursement of supplementary capital by Sonae M.

In the period ended at 30 June 2018 the amount of EUR 6,818,890 of increspond to the granting of supplementary capital by Sonaecom.

During the periods ended at 30 June 2019, the loans granted to group companies and companies jointly controlled earned interest at market rates with an average interest rate of 2.23%. Supplementary Capital is non-interest beaing and has no reimbursement turn.

The supplementary capital has a repayment term of more than one year, and the repayment period is not defined after one year, so no information is presented on their maturity.

The evaluation of the existence of impairment losses for the loans made to group companies was based on the most up-to-date business plans duly approved by the Group's Board of Directors, which include projected cash flows for periods of five years. The discount rates used and the perpetuity growth considered are presented in the notes 6 and 7.

9. Deferred taxes

The changes in deferred tax assets for the periods ended at 30 June 2019 and 2018 were as follows:

	2019	2018
Opening balance	117,821	114.706
Record of deferred tax assets	(16,805)	5.937
Closing balance	101,016	120,643

At 30 June 2019 and 2018, assessments of the deferred tax assets to be recovered were made. Potential deferred tax assets were recorded to the extent that future taxable profits were expected against which the tax losses and deductible tax differences could be used. These assessments were made based on the most recent business plans duly approved by the Board of Directors of the Group companies, which are periodically reviewed and updated.

At 30 June 2019, the values of deferred taxes assets not recorded were EUR 1,989,007 (generated in 2014 and available for use up to 2026). In addition, there are impairment losses in amount of EUR 48,553,372 that did not give rise to the registration of deferred tax assets, but which could be used in the case of liquidation of the companies.

In the periods ended at 30 June 2018 the tax rate used to calculate deferred tax assets related to tax losses was 21%. In the case of temporary differences in particular of provisions not accepted and impairment losses, the rate used in 2019 and 22.5%.

The state surcharge was not considered as it was understood to be unlikely the taxation of temporary differences during the estimated period when the referred rate will be applicable.

The reconciliation between the earnings before tax and the periods ended at 30 June 2019 and 2018 is as follows:

	2019	2018 (restated)
Earnings before tax	33.761.636	15.399.730
Tax (21%)	(7,089,944)	(3,233,943)
Autonomous taxation surcharge	(5,131)	(4,203)
Tax losses of the period without record		(44,753)
Temporary differences from the period without record deferred tax assets	(312,272)	(333.753)
Adjustments of results not tax deductible	7.454.719	3,618,539
Income taxation recorded in the period (note 21)	47.372	1,887

The tax rate used to reconcile the tax expense and the accounting profit was 21% in the years of 2019 and 2018 because it is the standard rate of the corporate income tax in Portugal in 2019 and 2018.

The adjustments to the net results not tax deductible referring to 2019 and 2018 also includes adjustments that do not contribute to taxable income for the period.

Portuguese Tax administration can review the income tax returns of the Company for a period of four years for Social Security), except when tax losses have been generated tax benefits have been granted or when any review, claim or in in progress, in which circumstances, the periods are extended. The Board of Directors believes that any correction that may arise as a result of such review would not produce a significant impact in the accompanying financial statements.

Supported by the Company's lawyers and tax consultants, the Board of Directors believes that there are no liabilities not provisioned in the financial statements, associated to probable tax contingencies that should have been registered or disclosed in the accompanying financial statements, at 30 June 2019.

10. Other current debtors

At 30 June 2019 and 2018, this caption can be detailed as follows:

	2019	2018
Trade debtors	441,434	497.019
State and other public entities	65.800	83.550
	507.234	580,569

At 30 June 2019 and 2018, the caption Trade debtors' included amounts receivable from various group companies, related to interest on supplies, interest on treasury applications and various rendered. Given the nature of this caption, it is the Board Directors belief that it does not present a credit risk.

At 30 June 2019 and 2018, the caption 'State and other public entities' corresponds to value added tax in the amount of EUR 65,800 and EUR 83,550 respectively.

11. Cash and cash equivalents

At 30 June 2019 and 2018, the breakdown of 'Cash and cash equivalents' was as follows:

	2019	2018
Cash	316	567
Bank deposits repayable on demand	148,101,866	141,213,782
Treasury applications	64,430,000	59.315.000
	212,532,182	200,529,349

At 30 June 2019 and 2018, the caption 'Treasury applications' had the following breakdown:

	2019	2018
Bank applications	50,000,000	50,000,000
Sonae IM	14.165.000	9,315,000
Público	265.000
	64,430,000	59,315,000

In the period ended at 30 June 2019, Sonaecom entered into financial transaction contracts with Sonae, Sonae M and Público.

In the period ended at 30 June 2018, Sonaecom entered into financial transaction contracts with Sonae and Sonae IM.

As a result of these financial transactions, income was registered (note 22).

The treasury applications immediately available, mere paid-off during the periods ended at 30 June 2018, with an interest average rate of 0.24% and 0.21%, respectively.

12. Share capital

At 30 June 2019 and 2018, the share capital of Sonaecom was comprised by 311,340,037 ordinary shares registered of EUR 0.74 each. At those dates, the Shareholder structure was as follows:

		2019		2018
	Number of shares	%	Number of shares	%
Sontel BV	194.063.119	62.33%	194.063.119	62.33%
Sonae SGPS	81.022.964	26.02%	81.022.964	26.02%
Shares traded on the Portuguese Stock Exchange ('Free Float')	30,682,940	9.86%	30.682.940	9.86%
Own shares (note 13)	5.571.014	179%	5.571.014	179%
	311.340.037	100.00%	311,340,037	100.00%

All shares that comprise the share capital of Sonaecom, are authorised, subscribed and paid. All shares have rights and each share corresponds to one vote.

13. Own shares

During the periods ended at 30 June 2019, Sonaecom did not acquired, sold or delivered own shares, whereby the amount held to date is of 5,571,014 own shares representing 1.79% of its share capital, at an average price of EUR 1.515.

14. I oans

Short-term loans and other loans

In the period ended at 30 June 2019, Sonaecom is not using a short-term credit line, although it has a bank credit line in the form of current or overdraft account commitments, in the amount of EUR 1 million. This credit ine has maturities up to one year, automatically renewable, except in case of termination by either party, with some periods of notice.

The credit line bear interest at market rates, indexed to the EURIBOR of the respective term.

At 30 June 2019 and 2018, the available credit lines are as follows:

					Maturity
		Amount			More
Credit	Limit	outstanding	Amount available	Until 12 months	than 12 months
2019
Authorised overdrafts	1,000.000		1.000.000
	1,000,000	-	1,000,000
2018
Authorised overdrafts	1,000,000		1,000,000
	1,000,000		1,000,000

At 30 June 2019 and 2018, there are no financial instruments of interest rate hedging.

15. Provisions and accumulated impairment losses

The movements in provisions and in accumulated impairment losses in the period ended at 30 June 2019 were as follows:

	Opening balance	Increases	Reductions	Closing balance
2019
Accumulated impairment losses on investments in Group companies (notes 6 and 19)	42,211,754	1,706,822	(223,000)	43,695,576
Accumulated impairment losses on other non-current assets (notes 8 and 19)	4,857,796			4,857,796
Provisions for other liabilities and charges	349.979	22,784		372,763
	47.419.529	1,729,606	(223,000)	48,926,134
2018
Accumulated impairment losses on investments in Group companies (notes 6 and 19)	35,015,000	1.591.186		36,606,186
Accumulated impairment losses on other non-current assets (notes 8 and 19)	9.046.994			9.046.994
Provisions for other liabilities and charges	269,665	120,823		390.488
	44,331,659	1,712,009		46,043,668

The increases in provisions and impairment losses are registered under the caption "Provisions and impairment losses" in the profit and loss statement with the exception of the impairments in Group companies and other non-current assets, which, due to their nature, are recorded under the caption "Gains and losses on Group companies" (note 19).

At 30 June 2019 and 2018, the changes in the caption 'Accumulated impairments in Group companies' correspond to an increase and a reduction in the impairments in Público and PCJ, respectively (nota 6).

16. Lease liabilities

The commitments assumed, at 30 June 2019 and 2018, under financial lease agreements are as follows:

	2019		2018 (restated)
		Update of the		Update of the
	Leasing payments	leasing payments	Leasing payments	leasing payments
2018			17,046	15,204
2019	13,612	12,338	30,658	27,844
2020	26,065	24,155	26,065	24,155
2021	22,585	21,421	22,585	21,421
2022	22,585	22,131	22,585	22,131
2023	1,882	1,877	1,882	1,877
	86,729	81,922	120,820	112,630
Interest	(4,807)		(8.190)
	81,922	81,922	112,630	112,630
Short-term		(69,583)		(81.921)
	81,922	12,339	112,630	30,709

17. Other creditors

At 30 June 2019 and 2018, this caption was detailed as follows:

	2019	2018
Other creditors	1.187.594	1.144.641
State and other public entities	40.427	51,271
	1,228,021	1,195,912

At 30 June 2019 and 2018, the caption "State and other public entities" were detailed as follows:

	2019	2018
Social security contributions	20,996	26.062
Personal income tax	19,431	25,209
	40,427	51,271

18. External supplies and services

At 30 June 2019 and 2018, this caption was detailed as follows:

	2019	2018 (restated)
Specialised work	227,611	192.614
Travel and accommodation	38.183	60.080
Insurance	23,697	24.999
Communications	9.629	22.427
Other external supplies and services	37.444	29.862
	336,564	329,982

19. Gains and losses related to investments

At 30 June 2019 and 2018, these captions 'Gains and losses on investments in Group companies jointly controlled'and 'Gains and losses on investments recorded at fair value through profit or loss' were detailed as follows:

Gains and losses on investments in Group companies jointly controlled Losses related to Group companies (notes 6 and 15) (1,706,822) 223.000
	(1591186)
Gains related to Group companies (notes 6 and 15)
35.491.559 Dividends obtained (note 22)	17,255,883
34.007.737	15.664.696

At 30 June 2019 and 2018, losses on the Group companies include the reinforcement e reduction of impairments in Público and PCJ, respectively.

20. Financial results

The financial results for the periods ended at 30 June 2018 are detailed as follows ((costs)/gains):

	2019	2018 (restated)
Other financial expenses
Interest expenses	(1,560)	(1,850)
Foreign currency exchange losses	(208)	(297)
Other financial expenses	(30,488)	(40,274)
	(32,256)	(42.421)
Other financial income
Interest income (note 22)	456,428	473,925
Foreign currency exchange gains	243	345
Other financial income	8.917
	465,588	474,270

21. Income Taxation

Income tax recognised during the periods ended at 30 June 2019 and 2018 are detailed as follows ((costs) / gains):

	2019	2018
Current tax	64.177	(4,050)
Deferred tax assets (note 9)	(16,805)	5,937
Closing balance	47.372	1,887

22. Related parties

During the periods ended at 30 June 2019 and 2018, the most significant balances and transactions with related parties were as follows:

						Balances at 30 June 2019
	Accounts receivable	Accounts payable	Treasury applications			Loans granted
	(note 10)	(note 17)	(note 11)	Other assets	Other liabilities	(note 8)
Parent Company		332,575		721,562	46.003	-
Companies jointly controlled	13.869
Others related parties		74.169		74.927	2,032
Subsidiaries	444	692,840	14.430.000	49.201		14.815.000
	14.313	1,099,584	14.430.000	845.690	48.036	14.815.000

						Balances at
						30 June 2018
	Accounts receivable	Accounts payable	Treasury applications			Loans granted
	(note 10)	(note 17)	(note 11)	Other assets	Other liabilities	(note 8)
Parent Company		79.662		215,557	51.115
Companies jointly controlled	13,869					-
Others related parties	25,605	106.828		353,751	2.710
Subsidiaries	505,885	899,861	9,315,000	57.127		21,257,586
	545,359	1,086,351	9,315,000	626.435	53,825	21,257,586

				Transactions at 30 June 2019
	Sales and services	Supplies and services	Interest and similar	Supplementary income
Parent Company	rendered -	received (note 18) 47,015	income (note 20) 171.777
Companies jointly controlled	-
Others related parties		75.463
Subsidiaries	179.537	9.862	283.179	1.022
	179,537	132.340	454,956	1,022

				Transactions at 30 June 2018
	Sales and services	Supplies and services	Interest and similar	Supplementary
	rendered	received (note 18)	income (note 20)	income
Parent Company			149.470	-
Companies jointly controlled	-	6,775		-
Others related parties		95.425		9,900
Subsidiaries	284.097		317,506	1356
	284.097	102,200	466,976	11 036

All the above transactions were made at market prices.

Both accounts receivable and payable with related companies will be settled in cash and have no guarantees attached.

23. Guarantees provided to third parties

Guarantees provided to third parties at 30 June 2019 and 2018 were as follows:

Beneficiary /	Description	2019	2018
Direção de Contribuições e Impostos (Portuguese tax authorities)	Additional tax assessments (Stamp and Income tax)	3,563,877	2,311,861
		3.563.877	2.311.861

ln addition to these guarantees sureties were set up for the current fiscal processes. Sonae SGPS became cosigner of Sonaecom surety to the amount of 28,111,899 EUR and Sonaecom became cosigner of Público for the amount of EUR 564,900.

At 30 June 2019, the Board of Directors of the Company believes that the decision of the court proceedings and ongoing tax assessments in progress will not have significant impacts on the financial statements.

At 30 June 2019 and 2018, the contingencies for which guarantees, and sureties were considered as remote.

24. Earnings per share

Earnings per share, basic and diluted, are calculated by dividing the net income of the year (EUR 33,809,008 in 2019 and EUR 15,401,617 in 2018) by the average number of shares outstanding the periods ended at 30 June 2018, net of own shares (305,769,023 in 2019 and 2018).

25. Medium Term Incentive Plans

In June 2000, the Company created a discretionary Medium Term Incentive Plan for more senior emaecom options and shares and Sonae, SGPS, S.A. shares which at 10 March 2014 Sonaecom share plans been converted into Sonae shares. The exercise of the rights occurs three years after their attribution, provided that the employee stays in the Company during this period.

In March 2019, the 2018 plan was assigned to Sonaecom Directors.

The 2015 plan was delivered in March 2019 to Saphety employees and in April 2019 for the remaining employees.

Therefore, the outstanding plans at 30 June 2019 are as follows:

			Vesting period		30 June 2019
	Share price 28 June 2019	Award date	Vesting date	Aggregate number of participations	Number of shares
Sonae SGPS shares
2016 Plan	0.85	mar/17	mar/20	2	257,712
2017 Plan	0.85	mar/18	mar/21	2	215.096
2018 Plan	0.85	mar/19	mar/22		269,796

During the period ended at 30 June 2019, the changes that occurred in the plans can be summarised as follows:

		Sonae SGPS shares
	Aggregate number of participations	Number of shares
Outstanding at 31 December 2018:
Unvested	8	708,975
Total	8	708,975
Movements in period:
Awarded	2	257,038
Vested (1)	(4)	(258,524)
Cancelled / corrected / transfers (2)		35,116
Outstanding at 30 June 2019:
Unvested	ნ	742,604
Total	6	742,604
10 Acres of the 100 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

(1) Of the overdue shares 246.407 were delivered in cash

(2) Corrections are made based on the dividend paid and by the exit of the employees during the plan period.

The responsibility for all plans was recognised under 'Other current liabilities' and 'Other non-current liabilities'.

Share plan costs are recognised in the accounts over the award and the vesting date of those plans. The costs recognised for the outstanding plans and for the plan delivered in the period ended 30 June 2019 are as follows:

	Value
Costs recognised in previous periods	349.440
Costs recognised in the period	153,041
Costs of plans vested in the period	(241,512)
Total cost of the plans	260,970
Recorded in 'Other current liabilities'	166,883
Recorded in 'Other non-current liabilities'	94,087

These financial statements have been approved by the Board of Directors and authorised for issue at 26 June 2019, however subject to the approval by the Shareholders' General Meeting.

These financial statements are a translation of financial statements originally issued in accordance with International Financial Reporting Standards (IAS / IFRS) as adopted by the European Union and the format and disclosures required by those Standards, some of which may not conform to or be required by generally accepted accounting principles in the event of discrepancies, the Portuguese language version prevails.

Sonaecom SGPS is listed on the Euronext Stock Exchange. Information is available on Reuters under the symbol SNC.LS and on Bloomberg under the symbol SNC:PL.

SAFE HARBOUR

This document may contain forward-looking information and statements, based on management's current expectations or beliefs. Forward-looking statements are statements that are not historical facts.

These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, including but not limited to, changes in regulation, the telecommunications industry and economic conditions; and the effects of competition. Forward-looking statements may be identified by words such as "believes", "expects", "projects", "intends", "should", "seeks", "estimates", "future" or similar expressions.

Although these statements reflect our current expectations, which we believe are reasonable, investors, and, generally, the recipients of this document are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. You are cautioned not to put undue reliance on any forward-looking information or statements. We do not undertake any obligation to update any forward-looking information or statements.

Report available on Sonaecom's corporate website www.sonae.com

Investor Relations Contacts Investor.relations@sonae.com Tlf: +351 22 013 23 49