Sonae SGPS

Annual Report • Apr 4, 2008

Registered Office: Lugar do Espido, Via Norte, Maia Registered at Maia Commercial Registering Office under no. 506 035 034 Share Capital: 700 000 000 euros VAT no. 506 035 034 Publicly Traded Company

Annual Report Report

Consolidated and Separate Accounts 2007

5 March 2008

ContentsContents Contents Contents

Management Report

1.	Message from the Chairman	4
2.	Message from the CEO	4
3.	Board of Directors' Report	5
	3.1. Sector Review in 2007	5
	3.2. Sonae Indústria Business Review in 2007	6
	3.2.1. Iberia	6
	3.2.2. Central Europe (Germany, France and UK)	7
	3.2.3. Rest of the World (Canada, Brazil, South Africa)	8
	3.3. Financial Review of FY 2007	10
	3.4. Review of the Individual Accounts of the Holding Company	11
	3.5. Activity carried out by the Non-Executive Board Members	12
	3.6. Treasury Shares	12
	3.7. Proposal for Appropriation of Results	12
	3.8. Outlook	12
	3.9. Dividend Policy	13
	3.10. Acknowledgements	13

Corporate Governance Report

0.	Compliance with CMVM Recommendations	15
1.	Corporate Governing Bodies	15
2.	Governing Bodies, Constitution and organization	17
	2.1. Board Composition and Organization	17
	2.2. Executive Committee Composition	20
3.	Board Committees	22
	3.1. Board Audit and Finance Committee (BAFC)	23
	3.2. Social Responsibility and Environment Committee (SREC)	23
	3.3. Board Nomination and Remuneration Committee (BNRC)	23
	3.4. Board and Corporate Governance Officer (BCGO)	24
4.	Board Assessment	24
5.	Board and Board Committee Meetings and Attendance in 2007	24
6.	Directors' Remuneration and Other Compensation	25
7.	Capital Structure	26
8.	Voting Rights and Shareholder Representations	27
9.	Rules for nomination and substitution of members of the Board of Directors and
	changes to the Company's Articles of Association	28
	10. Shareholders' Remuneration Committee	28
	11. Share Price Performance during 2007	29
	12. Investor Relations	30
	13. Dividend Policy	30
	14. Share and Share Options Scheme	30
	15. Transactions with Related Parties	30
	16. Remuneration of the Statutory External Auditors	31
	17. Risk Management	31
	18. Other Positions held by Sonae Indústria Directors as of 31 December 2007	35
	19. Other Positions formally held by Sonae Indústria Directors	38

Appendices to the Management Report and Qualified Shareholdings

Appendix regarding Article 447 of the Company Law Appendix regarding Article 448 of the Company Law Qualified Shareholdings

Separate Financial Statements

Balance Sheet Income Statement Statement of Changes in Equity Statements of Cash Flow

Notes to the Financial Statements

Consolidated Financial Statements

Consolidated Balance Sheet Consolidated Profit and Loss Account Consolidated Movements in Shareholders' Funds Consolidated Cash Flow Statements Notes to the Consolidated Financial Statements

Statutory External Auditor's Report

Statutory Audit Board's Reports

Statement issued according and for the purposes of paragraph c) of Article 245. CMVM code

MANAGEMENT REPORT

1. Message from the Chairman

Sonae Indústria posted its best results ever in 2007, driven by our strategy of improving profitability, pursuing sustainable growth and maintaining a strong balance sheet, which has been rigorously followed over recent years. This strategy enabled us to benefit from the strong demand felt for the greater part of the year in Europe and the positive market environment prevailing in both Brazil and South Africa.

Our ambition has been and continues to be to grow in a competitive and global marketplace. Today, Sonae Indústria has an industrial presence in 9 countries, spread out over 4 continents and is one of the leading wood panel players in the world. We are a multi-regional company with common values centred on competence, honesty and trust, delivered by our workforce of almost 7000 employees.

We will continue to act responsibly in environmental and social terms through achieving the most efficient utilisation of resources. Our continued commitment to this area will be explained in our Sustainability Report.

I am certain that we are well prepared to seize the market opportunities that may arise and to strengthen our position in those markets where we are present, despite the backdrop of a more difficult European market.

I am very proud of our team and I would like to thank them for their contributions, enthusiasm and commitment throughout these years. I count on their support, the loyalty of our customers and suppliers and the confidence and trust shown by our shareholders to allow us to face the challenging times ahead.

2. Message from the CEO

2007 proved to be a very positive year. Consolidated Turnover increased by 22% to 2.1 billion euros and EBITDA reached 335 million euros, 43% higher than that posted in 2006.

Following the 2006 acquisitions of the ex-Hornitex plants in Germany and the Darbo plant in South West France, our focus in Europe has been on restructuring and improving operational profit through efficiency gains from these assets. We have also expanded and modernised our impregnated paper production capacity in Kaisersesch, Germany. In line with our goal of growing in our most profitable markets, we invested in a new PB line in the White River plant in South Africa and have rebuilt the PB line 2 in Canada. At the beginning of 2007, we faced very high pressure on our raw materials costs, mainly wood, chemicals and energy which we succeeded in offsetting through market positioning and improvements in operational efficiencies.

2007 also marked the year in which Tafisa was de-listed from the Madrid Stock Exchange, following a public tender offer that enabled the minority shareholders to sell their shares to Sonae Indústria at a price approved by the Spanish stock market regulator (CNMV). The process of acquiring Tafisa was initiated back in 1993 and has given Sonae Indústria the international dimension it has needed. With this last step, the only listed company in our Group is now Sonae Indústria itself, since Glunz had already been de-listed in 2006.

In the immediate future, I expect us to face further complex challenges. The US and European economies are slowing down on the back of the lack of confidence that has prevailed within the financial markets and some residential real estate markets, mainly driven by the so called "subprime crisis". For this reason, I believe that we may face some weakness in demand. If this materialises, Sonae Indústria will implement all the measures necessary to adapt production to customers' needs. We believe that there is still room for improvements in Central Europe through further restructuring and efficiency gains. In Canada, we will fight to reconquer our market share, looking for growth opportunities that may arise under the current tough market conditions. In Brazil, we will work to achieve an agreement with Masisa to allow us to move towards the consolidation and development of our market position. Furthermore, we will be investing in surfacing capacity in South Africa to benefit from the expected economic growth there.

The combination of the greater industrial sector consolidation that has taken place in recent years together with the restructuring we have undertaken, as well as our improvements in operational efficiency and innovation, lead me to believe that we are now well placed to face the current weakness in markets, as well as further retraction in economic activity, should that arise.

3. Board of Directors Report

3.1. Sector Review in 2007

The European Wood panels sector started 2007 brightly with strong demand which had previously been seen in the last quarters of 2006. This effect was mainly driven by growth emanating from the Eastern European countries, the furniture industry in Central Europe and from what continues to be a high construction level in Spain. However, depending on the country, this environment evolved differently over 2007. According to the latest forecasts issued by Euroconstruct, real construction output in 2007 increased by 2%. In Western Europe, the construction sector cooled down to a 1.7% growth rate, affected by the slowdown in real estate markets particularly in Spain, Ireland and Great Britain. In Central Eastern Europe on the other hand, real construction volume grew by 7.6% last year with housing construction catching up to those levels seen in Western Europe.

The consolidation process of the European wood-based panels sector which had been particularly active in recent years, slowed down in 2007 with fewer M&As concluded. The Swiss Krono Group acquired the French particleboard producer Depalor in May and in September, the European Commission's DG Competition authorized Kronospan's takeover of the Hungarian particleboard manufacturer Falco, from Constantia Industries.

Consolidation in the European laminate flooring industry accelerated in 2007 with several transactions being completed, namely the acquisition of Pergo by Pfleiderer which was concluded in March. The sharp decline in export deliveries to several non-European markets created additional pressure on volumes in Central Europe. Preliminary data issued by the EPLF (European Producers of Laminate Flooring) association points to a 6% increase in worldwide sales of laminate flooring produced in Europe (by its members).

OSB suffered a slowdown in export volumes to the US caused by the deterioration of the USD and decrease in construction sector activity in this region, mainly due to the subprime crisis previously faced in 2006.

Production costs increased particularly in wood, chemicals and energy, thereby affecting the profitability of the wood panels industry. Wood costs were very high at the beginning of 2007, driven by high demand and competition from the biomass energy plants. In the second half of 2007 wood cost began to stabilize due to increased availability of this raw material. Along 2007, the wood panels industry faced a sharp increase in chemical prices mainly because of the volatility seen in methanol price. According to the information from Methanex, the average methanol price in Europe grew by 6.4% in 2007 to €320/MT, the highest level witnessed since 2002.

In North America, the construction sector followed the negative trajectory previously recorded in 2006 mainly as a consequence of the financial crisis. According to RISI, total US housing starts in 2007 dropped by 26% to approximately 1.34 million units due to a 29% decrease in single-family starts, while North American particleboard consumption decreased by 9% to 9.2 million m³ in 2007, particularly in the US where demand dropped by 10%.

In Brazil the improved macroeconomic environment brought a very strong performance to the wood panels sector. According to the latest forecast from OCDE (dated December 2007), GDP grew by 4.8% and unemployment and interest rates recorded their lowest levels of recent years. The construction sector took advantage of these strong economic conditions and (according to the Brazilian Panels Industry Association - ABIPA), the sales volume of particleboards in Brazil grew 16%, whilst MDF sales were up 13%. The international credit crisis did hit the financial market but with no significant impact on the real economy while the strength of the BRL led to a decline in export volumes, although this was largely compensated by the strong domestic demand.

In South Africa, despite the power supply problems faced at the end of 2007 and the devaluation of the ZAR, GDP grew by 5.1%. According to the South African Statistics Office, the total value of buildings reported as completed grew 17.3%. The Particle Board market took advantage of this positive environment.

3.2. Sonae Indústria Business Review in 2007 3.2.1. Iberia

In 2007, we achieved an excellent level of performance by focusing on protecting our market share through product portfolio improvement, managing customer service and consolidating our presence in strategic export markets. Turnover increased by 19% on 2006 to 565 million euros, on the back of higher volumes (220,000 m³ above 2006, including a full year of Darbo sales in 2007).

Despite recording this strong performance in 2007, we did in the last months of the year face a tailing off in demand due to a slowdown in the economic environment. The economic growth forecast for Spain for 2008 has been revised downwards from 3% to 2.7% (European Commission) and the Portuguese construction sector continues to underperform. Turnover in 4Q 2007 decreased 6% when compared to 4Q 2006, chemical costs increased dramatically and we have returned to profitability levels comparable to those seen at the end of 2006.

Recurrent EBITDA increased to 99 million euros in 2007, 39% above 2006 and represented an 18% EBITDA margin (compared with 15% in 2006). Total EBITDA reached 124 million euros which includes a 26 million euros gain on the sale of our site in Pontevedra.

3.2.2. Central Europe (Germany, France and UK)

Over the course of 2007, Germany experienced a slowdown in residential construction, with new building permits dropping significantly as a consequence of changes in legislation (the ending of incentives to encourage private sector building) and a VAT increase. As a result, most market segments have suffered from weaker demand. The strength of the Euro against the USD has effectively halted exports to North America and has led to imports of OSB into European markets which are traditionally customers of German plants. This led to price and volume pressure in the OSB market late in the year.

In France, the construction sector grew marginally during 2007 showing a declining trend in the second half. Furniture sales increased, particularly in the kitchen and flat pack segments, positively affecting our activity in these sectors. In this context, we succeeded in increasing our market share and achieving record sales.

The UK operation performed well in 2007, driven in the first half of 2007 by strong market demand and a favourable exchange rate providing protection against imports from Continental Europe. In the second half of the year, increased supply combined with the credit crunch restricted demand.

Nevertheless, industrial volumes remained at similar levels to those of 2006 despite the fire at our Knowsley plant in February 2007, which caused a 30 day production stoppage.

€ Mn

€ Mn

The first phase of integrating the Hornitex plants into our German operations and organisation was successfully completed and we are continuing the restructuring process with a view to further improving efficiency and profitability.

A direct comparison between 2006 and 2007 is affected by the impact of the 3 Hornitex plants, acquired in July 2006, by the Flooring JV with Tarkett and by the fire in February 2007 at our UK plant. Turnover increased by 25% on 2006 to reach 1.2 billion euros. Recurrent EBITDA, based on significantly improved profitability in France and the UK, totalled 104 million euros which represents an 80% increase on 2006 and resulted in an EBITDA margin of 9%.

3.2.3. Rest of the World (Canada, Brazil; South Africa)

Our performance in Canada, Brazil and South Africa reflects a combination of mixed market trends and of specific impacts which make direct comparisons difficult.

In Canada, our PB Line 2 produced its first boards in December 2007, 20 months after the fire that destroyed the previous line in April 2006. The production constraints that resulted from the fire changed our product mix. Melamine turnover grew substantially in both Canadian and US markets. The "subprime" crisis in the US that emerged during the second half of 2007 was a consequence of already existing problems in real estate markets. This economic environment contributed to capacity closures towards the end of the year and our rebuilt PB line is the only "new PB capacity" expected to enter operations in North-America. Despite overall weaknesses in the US housing market, some regions like the North East where we have significant access, showed more stability in 2007. Also, the Canadian housing market, where we sell most of our volume posted one of its best years of the last two decades in 2007.

In line with 2005 and 2006, South African GDP growth remained very high at 4.5% during 2007, in spite of successive interest rate hikes that have contributed to a slowdown in economic output. Our main variable costs have increased significantly, due also to the devaluation of the ZAR. Nevertheless, we saw our turnover (in local currency) and profitability increasing as we managed to outweigh these higher industrial costs. South Africa also has to deal with electricity capacity problems. Nevertheless, demand is very solid and we expect that building and construction will remain the strongest performing sector over the next 2-3 years. Our new PB line in White River initiated production in July 2007 and we are planning to invest a further 8 million euros in a new melamine line in 2008.

Brazil experienced a very strong market during 2007 due to the positive macroeconomic environment. GDP growth rate was higher than expected, inflation was kept under control and the lowest level of interest and unemployment rates in recent years was achieved. As a consequence, there was an increase in real income per capita resulting in a higher level of demand. The international credit crisis is already reaching the financial markets but this has had no significant impact on the real economy. Our marketing strategy focused on value-added products (Melamine Faced MDF and Melamine Faced Chipboard), rather than merely looking for volume growth, which led to a significant growth in profitability. The Brazilian market has many players and will be facing strong competition from installed capacity growth in the coming years. In January 2008, Sonae Indústria and Masisa agreed to work together to develop a joint-venture for this market.

Turnover in the Rest of the World totalled 346 million euros in 2007, reflecting no growth compared to 2006. This arises as a consequence of a decrease in turnover in Canada due to the fire and in South Africa because of the devaluation of the ZAR. Recurrent EBITDA reached 98 million euros, slightly above the 2006 figure of 96 million euros.

3.3. Financial Review of FY2007

As previously explained, our business performance in 2007 is not directly comparable with 2006 due to four main effects namely the: (i) acquisition of the Hornitex assets in Germany which we consolidated as from 1 July 2006; (ii) acquisition of the Darbo plant in France, consolidated as from 30 September 2006; (iii) contribution of our Eiweiler plant to the 50%-50% partnership with Tarkett, which was formalized on 29 September 2006 and (iv) reduced activity in Canada due to the fire that destroyed our 2nd particleboard line in April 2006.

							(euro millions)
	4Q'06	3Q'07	4Q'07	4Q'07 / 4Q'06	4Q'07 / 3Q'07	2006	2007	% chg 07/06
Turnover	495	511	478	(3%)	(6%)	1.699	2.066	22%
Other Operational Income	36	1	79	116%	8.380%	119	129	8%
EBITDA	61	85	96	56%	12%	234	335	43%
Recurrent EBITDA	71	85	62	(12%)	(27%)	223	302	36%
Recurrent EBITDA Margin %	14,3%	16,7%	13,0%			13,1%	14,6%
Depreciation and amortisation	(31)	(29)	(31)	(3%)	6%	(108)	(117)	8%
Operational Profit	36	56	52	44%	(7%)	120	205	71%
Net Financial Charges	(17)	(21)	(20)	20%	(4%)	(68)	(81)	19%
o.w. Net Interest Charges	(11)	(13)	(7)	(34%)	(44%)	(37)	(44)	17%
o.w. Net Financial Discounts	(6)	(5)	(5)	(8%)	2%	(17)	(22)	30%
Profit before taxes (EBT)	19	35	32	68%	(9%)	52	125	138%
Taxes	(0)	(12)	(12)	2.786%	0%	(19)	(35)	89%
o.w. Current Tax	(3)	(7)	(5)	59%	(32%)	(14)	(19)	36%
Net Profit attributable to Shareholders of Sonae Industria	17	18	15	(13%)	(18%)	32	79	143%

Consolidated Turnover in 2007 was 2.1 billion euros, an increase of 22% compared with 2006. Consolidated Recurrent EBITDA was 302 million euros, representing a margin on Turnover of 15% and a 36% increase when compared with 2006. Operating Results (EBIT) increased 71% in 2007 to 205 million euros compared with 120 million in 2006.

Consolidated Net results attributable to Sonae Indústria Shareholders increased by 143% to 79 million euros, compared with 32 million euros in 2006.

The higher interest rate environment and higher average debt levels during 2007 led to an increase on Net Interest Charges to 44 million euros, compared with 37 million euros in 2006. However, due to the increase in EBITDA, our interest cover rate improved from 6.3x to 7.7x.

	2006	2007	% chg 2007 / 2006
Non Current Assets	1.360	1.517	12%
Tangible Assets	1.235	1.343	9%
Goodwill	51	100	96%
Deferred Tax	60	49	(19%)
Other Non Current Assets	15	26	76%
Current Assets	796	651	(18% )
Inventories	214	258	20%
Trade Debtors	290	260	(10%)
Cash & Investments	194	66	(66%)
Other Current Assets	97	67	(31%)
Total Assets	2.156	2.168	1%
Shareholders' Funds	520	595	14%
Minority Interests	28	34	20%
Shareholders' Funds + Minority Interests	548	629	15%
Interest Bearing Debt	943	864	(8%)
Short term	141	160	13%
L-M term	802	704	(12%)
Trade Creditors	259	226	(13%)
Other Liabilities	406	449	10%
Total Liabilities	1.608	1.539	(4% )
Total Liabilities, Shareholders' Funds and
Minority Interests	2.156	2.168	1%

During 2007 gross fixed assets increased by 202 million euros. This amount includes (i) 90 million euros for the reinstatement of line 2 in Canada, of which 49 million euros was already financed by cash advances from insurance claims (ii) 34 million euros related to the construction of our new PB line in South Africa; (iii) 16 million euros in relation to a paper impregnation centre in Germany; and (iv) other maintenance investments and industrial improvements. We also bought out most of the minority shareholding in our subsidiary Tafisa in May 2007, representing a cash outflow of 50 million euros.

During 4Q 2007, we managed to decrease Net Debt by 102 million euros, as a result of our efforts to reduce working capital, which included extending production curtailments at some plants during December. At the end of 2007 the Net Debt to EBITDA ratio was 2.4x and the Net Gearing was 127% (compared to 3.2x and 137% at the end of 2006).

3.4. Review of the Individual Accounts of the Holding Company

Sonae Indústria, SGPS, SA, as the holding company of the Sonae Indústria Group, defines the strategic guidelines for the Group and actively manages shareholdings and monitors the business activity of its subsidiaries. Amongst its main activities it is responsible for the global finance function, allocating funds for investment and for treasury requirements of its subsidiaries.

The main financial transactions that occurred during 2007 were the:

• a) Acquisition of 32,482,393 of Tafisa's outstanding shares in the process which enabled Tafisa to be delisted from the Spanish stock exchange, representing a cash outflow of 50million euros;
• b) Share capital increase at Tafisa amounting to 285 million euros
• c) Acquisition of 100% of the equity share capital of Imoplamac Gestão de Imóveis S.A., company that owns the sites where some of our Portuguese plants are installed, amounting to 6 million euros
• d) Acquisition of the remaining 51% of the equity share capital of Ipaper Indústria de Papéis Impregnados, S.A., amounting to 25 thousand euros,

through the exercise of a call option, and merger of this company into EuroResinas - Indústrias Químicas, S.A.;

e) Merger of Resoflex – Mobiliário e Equipamentos de Gestão, S.A. into Movelpartes – Componentes para a Indústria do Mobiliário, S.A.

3.5. Activity carried out by the Non-Executive Board Members

Besides participating actively in the activities of the Board Committees to which they where appointed (for a full description of composition and main tasks of each committee please see the Corporate Governance Report), the Non-Executive Board Members have participated in activities of the company according to their professional past experience and time availability. Those activities include the analysis of industrial footprint optimization, expansion projects, restructuring projects and the development of relevant international networking with eventual partners and authorities in present and potential geographical areas of activity.

The Non-Executive Board members have also attended the International Managers Meeting of Sonae Indústria. This event brought together over 150 managers of the Group for two days in June 2007 and was organized to enable the exchange of best practices between the representatives of the different companies.

3.6. Treasury Shares

The Company did not acquire or sell any own shares during the year. As at 31 December, the Company did not hold any own shares.

3.7. Proposal for Appropriation of Results

Sonae Indústria SGPS SA, as the holding company of the Group, on an individual accounts basis, generated Net Profits of 21,190,023.42 euros for 2007 and on a consolidated basis generated 78,612,713.00 euros of Net Profit Attributable to its Equity Holders. The Board of Directors will propose to the Shareholders' General Meeting that the Net Profit for the year should be appropriated as follows:

Euros	2007
Legal Reserves	1,059,501.17
Proposed Dividend	20,130,522.25

A gross dividend of 28 cents per share will be proposed, totalling 39,200,000.00 euros, using Free Reserves in the amount of 19,069,477.75 euros to complement appropriation of the Net Profits for the year stated above.

3.8. Outlook

Deceleration in Iberia and in Central Europe has been evident while Brazil and South Africa have proved resilient.

We firmly believe that there is still scope to improve our operational efficiency in Central Europe and Iberia, by adapting our production to the evolution in demand. We will concentrate our efforts on completing the integration and restructuring of the plants we acquired in Germany and on optimizing our industrial and logistics costs. We will also continue investing to improve health and safety and address environmental issues so that we improve our standards in these areas.

Having experienced a sharp increase in chemical costs in 4Q 2007, we expect these costs to return to earlier price levels by the middle of the year.

In Canada, we are focused on the ramp-up of our 2nd particleboard line and, since we are the lowest cost producer in this market, we will be aiming to improve our market share.

In line with our established strategic guidelines, we will continue to seek opportunities to grow in our most profitable markets. In Brazil, we are negotiating a joint-venture with Masisa and we will increasingly focus on value-added products. In South Africa, we will invest 8 million euros in a new melamine line in White River.

3.9. Dividend Policy

As stated in the 2006 Board of Directors Report, the policy of the Company is to distribute up to 50% of Consolidated Net Results Attributable to Shareholders of Sonae Indústria, with the actual pay-out ratio taking into consideration this target pay-out ratio of 50% and the investment opportunities that the Board plans to execute in the near future.

The Board of Directors will propose to the Shareholders' General Meeting that Sonae Indústria should pay a dividend that represents slightly less than 50% of 2007 Net Consolidated Profits Attributable to its Equity Holders for the first time in recent years, as explained in point 3.7. above. This amount was decided by considering the investments being implemented at group level together with the investment opportunities that are currently envisaged, namely in Brazil.

3.10. Acknowledgements

We would like to emphasise that being one of the leading wood panel producers in the World is only possible with the full commitment and dedication of our employees, the confidence of our equity and debt holders and the loyalty of our customers and suppliers. We would therefore like to thank all of them and reaffirm our commitment to do our utmost to pursue sustainable value and potential growth for Sonae Indústria, reinforcing our responsible and efficient way of utilising resources. We also extend our thanks to the Statutory Audit Board and to the External Auditors for their advice and valuable assistance throughout the year and to the local communities, in which we operate, for their continuing support.

Maia 5th March 2008

Board of Directors

Belmiro de Azevedo

_________________________

_________________________ Álvaro Cuervo

_________________________ Paulo Azevedo

Per Knuts

_________________________ Thomas Nystén

_________________________ Carlos Bianchi de Aguiar

_________________________

_________________________

Rui Correia

_________________________ Christophe Chambonnet

_________________________ José Antonio Comesaña

_________________________

Louis Brassard

CORPORATE GOVERNANCE REPORT

0. Compliance with CMVM Recommendations

Sonae Indústria is committed to developing and implementing good corporate governance practices going beyond mere compliance with regulatory obligations. Sonae Indústria firmly believes that good governance reduces risk and creates shareholder value. Good governance should include responsible management practices and a broad-based concern about environmental, social and ethical issues.

Sonae Indústria complies with all but Recommendations 8 and 10-A of the Corporate Governance Recommendations issued by the CMVM, (the Portuguese Securities Exchange Regulator) dated November 2005.

In relation to Recommendation 8, Sonae Indústria discloses the individual remuneration of the Chairman of the Board of Directors and the CEO, as well as the aggregate remuneration of the Executive and Non-Executive Directors. The Board's decision is based on the fact that disclosure of individual remuneration of all Directors is not generally accepted practice amongst Portuguese companies (less than 7% of listed companies in Portugal complied in their 2006 financial statements). In addition, the Board believes that the disclosure currently made is sufficient to separately assess the remuneration of the main components of the Board: the Chairman, CEO, Executive Committee and Non-Executive Directors.

Sonae Indústria launched a process to develop a sustainability reporting strategy in 2007. Sonae Indústria's business practices are rooted in strong ethical standards and processes and are set out in detail in the company's Code of Conduct, as well as the procedures used to communicate irregularities, currently in the approval process by the relevant corporate governing bodies. Following approval, these documents will be disclosed to all employees and Sonae Indústria will thereby become compliant with Recommendation 10-A.

1. Corporate Governing Bodies

The Shareholder's Annual General Meeting held on 31 May 2007 introduced amendments to the Articles of Association including the changes necessary to adopt a corporate governance model in accordance with alterations made to Portuguese Company Law.

The adoption of the "Reinforced Latin Model" implies that the company will have a Board of Directors, Statutory Audit Board and Statutory External Auditor.

In this same General Meeting it was also decided to reduce the number of members of the Board of Directors from eleven to ten.

In accordance with the company's Articles of Association, the Statutory Audit Board may be composed of an even or odd number of members, with a minimum of three and a maximum of five with one or two substitutes appointed, depending on the number of members being either three or more, respectively.

This General Meeting also elected the following members to the company's Statutory Audit Board:

• Manuel Guilherme Oliveira e Costa (Chairman)

• Armando Luís Vieira de Magalhães (Member)

• Jorge Manuel Felizes Morgado (Member)

• Óscar José Alçada da Quinta (Substitute)

In December 2007, Manuel Guilherme Oliveira e Costa resigned as Chairman of the Statutory Board and was replaced by the substitute member of this Board, Óscar José Alçada da Quinta, who took over the position of Chairman by deliberation of the Statutory Audit Board on 21 December. Óscar José Alçada da Quinta will retain this function until the next Shareholders' Annual General Meeting.

Following the above-mentioned changes as of 31 December 2007, the Statutory Audit Board is composed of:

• Óscar José Alçada da Quinta (Chairman)
• Armando Luís Vieira de Magalhães (Member)
• Jorge Manuel Felizes Morgado (Member)

PriceWaterHouseCoopers & Associados, SROC, Lda. represented by António Joaquim Brochado Correia or José Pereira Alves was elected as the Company's Statutory External Auditor.

In the same General Meeting, following changes to Portuguese Company Law, a new Board of the Shareholders' General Meeting was elected:

• João Augusto Esmeriz Vieira de Castro (Chairman)

• António Agostinho Cardoso da Conceição Guedes (Secretary)

The members of both the Statutory Audit Board and the Board of the Shareholders' General Meeting, responded to two questionnaires addressed to the company and formally declared their independence and lack of incompatibility in accordance with Portuguese Company Law, and committed themselves to immediately notifying the company of any occurrence that may lead to their loss of independence or to any incompatibility during their mandate.

2. Governing Bodies, Constitution and Organisation

2.1. Board Composition and Organisation

Based on the changes to the Articles of Association made in the 2007 Shareholders' General Meeting, the Board of Directors may be composed of an even or odd number of members, ranging from a minimum of three and maximum of thirteen, elected at a Shareholders' General Meeting. In the same General Meeting, the number of members of Sonae Indústria's Board of Directors was reduced to 10 following the resignation of Angel Garcia Altozano on this same date. In December, Christian Günther Schwarz resigned as a member of the Board of Directors and Christophe Chambonnet was co-opted to replace him on the Board and appointed to the Executive Committee by the Board of Directors in the meeting dated 20 December 2007. In accordance with the law, the Board of Directors will propose the ratification of his appointment to the next Shareholders' General Meeting.

According to the changes made to the Articles of Association, the Chairman of the Board of Directors, who is elected by the Board, has now a casting vote. As the Board of Directors is composed of an even number of members, in order to comply with Article 395º Point 4 of Portuguese Company Law, the Board of Directors conferred a casting vote to Duarte Paulo Teixeira de Azevedo, in the event of the absence or incapacity of the Chairman.

The Board of Directors is currently composed of:

• Belmiro Mendes de Azevedo Chairman (Non Executive)
• Álvaro Cuervo Garcia (Non Executive and Independent);
• Duarte Paulo Teixeira de Azevedo (Non Executive)

• Per Otto Knuts (Non Executive and Independent)

• Knut Thomas Alarik Nysten (Non Executive and Independent)

• Carlos Francisco de Miranda Guedes Bianchi de Aguiar (Executive)
• Rui Manuel Gonçalves Correia (Executive)
• Christophe Chambonnet (Executive)
• José António Comesaña Portela (Executive)
• Louis Maurice Brassard (Executive)

As such, it can be seen that the number of Non-Executive Directors is equal to the number of Executive Directors. Of the Non-Executive Directors, 3 (three) are Independent, in that they are not associated with special interest groups related either to the Company or to its reference shareholder and they have no materially relevant business interests that could interfere with their ability to freely exercise independent judgement. These Independent Non-Executive Directors do not hold qualified shareholding nor do they act on behalf of shareholders with qualified shareholdings of 2% or more of the company's share capital and they have not been re-elected for longer than two mandates. These independent Directors exercise an important influence over the decision-making process and the development of company strategy and policy.

The Board mandate is three years, with the possibility of re-election and the current mandate covers the period 2006 to 2008. All members of the Board of Directors were appointed with effect from 15 December 2005. This marked the registration date for the merger of the "old" Sonae Indústria – SGPS, SA, into Sonae 3P – Panels, Pulp and Paper, SA and the renaming of the latter to Sonae Indústria SGPS, SA, with the exception of Rui Correia, who was initially appointed to the Board of Sonae 3P on 22 July 2002 and Christophe Chambonnet, who was coopted by the Board of Directors in the meeting dated 20 December 2007.

As stipulated by the Company's Articles of Association, Sonae Indústria's Board of Directors meets once a quarter and additionally whenever the Chairman or two of its members call a meeting. All decisions taken are recorded in the respective minutes. According to the Articles of Association, when a Board member misses two meetings without a justification, which is accepted by the Board of Directors, this will be considered a definitive absence.

Nine Board meetings were held in 2007. The Board of Directors can only deliberate if the majority of its members are present or represented by proxy, and decisions are taken by a majority of the votes of the Board members present or represented and of those who vote by post.

Members of the Board of Directors are currently also members of the Boards of other companies, which are listed in Point 18 of this report. Former Board memberships held over the last 5 years are also listed in Point 19 of this report.

The Board of Directors is empowered to assure the management of the Company in accordance with the objects established in the Company's Articles of Association. Currently, the Board of Directors may deliberate on increases in the Company's share capital of up to two billion euros, on one more occasions, in accordance with the law.

Sonae Indústria's Board of Directors

Belmiro de Azevedo (Chairman Sonae Indústria): obtained a degree in Industrial Chemical Engineering at the University of Oporto, a PMD from Harvard Business School, participated in the Financial Management Programme from Stanford University and has occupied a diverse number of positions in the Efanor/Sonae Group from an early stage. Mr Belmiro de Azevedo is today Chairman of the Board of Sonae Group and Chairman of the Board and CEO of Sonae Capital, SGPS S.A., a member of the European Union Hong Kong Business Cooperation Committee, of the International Advisory Board of Allianz AG and of the Harvard Business School International Advisory Board. He has been decorated on a number of occasions, some of the most prominent being the "Encomienda de Numero de la Ordem del Mérito Civil" from His Majesty D.Juan Carlos, King of Spain, the "Order of the Cruzeiro do Sul" from the President of the Brazilian Federal Republic, the "Grã Cruz da Ordem do Infante D. Henrique" from the President of the Portuguese Republic, nomination as "Honorary Fellow" of the London Business School and member of the "Order of Outstanding Contributors to Sustainable Development" from the World Business Council for Sustainable Development.

Álvaro Cuervo Garcia (Independent): holds a post graduate degree in Statistics and Psychology and a PhD in Economics from the University of Madrid (Spain). Mr Cuervo is a professor of Business Economics and was Head of the Business department at the Complutense University in Madrid, Head of Business Economics at Valladolid and Oviedo University (Spain) and CIDE (Mexico) and visiting professor at New York University and California Berkeley University (USA). As a member of the Spanish government's consultative committee for privatizations and Chairman of the Economic and Business Scientific Association (Spain), he holds a number of other directorship roles.

Paulo Azevedo: holds a degree in Chemical Industrial Engineering from the Lausanne Polytechnic School (Switzerland) and a post-graduate degree in Business studies from the Oporto Institute of Business Studies. Having been CEO of Optimus – Telecomunicações S.A. between 1998 and 2000. Today Mr. Paulo de Azevedo is CEO of Sonae SGPS and holds a number of managerial and directorship roles in the Efanor/Sonae Group. Paulo Azevedo is Belmiro de Azevedo's son.

Per Knuts (Independent): holds a degree in Chemical Engineering from the Royal Institute of Technology (Sweden) and was Chairman for the Global Council of Stora Feldmuhle AG Companies and FPB Holding AG (Dusseldorf – Germany) between 1998 and 2004.

Thomas Nystén (Independent): obtained a Master of Arts degree (Political Economy) at the University of St Andrews (Scotland) in 1963 and completed an AMP at the Harvard Business School in 1984. Previously held the positions of Executive Director of the Myllykoski Corporation in Helsinki and CEO of MD Lang Papier in Germany (1994- 2004).

Carlos Bianchi de Aguiar (President of the Executive Committee and CEO Sonae Indústria): graduated with a degree in economics from the University of Oporto. Having worked for Sonae Indústria since 1986, he has occupied a number of managerial and directorship roles in various geographies, namely the UK ('90-'95), Spain ('96-'97) and Germany ('00-'01). He returned to Portugal in 2002 to become Group CFO and was appointed CEO in 2005.

Rui Correia (CFO): holds a degree in Economics from the University of Oporto and a post graduate degree in Business Management from the Oporto Institute of Business Studies. Having exercised functions in the Efanor/Sonae Group since 1994, he was head of the Finance Department of Sonae SGPS from 2000 and was appointed as Sonae Indústria CFO in 2005. Since 2001, he has also held a number of directorship roles in the Efanor/Sonae Group.

Christophe Chambonnet (COO France): obtained a degree in engineering from ISAB (France), a MS in Applied Economics and an MBA from the University of Purdue, USA. Between 1998 and 2000 he has occupied a number of managerial and directorship roles in the Marketing area, namely in companies based in USA, Canada, France and Belgium. Between 2000 and 2005 he was a Board member of Tafisa Canada, a subsidiary of Sonae Indústria. Between April 2005 and June 2006, he was vice president of Tembec Avebene SAS, a French company. As from July 2006, he was appointed COO of Isoroy SAS.

José António Comesaña (COO Iberia): obtained a degree in Industrial Mechanical Engineering from the Barcelona School of Industrial Engineers and has held a number of managerial and directorship roles in Sonae Indústria. Having started his career in the resins sector, he has been in the wood panels business for over 33 years with Tafisa. Previously held numerous positions at plant management level and has been COO of Iberia since 1998. He joined Sonae Indústria with the acquisition of Tafisa in 1993.

Louis Brassard (COO Canada): obtained a degree in Industrial Engineering from the Montreal Polytechnic School (Quebec Canada) and an MBA in Finance and Marketing from Montreal University. Mr. Brassard has been with Sonae Indústria since 1994 and has held a number of managerial and directorship roles.

Sonae Indústria Directors have the following Sonae Indústria Shares attributed to them:

	Number of Shares		Number of Shares
Belmiro Mendes de Azevedo		(1) Efanor Investimentos, SGPS, SA
Efanor Investimentos, SGPS, SA (1)	49,999,997	Sonae Indústria, SGPS, SA	44,674,706
Sonae Indústria, SGPS, SA	1,010	Pareuro, BV (2)	20,000
		Sonae Capital, SGPS, SA (3)	82,350,553
Carlos Bianchi de Aguiar
Sonae Indústria, SGPS, SA	720	(2) Pareuro, BV
		Sonae Capital, SGPS, SA (3)	50,000,000
Rui Manuel Gonçalves Correia		Sonae Indústria, SGPS, SA	27,118,645
Sonae Indústria, SGPS, SA	5,000
		(3) Sonae Capital, SGPS, SA
Duarte Paulo Teixeira de Azevedo		SC, SGPS, SA (4)	391,046,000
Efanor Investimentos, SGPS, SA (1)	1
Migracom, SGPS, SA (5)	69,996	(4) SC, SGPS, SA
Sonae Indústria, SGPS, SA	223	Sonae Indústria, SGPS, SA	9,521,815
		(5) Migracom, SGPS, SA
		Sonae Indústria, SGPS, SA	39,949
		Sonae Capital, SGPS, SA (3)	161,250
		Imparfim, SPS, SA (6)	150,000
		(6) Imparfim, SPS, SA
		Sonae Indústria, SGPS, SA	278,324
		Sonae Capital, SGPS, SA (3)	513,159

2.2. Executive Committee Composition and Organisation

The Executive Committee is appointed by the Board of Directors and is composed of the CEO, CFO and COOs from Iberia, France and Canada. The Company's Articles of Association permit the Board to delegate ordinary company business, duties and responsibilities to an Executive Committee.

Responsibilities are divided among the Executive Committee members as follows:

EXECUTIVE COMMITTEE

Carlos Bianchi de Aguiar President of the Executive Committee and CEO

Rui Correia CFO

Christophe Chambonnet COO France

José António Comesaña COO Iberia

Louis Brassard COO Canada

The Board of Directors has delegated powers to the Executive Committee to manage day-to-day operations of the Company except:

• a) appointing the Chairman of the Board of Directors;
• b) co-opting members to the Board of Directors;
• c) convening Shareholders' General Meetings;
• d) approving the Annual Report and Accounts;
• e) granting any pledge, guarantee or charge over the assets of Sonae Indústria;
• f) deciding to change the Company's registered office or approving any share capital increases;
• g) deciding on mergers, de-mergers and modifications to the corporate format of Sonae Indústria;
• h) approving the Company's Business Plan and Annual Budget;
• i) defining key features of personnel policies, including stock incentive plans and variable remuneration plans applicable to executives and senior managers (Management Level G4 and above), in areas that do not require decisions from the Shareholders' Remuneration Committee or deliberations at Shareholders' General Meetings, together with decisions on individual compensation for executives of Management Level G3 and above, which are delegated to the Board Nomination and Remuneration Committee and, when these executives are Officers of the Company, also require decisions from the Shareholders' Remuneration Committee or deliberations at Shareholders' General Meetings;
• j) defining or changing major accounting policies of any company included in the consolidation perimeter of the Group;
• k) approving quarterly and half-yearly reports and accounts;
• l) selling, acquiring directly or by long term lease or transacting in any other way, investments classified as tangible fixed assets where the individual transaction value is in excess of 5,000,000 euros, unless covered by the Annual Budget or the Business Plan, duly approved by the Board;
• m) purchasing or subscribing new shares in the share capital of any subsidiary company where the accumulated amount exceeds 20,000,000 euros in any

financial year, unless covered by the Annual Budget or the Business Plan, duly approved by the Board;

• n) investing in any other company or other financial assets when the accumulated value is in excess of 10,000,000 euros in any financial year, unless covered by the Annual Budget or the Business Plan, duly approved by the Board;
• o) making any other financial investment which exceeds the accumulated amount of 10,000,000 euros in any financial year, unless covered by the Annual Budget or the Business Plan, duly approved by the Board;
• p) disposing of assets or other divestments, if such a transaction has a significant effect on the operating results of the Company (defined as equal or greater than 5%) or affects the jobs of more than 100 employees, unless covered by the Annual Budget or the Business Plan, duly approved by the Board.

The Executive Committee normally meets at least once every month and additionally whenever the President of the Executive Committee (CEO) or a majority of its members call a meeting in writing, at least 3 days before the appointed date. Meetings can only take place if at least four of the members are present (either physically or by videoconference). The CEO presides over the meeting as Chairman. Over the course of 2007, 16 meetings of the Executive Committee were held.

Decisions made by the Executive Committee are taken by a qualified majority of four votes in favour. In the absence of this qualified majority, the Executive Committee must submit the matter under consideration to the Board of Directors for deliberation. With the objective of maintaining the Board of Directors permanently informed on decisions taken by the Executive Committee, all Board members are sent a summary of the minutes arising from the Executive Committee meetings.

3. Board Committees

To improve the operational efficiency of the Board of Directors and meet best practice in Corporate Governance, the Board of Directors has created 3 Board Committees and the role of Board and Corporate Governance Officer:

3.1. Board Audit and Finance Committee ("BAFC")

The BAFC is composed of the following Non-Executive Directors:

• Álvaro Cuervo (Chairman; independent)
• Paulo Azevedo
• Per Knuts (Independent)

The BAFC normally meets at least 5 times yearly and is responsible for:

• Analysing the financial statements and earnings announcements to be disclosed to the market and reporting their findings to the Board of Directors;
• Reviewing risk management, internal control and business processes;
• Verifying the results of internal and external audits;
• Advising on any changes in accounting policies and practices;
• Verifying compliance with accounting standards;
• Reviewing compliance with legal and statutory obligations, particularly within the financial domain.

Over the course of 2007, the BAFC held 6 meetings.

3.2. Social Responsibility and Environment Committee ("SREC")

The SREC is composed of the following Directors:

• Belmiro de Azevedo (Chairman)
• Per Knuts (Independent)
• Thomas Nysten (Independent)

The SREC met twice in 2007 with its main function being to analyse the impact of the economic, environmental and social dimensions of sustainability.

3.3. Board Nomination and Remuneration Committee ("BNRC")

The BNRC is composed of the following Directors:

• Belmiro de Azevedo (Chairman)
• Álvaro Cuervo (Independent)
• Carlos Bianchi de Aguiar (CEO)
• Paulo Azevedo
• Thomas Nysten (Independent)

In meetings held normally at least twice a year, the BNRC's main function is to analyse and submit proposals and recommendations on behalf of the Board of Directors to the Shareholders' Remuneration Committee in relation to the remuneration and other compensation of members of the Board of Directors, and to analyse and approve proposals and recommendations on behalf of the Board of Directors in relation to remuneration and other compensation for senior executives of the Sonae Indústria Group.

The BNRC liaises with the Sonae Indústria Shareholders' Remuneration Committee ("Comissão de Vencimentos"). It may also receive assistance from external entities provided absolute confidentiality is ensured in relation to the information obtained as a result of that cooperation.

In 2007, the BNRC met on two occasions.

3.4. Board and Corporate Governance Officer

The Board and Corporate Governance Officer ("BCGO") is David Graham Shenton Bain, who reports to the Board of Sonae Indústria as a whole, through the Chairman.

Principal duties of the BCGO encompass:

• Supporting the Board in defining its role, objectives and operating procedures in order to optimise its performance;
• Taking a leading role in organising Board evaluations and assessments;
• Keeping all Legislative, Regulatory and Corporate Governance developments under close review;
• Supporting and challenging the Board to achieve the highest standards in Corporate Governance;
• Supporting the Board in ensuring that the concept of stakeholders and the need to protect minority interests are in the Board's mind when important business decisions are being taken.

The BCGO also acts as the secretary of the BAFC and BNRC.

4. Board Assessment

To aligning itself with Corporate Governance best practices, the Board has decided to undertake a self-assessment every 2 or 3 years. The last formal self-assessment was carried out in 2005 with the help of an external consultant. The assessment was designed to review how the Board and the Board Committees function, to evaluate Corporate Governance at Board level and propose measures for further improvements. The main measures identified in the 2005 self-assessment have already been implemented. Another self-assessment will be completed during 2008.

5. Board and Board Committee Meetings and Attendance in 2007

During 2007, the number of meetings and attendance record for the Board of Directors and Board Committees were as follows:

	Number of Meetings	Attendance
Board of Directors	9	91%
Executive Committee	16	100%
Board Audit and Finance Committee	6	85%
Social Responsibility and Environment Committee	2	100%
Board Nomination and Remuneration Committee	2	89%

6. Directors' Remuneration and Other Compensation

The Shareholders' Annual General Meeting held in 2007 approved a proposal made by Sonae Indústria Shareholders' Remuneration Committee ("Comissão de Vencimentos") setting out the remuneration policy to be followed during the current mandate (2006 – 2008).

This remuneration and compensation policy is based on the presumption that initiative, effort and commitment are the essential foundation stones for good performance. For these reasons, individual activity, performance and contributions to the company's success should be evaluated annually, which will thereby influence the attribution of variable remuneration and other compensations to each person.

In relation to Directors' remuneration and other compensation, the approved policy establishes the following:

Executive Directors

Remuneration and compensation of the Executive Directors (ED) includes: (i) a fixed component, composed of a base remuneration or salary, paid 12 times per year, and benefits in line with current market practices, (ii) a variable annual performance bonus paid in the first quarter of the following year, and (iii) a third variable and discretionary component, attributable in the first quarter of the following year, as deferred remuneration under the Company's Medium-term Incentive Plan, which vests and becomes payable on the second anniversary of the attribution date.

Individual remuneration and compensation packages will be defined according to the responsibility levels of each ED and will be reviewed annually. Each ED will be attributed with a Sonae Indústria Management Level. Normally, "Senior Executive" (Management Level G2) is attributed to Sonae Indústria's ED and "Group Senior Executive" to the CEO. Sonae Indústria's Management Levels are similar to those of the Efanor/Sonae Group and are based on the classification of corporate functions under the Hay international model, thereby facilitating market comparisons and internal equity. Remuneration and compensation packages to be attributed to ED will be benchmarked, using market surveys of Portuguese and European Top Executive remuneration, in order to establish a fixed remuneration close to the average and a total remuneration or compensation close to the third quartile, on a comparable basis.

The purpose of the Annual Performance Bonus is to reward the achievement of several objectives annually defined, related to "Key Performance Indicators of Business Activity" (Business KPIs) and "Personal Key Performance Indicators" (Personal KPIs). The Bonus target to be attributed will be based on a percentage of the fixed component, which will vary between 40% and 60%. Business KPIs, which include economic and financial indicators, will be based on approved budgets; individual performance of the business unit and group performance will account for 70% of the Annual Performance Bonus and constitute objective indicators. The remaining 30% will derive from Personal KPIs, based on subjective indicators and amounts paid will be based on actual performance and may vary between 0% and 120% of the target bonus attributed;

The Medium-term Incentive Plan will be aimed at enhancing ED's loyalty, aligning them with shareholders and increasing their awareness of their importance on the overall success of our organisation. Currently, the objective values are defined as a percentage of the Annual Performance Bonus. For the Executive Directors, such amounts represent between 50% and 100% of the target Annual Performance Bonus. Amounts attributed derive from one or more KPIs, aligned with value creation to shareholders and are similar for all EDs.

Non-Executive Directors

Remuneration of Non-Executive Directors (NEDs) consists of a fixed remuneration (of which approx. 15% is paid as meeting attendance fees), with no variable remuneration or other compensation payable. For those NEDs who exercise functions in other companies of the Efanor/Sonae Group, the remuneration paid by Sonae Indústria is derived from the overall Efanor/Sonae Group compensation, allocated in proportion to the estimated time devoted to Sonae Indústria as NEDs. For the remaining NEDs, a fixed remuneration is paid (including remuneration for attendance in meetings) based on benchmarking to the market. This remuneration is increased up to 15% for those NEDs serving on Board Committees and up to an additional 10% for the respective Chairmanship.

2007	Total Fixed Annual Remuneration		Total Short Term Performance Bonus		Total Deferred Medium Term Performance Bonus		Total 2007
	2006	2007	2006 (a)	2007 (b)	2006 (c)	2007 (d)	2006	2007
Chariman of the Board of Directors	61,000	156,083					61,000	156,083
CEO	221,400	228,000	102,000	125,000	147,200	100,000	470,600	453,000
Executive Directors (remaining)	775,270	785,231	283,815	367,639	261,780	192,804	1,320,865	1,345,674
Non-executive Directors (remaining) (e)	173,070	162,607					173,070	162,607
Total of Board of Directors	1,230,740	1,331,921	385,815	492,639	408,980	292,804	2,025,535	2,117,364

In 2008, a subsidiary of Sonae Indústria paid compensation for loss of office of 144,975 Euros to an Executive Director who ceased functions during 2007.

No special agreements exist regarding compensation or payments to be made to either Company Directors or employees in the event of termination of service resulting from a tender offer.

7. Capital Structure

Sonae Indústria's share capital amounts to 700 million euros and is represented by 140 million ordinary shares with a nominal value of 5 euros per share. All shares are listed on Euronext Lisbon. No limitations or restrictions are in place regarding the transfer of control or sale of shares.

Qualified Shareholdings according to Article 8, nr 1, line e) of CMVM regulation 04/2004

Shareholder	Number of shares	% Share Capital	% Voting Rights
Efanor Investimentos, SGPS, S.A	44,674,706	31.9105%	31.9105%
Pareuro, BV	27,118,645	19.3705%	19.3705%
SC, SGPS, SA	9,521,815	6.8013%	6.8013%
Duarte Paulo Teixeira de Azevedo	40,172	0.0287%	0.0287%
Maria Claudia Teixeira de Azevedo	23,186	0.0166%	0.0166%
Maria Margarida CarvalhaisTeixeira de Azevedo	1,010	0.0007%	0.0007%
Nuno Miguel Teixeira de Azevedo	969	0.0007%	0.0007%
	81,380,503	58.1289%	58.1289%

8. Voting Rights and Shareholder Representations

Under the terms of Sonae Indústria's Articles of Association, the Shareholders' General Meeting is composed only of shareholders with voting rights and holding shares or subscription bonds who, until five business days before the meeting taking place, provide evidence of their ownership, according to the terms established by company law.

According to the changes made in the Company´s Articles of Association approved at the 2007 General Meeting, each share corresponds to one vote. Shareholders' General Meetings can meet at the first instance, as long as shareholders representing over fifty percent of the Company's share capital are present or represented. All decisions at Shareholder's General Meetings are taken by simple majority, except if a higher percentage is required by law. Individual shareholders may be represented at Shareholders' General Meetings by their spouse, direct family, a Director of the Company or another shareholder, as long as they have notified the Chairman of the Shareholders' General Meeting in writing, identifying the representative and his or her residence and date of the meeting. Corporate shareholders may be represented by a person duly appointed for that purpose by letter, the authenticity of which is scrutinised by the Chairman of the Shareholders' General Meeting.

No shareholders possess special voting rights. The Board of Directors has no knowledge of shareholders' agreements in which the Company or the shareholders of the Company are involved.

The Company has not taken any measures that would hinder the success of a public tender offer for the purchase of the Company's shares. It has not entered into any relevant kind of agreement that would be subject to change or termination in the event of transfer of control resulting from a public tender offer.

As Sonae Indústria is regarded as a listed and "publicly traded company", shareholders are allowed to vote by post in relation to all items in the agenda of the Shareholders' General Meeting.

Postal votes can only be considered when sent to the headquarters of the Company by registered post with notification of receipt addressed to the Chairman of the Shareholders' General Meeting, which are received at least three days before the date of the Meeting and subject to the normal rules regarding evidence of share ownership. Votes by post are considered negative votes in relation to any proposals presented after the date they were issued.

A standard form for postal voting is available from Sonae Indústria's corporate website www.sonaeindustria.com and its head offices.

Proposals to be submitted by the Board of Directors to the Shareholders' General Meeting are made available to shareholders, as required by law, (one month or fifteen days notice ahead of the meeting, depending on whether there is a proposal to alter the Company's Articles of Association) at the Company's registered office, together with all relevant reports, documents and other legally mandatory information. These documents and the Annual Reports are available on the Company's website www.sonaeindustria.com as from same date.

9. Rules for nomination and substitution of members of the Board of Directors and changes to the Company's Articles of Association

Members of the Board of Directors are elected by the Shareholders' General Meeting. Groups of shareholders representing between 10% and 20% of the Company's share capital, may submit a stand-alone proposal to nominate a Director in advance of the Shareholders' General Meeting. Each shareholder cannot support more than one list of Directors and each list must identify at least two eligible people to fill each position on the Board. If lists are submitted by more than one group of shareholders, the voting will be based on these lists.

In the event of death, resignation or temporary or permanent inability of any of the Directors, the Board of Directors is responsible for his or her replacement. If the Director in question was nominated by minority shareholders, a new separate election must be held.

10. Shareholders' Remuneration Committee

Sonae Indústria's Shareholders' Remuneration Committee is appointed by the Shareholders' General Meeting for a three-year term and is currently composed of Efanor Investimentos - SGPS, SA, represented by José Manuel Neves Adelino, and Imparfin -SGPS, SA, represented by Bruno Walter Lehmann.

11. Share Price Performance during 2007

12. Investor Relations

Sonae Indústria has its own Investor Relations' Department, responsible for managing the relationship between the Company and shareholders, investors, analysts and market authorities including the CMVM (the Portuguese Securities Exchange Regulator).

Each quarter, the Investor Relations' Department is responsible for coordinating the preparation of an earnings announcement to be issued to the market and also provides statements whenever necessary to disclose or clarify any relevant fact or event that could affect the share price. The Investor Relations' Department is available at all times to respond to any general questions posed by the market. The Company is available to meet with investors, either in roadshows or in one-to-one meetings upon request, or by participating at conferences.

Sonae Indústria's Investor Relations Department may be contacted by email at investor.relations@sonaeindustria.com or by telephone: 00 351 22 010 0638.

In addition, Sonae Indústria has an institutional website (www.sonaeindustria.com) that posts all earnings announcements, statements, reports and accounts together with any other public documents, press releases or general news items on a wide range of themes relating to the Company and Group.

Sonae Indústria's legal representative relations with equity market ("Representante para as Relações com o Mercado") is Rui Correia, who can be contacted via the Investor Relations' Department or alternatively, directly by email: rmcorreia@sonaeindustria.com.

13. Dividend Policy

Sonae Indústria has not distributed dividends in recent years, as it has opted to strengthen its balance sheet following the significant deterioration in shareholders' funds as a result of losses accumulated up to 2003. As Sonae Indústria has now recovered its financial strength and is generating positive results, a policy of distributing up to 50% of Consolidated Net Results Attributable to the Shareholders of Sonae Indústria will be proposed. Each year, the actual pay-out ratio will be proposed taking into consideration this target pay-out ratio of 50% and the investment opportunities that the Board plans to execute in the near future. The Board of Directors will propose to the Shareholders' General Meeting that Sonae Indústria pays dividends in the amount of 50% of the 2007 Consolidated Net Profits Attributable to its Equity Holders.

14. Share and Share Options Schemes

Sonae Indústria does not currently award any remuneration or other compensation involving or linked to shares or share options.

15. Transactions with Related Parties

Sonae Indústria did not carry out any transactions with members of the Board of Directors nor with the Statutory Audit Board members.

All transactions with holding or other related companies represent normal operational activity and were made under "open market" conditions and at prices that comply with transfer pricing regulations.

16. Remuneration of the Statutory External Auditors

In 2007 the statutory external auditors, PriceWaterhouseCoopers, invoiced Sonae Indústria and its affiliated companies a total amount of 696,839 euros of which 95.3% related to audit and the legal certification of the accounts and 4.7% to other services.

To safeguard external auditor independence, tax consultancy and other services are provided by different teams from those involved in the audit process.

17. Risk Management

Sonae Indústria has a Risk Management Department which is responsible for promoting and monitoring the development of structured and systematic processes and activities to manage business risks.

Risk Management is a key concern within the Sonae Indústria culture and is present in all management processes, forming part of the delegated responsibility of managers and employees at all levels within the Sonae Indústria Group.

Risk Management comprises the process of identifying potential risks, analysing their possible impact on the organisation's strategic goals and seeking ways to minimise the probability of their materialisation, in order to determine the best procedures to manage exposure to them.

A global approach is in place to assure a suitable and balanced coverage of the operational risk through its transfer to our reinsurance panel. Property damage and business interruption risks are covered by a global policy, developed and implemented locally. Sonae Indústria adopts this global policy as a support to its processes of risk management and is committed to improving plant protection and prevention levels to reinforce this partnership.

Process of Integrated Risk Management

At Sonae Indústria, Risk Management is based on a standard and integrated methodology, denominated Enterprise-Wide Risk Management ("EWRM").

In 2006, the systematisation process initiated in 2004, was consolidated, fully integrated and aligned with strategic business goals, aimed at prioritizing relevant business risks and identifying procedures to mitigate their impact. The process covers the whole organisation, encompassing all countries and corporate functions.

The Risk Model, which was built in 2004 and reviewed in 2006, aggregates business risks into three categories (Business Environment Risks, Business Process Risks and Information for Decision-Making Risks) and contains the quantification of the Significance (impact on the EBITDA and operational efficiency) as well as Probability (the frequency of occurrence of the event or scenario) of the critical risks for Sonae Indústria.

A Risk ScoreCard (RiSC 07) was developed identifying and defining KPIs to challenge and monitor the accomplishment of the Action Plans prepared to address the Critical risks that were identified. The KPIs identified are integrated into the Compensation Process of those people with the capacity to deal and manage these risks. This is done through the identification and fulfilment of procedures, included in the PAR process, to address those risks and subsequent measurement of their impact through the KPIs. The KPIs are measured on a local (country) basis and the objectives defined as such.

In addition, financial risk management is included in Business Process Risk and is complemented and monitored within the scope of the financial function.

Operational Risk Management

The manufacture of wood-based panels is an industrial activity with very significant operational fire and explosion risks. As a world leader, it would be unacceptable for Sonae Indústria to fail to recover from a catastrophic event on a "world class" scale. Thus, loss prevention and protection of core assets is a constant concern for our Group.

As a structured response to this "risk exposure", an ambitious Loss Prevention Programme was set up in 2003.

This programme is the corner stone of the property damage and loss prevention strategy in all plants.

Corporate Risk Standards

Having been developed in 2003, the Corporate Risk Standards are divided into several groups of Loss Prevention measures as follows:

• Management Programs
• Automatic Fire Protection
• Specific protection systems for machinery and equipment
• Surveillance
• Manual Fire Fighting
• Warehousing
• Maintenance
• Water Supply
• Contingency Planning and Business Continuity Management

In the last quarter of 2007, a project to develop an analytical version of these standards was launched with the support of recognized external consultants and with one of the key insurance market representatives, who is currently involved with Sonae Indústria.

With this project, whose completion is scheduled for the first quarter of 2008, Sonae Indústria aims to facilitate the understanding and implementation of these standards in all its units.

External Risk Inspections

Supported by the Corporate Risk Standards, the Swiss Re GAPS conducts external risk inspections at all sites every two years; a report is issued with a set of recommendations for each of the plants visited and a rating of the risk quality (QIN – Quality Index Number) is allocated for each plant. Since 2000, the overall QIN of Sonae Indústria has improved from 5.8 in 2000 to 7.1 in 2007 (on a scale from 0 to10).

QIN SONAE Indústria

In addition, AIG Europe actively participates in the Risk Engineering program in collaboration with Swiss Re and the risk management services of the insurance broker - MDS.

In 2007, 22 external risk surveys were conducted by Swiss Re GAPS and AIG Europe in close cooperation with each plant and with the support of the Risk Management Department.

Internal Risk Inspections

An internal visit is made to each plant every 18 months to review the status of the previous internal and external recommendations as well as compliance with Corporate Risk Standards. In 2006, 10 internal surveys were carried out.

Self Inspection Form

A Quarterly Control self-assessment procedure using a Self Inspection Form has been carried out by each plant since 2000. This evaluates 106 items grouped into 23 categories. All non-conformities detected automatically generate a corrective action, and there is an automatic quarterly follow-up of outstanding corrective actions.

In 2007, with the Self Inspection Form now implemented in Lotus Notes, the process generated 413 corrective actions of which 162 were implemented while 251 are in progress at the year end.

Risk Plan 2004-2010

Each individual plant plan (which is updated annually) defines a set of measures to be taken towards achieving full compliance with the Corporate Risk Standards by 2010. The main objectives encompass:

• Improving Sonae Indústria's Installations Risk Standard with a view to increasing employee and asset safety, and avoiding eventual periods of business interruption;
• Obtaining a payback reflected in the insurance premium (demonstration of real and tangible commitment to loss prevention);

• Forming the basis for preparation of the annual budget for investment in Loss Prevention measures and establishing priorities based on the impact on Loss Prevention.

The 2004-2010 Risk Plan forms an integral part of the Industrial Master Plan of Sonae Indústria, which consists of the investment planning of each plant for the next 5 years.

Insurance Premium Distribution

Sonae Indústria's global insurance premium is charged to each plant with 50% being allocated according to local insurance market prices and 50% being based on the plant's measured risk quality. The former is calculated in line with "stand alone" local market insurance premium levels and the latter according to the QIN of each plant, so that the "worst" performers pay their fair share of insurance costs.

Relevant Event

On 17 April 2006 Sonae Indústria suffered a significant fire at our plant at Lac Mégantic, Canada. The core of the plant – the second chipboard line- and substantial part of the preparation area were severely affected. Operations in this line were interrupted for a period of approximately 20 months and activity only recommenced in December 2007.

The risk management procedures in place contributed to the absence of serious personal injuries. In economic terms, the impact is not expected to be significant since there is an adequate property damage and business interruption insurance cover.

New Acquisitions

In the course of 2006, four plants were acquired by Sonae Indústria: three in Germany and one in France. In the second half of the year, Risk Management initiated the process of implementing the Corporate Risk Standards at these plants. During 2007 external risk surveys were conducted for the first time at these plants by Swiss Re GAPS/AIG Europe using the reference standards. The QIN issued to these plants are in line with the average Sonae Indústria risk level.

Risk Management Organisation

In addition to the active involvement of all Sonae Indústria Group managers and employees, risk management activity is performed and supported by the Risk Management Department, together with the Corporate Planning and Management Control Department.

The Risk Management Department consists of a central team with 2 full time members. There is a formally coordinated network of Country Risk Officers in each of the countries where Sonae Indústria has industrial operations and at each of the sites there is a Plant Risk Officer.

The Corporate Planning and Management Control Department is composed of 8 people, organised into three teams to better address the challenges and changes the businesses face: the Corporate Reporting Team, which is also responsible for business analysis, the Investment Analysis and big projects Team and the Strategic Planning and special projects Team.

18. Other Positions held by Sonae Indústria Directors as of 31 December 2007

Belmiro Mendes de Azevedo:

• BA Business Angels SGPS, S.A. (Sole Director)
• Casa Agrícola de Ambrães, S.A.(Chairman)
• Efanor Investimentos, SGPS, S.A. (Chairman)
• Praça Foz Sociedade Imobiliária, S.A. (Chairman)
• Setimanale SGPS, S.A. (Chairman)
• Sonae SGPS, S.A. (Chairman)
• Sonae Capital SGPS, S.A. (Chairman and CEO)
• Spred, SGPS, S.A. (Chairman)

Jose Alvaro Cuervo Garcia:

• ACS Actividades de Construccion Y Servicios, S.A.
• BA Vidrio, S.A.
• Bolsas y Mercados Españoles (BME)
• Sonae SGPS, S.A.

Duarte Paulo Teixeira de Azevedo:

• Efanor Investimentos, SGPS, S.A.
• Imparfin, SGPS, S.A.
• Inparvi, SGPS, S.A.
• Migracom SGPS, S.A. (Chairman)
• Sonae, SGPS, S.A. (President of Executive Committee CEO)
• Sonae Distribuição SGPS, S.A. (Chairman)
• Sonae Sierra, SGPS, S.A. (Chairman)
• Sonaecom, SGPS, S.A. (Chairman)

Per Otto Knuts:

• Glunz AG (Supervisory Board – "Aufsichtsrat")

Knut Thomas Alarik Nysten:

• Glunz AG (Supervisory Board Chairman– "Aufsichtsrat")

Carlos Francisco de Miranda Guedes Bianchi de Aguiar:

• -173509 Canada, INC. (Chairman)
• -Agepan Tarkett Laminate Park, GmbH & Co. Kg (Chairman)
• -Agloma – Sociedade Industrial de Madeira Aglomerada, S.A.
• -Agloma Investimentos, SGPS, S.A.
• -Aserraderos de Cuellar, S.A.
• -Darbo, SAS
• -Ecociclo – Energia e Ambiente, S.A.
• -Ecociclo II Energias, SA
• -Euro Decorative Boards, Ltd.
• -Euromegantic Ltée. (Chairman)
• -Euroresinas - Industrias Quimicas, S.A.
• -GHP GmbH
• -Glunz AG (Chairman)
• -Glunz Service GmbH
• -Glunz UK Holdings, Ltd.
• -Imoplamac – Gestão de Imóveis, S.A.
• -Isoroy SAS (Chairman)
• -Maiequipa – Gestão Florestal, S.A.

• -Movelpartes – Componentes para a Indústria do Mobiliário, S.A.

• -Poliface North America Inc.

• -Racionalización y Manufacturas Forestales, S.A.
• -Rochester Real Estate, Ltd.
• -SIAF - Imobiliária, S.A.
• -Somit - Imobiliária, S.A.
• -Somit – Sociedade de Madeiras Industrializadas e Transformadas, S.A.
• -Sonae – Indústria de Revestimentos, S.A.
• -Sonae – Serviços de Gestão, S.A.
• -Sonae International, Ltd.
• -Sonae Novobord (PTY) Ltd. (Chairman)
• -Sonae Tafibra Benelux, B.V.
• -Sonae Tafibra UK, Ltd.
• -Sonae UK, Ltd.
• -Spanboard Products, Ltd.
• -Tableros de Fibras, S.A. (Chairman)
• -Tableros Tradema, SL
• -Tafiber – Tableros de Fibras Ibéricos, SL
• -Tafibra South Africa (PTY) Ltd. (Chairman)
• -Tafibrás Participações S.A. (Chairman)
• -Tafisa Brasil S.A. (Chairman)
• -Tafisa France S.A. (Chairman)
• -Tafisa UK, Ltd.
• -Taiber – Tableros Aglomerados Ibéricos, SL
• -Tarkett Agepan Laminate Flooring, SCS (Chairman)
• -Tecnologias del Medio Ambiente, S.A.

Rui Manuel Gonçalves Correia:

• -173509 Canada, INC.
• -Agepan Tarkett Laminate Park GmbH & Co. Kg
• -Agloma – Sociedade Industrial de Madeira Aglomerada, S.A.
• -Agloma Investimentos, SGPS, S.A.
• -Aserraderos de Cuellar, S.A.
• -Ecociclo – Energia e Ambiente, S.A.
• -Ecociclo II- Energias, S.A.
• -Euromegantic Ltée
• -Euroresinas - Industrias Quimicas, S.A.
• -GHP GmbH
• -Glunz AG
• -Glunz UK Holdings, Ltd.
• -Imoplamac – Gestão de Imóveis, S.A.
• -Isoroy SAS
• -Maiequipa – Gestão Florestal, S.A.
• -Megantic, B.V.
• -Movelpartes – Componentes para a Indústria do Mobiliário, S.A.
• -Poliface North America Inc.
• -Racionalización y Manufacturas Forestales, S.A.
• -SC - Consultadoria de Gestão, S.A.
• -SIAF - Imobiliária, S.A.
• -Sociedade de Iniciativa e Aproveitamentos Florestais – Energia, S.A.
• -Somit - Imobiliária, S.A.
• -Somit – Sociedade de Madeiras Industrializadas e Transformadas, S.A.
• -Sonae – Indústria de Revestimentos, S.A.

• -Sonae – Serviços de Gestão, S.A.

• • Sonae Indústria – Produção e Comercialização de Derivados de Madeira, S.A.
• -Sonae Novobord (PTY) Ltd.
• -Tableros de Fibras, S.A.
• -Tafibra South Africa (PTY) Ltd.
• -Tafisa France S.A.
• -Tafisa UK, Ltd.
• -Tarkett Agepan Laminate Flooring, SCS
• -Tecnologias del Medio Ambiente, S.A.

Christophe Chambonnet:

• -Agepan Tarkett Laminate Park GmbH & Co. Kg
• -Glunz AG
• -Tavapan, S.A.

José António Comesaña Portela:

• Agloma Sociedade Industrial de Madeira Aglomerada, S.A.
• Agloma Investimentos, SGPS, S.A.
• Aserraderos de Cuellar, S.A. (Chairman)
• Compañia de Industrias y Negocios, S.A.
• Ecociclo Energia e Ambiente, S.A.
• Imoplamac Gestão de Imóveis, S.A.
• Maiequipa Gestão Florestal, S.A.
• Racionalización y Manufacturas Forestales, S.A.
• SCS Beheer, B.V.
• Serradora Boix, SL
• SIAF Imobiliária, S.A.
• Sociedade de Iniciativa e Aproveitamentos Florestais Energia, S.A.
• Somit Imobiliária, S.A.
• Somit Sociedade de Madeiras Industrializadas e Transformadas, S.A.
• Sonae Serviços de Gestão, S.A.
• Tableros de Fibras, S.A.
• Tableros Tradema, SL
• Tafiber, Tableros de Fibras Ibéricos, SL
• Tafibrás Participações, S.A. (Chairman)
• Tafisa Brasil, S.A. (Chairman)
• Taiber, Tableros Aglomerados Ibéricos, SL
• Tecmasa Reciclados de Andalucia
• Tecnologias del Medio Ambiente, S.A. (Chairman)

Louis Maurice Brassard:

• 173509 Canada, Inc.
• Euromegantic Ltée
• Isoroy SAS
• Sonae Novobord (PTY) Ltd.
• Tafibra South Africa (PTY) Ltd.
• Tafisa France S.A.

19. Other Positions formerly held by Sonae Indústria Directors:

During the past five years, Belmiro de Azevedo, Carlos Bianchi de Aguiar, Christian Schwarz, Rui Correia, Jose Antonio Comesaña, Christophe Chambonnet and Paulo Azevedo have also been Directors at various other Efanor/Sonae Group companies.

Within the same period, the following Directors also held directorships at the following companies outside to the Efanor/Sonae Group:

Per Otto Knuts:

• Stora Feldmühle AG
• FPB Holding AG

Knut Thomas Alarik Nysten:

• MD Lang Papier GmbH
• Myllykoski Corporation

Appendices to the Management Report

Qualified Shareholdings

APPENDIX REGARDING ARTICLE 447 OF THE COMPANY LAW

		Acquisitions		Sales		Balance at 31.12.2007
	date	amount	average value	amount	average value	amount
Belmiro Mendes de Azevedo Efanor Investimentos, SGPS, SA (1) Sonae Indústria, SGPS, SA						49,999,997 1,010
Carlos Bianchi de Aguiar Sonae Indústria, SGPS, SA						720
Rui Manuel Gonçalves Correia Sonae Indústria, SGPS, SA Tableros de Fibras, SA Sales	18.05.2007			100	1.54	5,000 0
Duarte Paulo Teixeira de Azevedo Efanor Investimentos, SGPS, SA (1) Migracom,SGPS,SA (5) Increase in share capital Imparfin, SGPS, SA (6) Sales Sonae Indústria, SGPS,SA Sales	20.11.2007 23-07-2007 29.05.2007	20,000	76.45	150,000 39,949	25.75 9.8	1 69,996 0 223
Agostinho Conceição Guedes Sonae Indústria, SGPS,SA						2,520

						Balance at
		Acquisitions			Sales	31.12.2007
	date	amount	average value	amount	average value	amount
(1) Efanor Investimentos, SGPS, SA Sonae Indústria - SGPS, SA Pareuro, BV (2) Sonae Capital,SGPS, SA * (3)						44,674,706 20,000 82,350,553
(2) Pareuro, BV Sonae Capital, SGPS, SA * (3) Sonae Indústria, SGPS, SA						50,000,000 27,118,645
(3) Sonae Capital,SGPS, SA SC - SGPS, SA (4)						391,046,000
(4) SC,SGPS, SA Sonae Indústria, SGPS, SA						9,521,815
(5) Migracom,SGPS,SA Sonae Indústria, SGPS, SA Acquisition Sonae Capital,SGPS, SA* (3) Imparfim,SGPS,SA (6)	29.05.2007	39,949	9.80			39,949 161,250 150,000
Acquisition (6) Imparfin, SGPS, SA Sonae Indústria, SGPS, SA Sonae Capital, SGPS, SA * (3)	23.07.2007	150,000	25.75			278,324 513,159

(*) - number of shares resulting from the demerger process of Sonae, SGPS, SA by applying the attribution factor to the number of shares of Sonae, SGPS, SA held by Sonae Capital, SGPS, SA at 31 December 2007.

APPENDIX REGARDING ARTICLE 448 OF THE COMPANY LAW

	Number of shares at 31/12/07
Efanor Investimentos, SGPS, SA
Sonae Indústria,SGPS, SA	44,674,706
Pareuro, BV	20,000
Sonae Capital-SGPS, SA (*)	82,350,553
Pareuro, BV
Sonae Indústria, SGPS, SA	27,118,645
Sonae Capital-SGPS, SA (*)	50,000,000
Sonae Capital-SGPS, SA
SC, SGPS, SA	391,046,000
SC, SGPS, SA
Sonae Indústria,SGPS, SA	9,521,815

(*) - number of shares resulting from the demerger process of Sonae, SGPS, SA by applying the attribution factor to the number of shares of Sonae, SGPS, SA held by Sonae Capital, SGPS, SA at 31 December 2007.

QUALIFIED SHAREHOLDINGS

Complying with Article 8, no. 1, e) of the CMVM Regulation no. 04/2004

Shareholder	No. of shares	% Share Capital	% Voting rights
Efanor Investimentos, SGPS, S.A.	44,674,706	31.9105%	31.9105%
Pareuro, BV	27,118,645	19.3705%	19.3705%
SC, SGPS, SA	9,521,815	6.8013%	6.8013%
Maria Margarida CarvalhaisTeixeira de Azevedo	1,010	0.0007%	0.0007%
Nuno Miguel Teixeira de Azevedo	969	0.0007%	0.0007%
Duarte Paulo Teixeira de Azevedo	40,172	0.0287%	0.0287%
Maria Claudia Teixeira de Azevedo	23,186	0.0166%	0.0166%
Total allocation	81,380,503	58.1290%	58.1290%

Separate Financial Statements

Sonae Indústria-SGPS,SA

BALANCE SHEET AS AT 31 DECEMBER 2007 AND 31 DECEMBER 2006

(Amounts in Euros)

ASSETS	Notes	31.12.07	31.12.06
NON CURRENT ASSETS
Tangible assets	3	24,675	36,064
Intangible assets	4	19,731	29,019
Investment property		-	-
Investment property in progress Goodwill arising on consolidation		- -	- -
Investments in jointly controlled companies		-	-
Investments in associated companies	6	921,842,133	623,323,924
Investments held for sale	6	117,922	17,922
Deferred tax assets		9,247,624	3,047,624
Other non current assets	8	680,160,458	988,568,166
Total Non Current Assets		1,611,412,543	1,615,022,719
CURRENT ASSETS
Inventories		-	-
Trade debtors	9	442,702	776,381
Other debtors	9	1,319,589	379,419
Taxes and other contributions receivable	9	1,331,193	1,134,177
Other current assets	10	332,365	144,204
Derivatives instruments	20	136,807	-
Cash and cash equivalents	11	89,410,824	97,771,288
Total Current Assets		92,973,480	100,205,469
Non current assets held for sale		-	-
TOTAL ASSETS		1,704,386,023	1,715,228,189
SHAREHOLDER´S FUNDS AND LIABILITIES
SHAREHOLDER´S FUNDS:
Share Capital		700,000,000	700,000,000
Own shares Supplementary capital		- -	- -
Legal reserve		1,340,138	59,994
Revaluation reserve		-	-
Translation reserve		95,244	-
Other reserves		271,225,627	246,902,887
Retained earnings			-
Net profit (loss) for the period		21,190,023	25,602,884
Total Shareholder´s Funds	12	993,851,033	972,565,765
LIABILITIES:
NON CURRENT LIABILITIES
Bank loans - long term-net of short-term portion	13	75,625,000	21,875,000
Debenture loans - long term-net of short-term portion	13	431,336,457	530,273,929
Finance lease creditors - long term - net of short-term portion		-	-
Derivatives		-	-
Other loans		-	-
Obligations arising from pensions : defined benefit plans	14	238,079	56,427
Obligations arising from share based payments Other non current creditors		- -	- -
Deferred tax liabilities		-	-
Provisions		-	-
Total Non Current Liabilities		507,199,536	552,205,356
CURRENT LIABILITIES:
Current portion of long term bank loans	13	6,250,000	6,250,000
Bank loans - short term	13	-	60,950,000
Current portion of long term debenture loans Current portion of long term finance lease creditors	13	100,000,000 -	- -
Finance lease creditors		-	-
Derivatives		-	-
Other loans		-	-
Trade creditors	15	612,675	494,315
Other creditors	16	87,183,030	115,136,053
Taxes and other contributions payable	16	352,261	571,764
Other current liabilities	17	8,937,489	7,054,935
Obligations arising from share based payments		-	-
Obligations arising from pensions:defined benefit plans Provisions		- -	- -
Total Current Liabilities		203,335,454	190,457,068
Liabilities related to non current assets held for sale		-	-
TOTAL SHAREHOLDER´S FUNDS AND LIABILITIES		1,704,386,023	1,715,228,189

TOTAL SHAREHOLDER´S FUNDS AND LIABILITIES

Sonae Indústria-SGPS,SA

INCOME STATEMENT

FOR THE PERIOD ENDED 31 DECEMBER 2007 AND 2006

(Amounts in Euros)

	Notes	31.12.07	31.12.06
Operating Income:
Sales		-	-
Services rendered	23	2,796,587	3,049,812
Changes in fair value of investment property		-	-
Other operating income		739,368	126,223
Total operantig income		3,535,955	3,176,036
Operating Costs
Cost of sales		-	-
Changes in stock and work in progress		-	-
External supllies and services		(3,038,841)	(2,508,538)
Staff costs		(3,302,655)	(2,261,535)
Amortisation and depreciation		(28,716)	(31,849)
Provisions and impairment losses		(337,428)	-
Other operanting costs	24	(293,639)	(74,205,108)
Total operating costs		(7,001,279)	(79,007,030)
Operating profit/loss		(3,465,324)	(75,830,994)
Finantial profit / loss	25	11,995,281	13,822,300
Profit / loss from associated companies		-	-
Profit / loss from other investments		5,804,673	83,891,674
Profit / loss before tax		14,334,629	21,882,981
Income taxation	27	655,394	672,279
Deferred tax assets	27	6,200,000	3,047,624
Net Profit / loss from continuing operations		21,190,023	25,602,884
Profit / loss from discontinued operations
Net profit / loss for the períod		21,190,023	25,602,884

Sonae Indústria-SGPS,SA

STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED AT 31 DECEMBER 2007 AND 2006

(Amounts in Euros)

								Rese rves
							Lega l	Fair
		Shar e	Own	Shar e	Suple ment ary	Lega l	Reva luatio n	Valu e	Hedg ing	Othe r	Reta ined
	Note s	Capit al	Shar e	Prom iums	Capit al	Rese rve	Rese rve	Rese rve	Rese rve	Rese rves	Earn ings	Net P rofit / loss	Total
Balan ce at 1 Ja 2006 nuary		700,0 00,00 0	-	-	-	-		- -	-	245,9 20,75 0	(157, 749)	1,199 ,879	946,9 62,88 0
Apro priati on of prof its fro m 20 05:
Tran sfer t o leg al res erve		-	-	-	-	59,99 4	-	-	-	982,1 36	(1,04 2,130 )	-	-
Distri butio n div idend s		-	-	-	-	-	-	-	-		-	-	-
Tran sfer t o reta ined earni ngs										-	1,199 ,879	(1,19 9,879 )	-
Acqu isition / (dis l) of o hares posa wn s		-	-	-	-	-	-	-	-	-	-	-	-
Incre ase/ (decr ) in fa ir val ue of hedg ing fi nanti al ease
instru ment s net of ta xes		-	-	-	-	-	-	-	-	-	-	-	-
Defe rred t ted to incre ase / (dec ) in fa ir val ax co nnec rease ue
of he dging finan cial in strum ents		-	-	-	-	-	-	-	-	-	-	-	-
Incre ase / (dec ) in fa ir val ue of avai lable for sa le rease
inves tmen ts		-	-	-	-	-	-	-	-	-	-	-	-
Defe rred t ted to incre ase / (dec ) in fa ir val ax co nnec rease ue
of av ailab le for sale inve stme nt		-	-	-	-	-	-	-	-	-	-	-	-
(Los s) for Profit the p eriod ende d at 3 1 Dec cemb er 20 06		-	-	-	-	-		- -	-	-	-	25,60 2,884	25,60 2,884
Othe r		-	-	-	-	-	-	-	-	-	-	-	-
Balan ce at 31 D ber 2 006 ecem		700,0 00,00 0	-	-	-	59,99 4	-	-	-	246,9 02,88 7	-	25,60 2,884	972,5 65,76 5
Balan ce at 1 Ja 2007 nuary		700,0 00,00 0	-	-	-	59,99 4	-	-	-	246,9 02,88 7	-	25,60 2,884	972,5 65,76 5
Apro priati on of prof its fro m 20 06:
Tran sfer t o leg al res erve		-	-	-	-	-	-	-	-	25,60 2,884	(25,6 02,88 4)	-	-
Distri butio n div idend s		-	-	-	-	-	-	-	-		-	-	-
sfer t Tran o reta ined earni ngs										-	25,60 2,884	(25,6 4) 02,88	-
Acqu isition / (dis l) of o hares posa wn s		-	-	-	-	-	-	-	-	-	-	-	-
Incre ase/ (decr ) in fa ir val ue of hedg ing fi nanti al ease
instru ment s net of ta xes		-	-	-	-	-	-	-	-	-	-	-	-
Defe rred t ted to incre ase / (dec ) in fa ir val ax co nnec rease ue
of he finan dging cial in strum ents		-	-	-	-	-	-	-	-	-	-	-	-
Incre ase / (dec ) in fa ir val ue of avai lable for sa le rease
inves tmen ts		-	-	-	-	-	-	-	-	-	-	-	-
Defe rred t ted to incre ase / (dec ) in fa ir val ax co nnec rease ue
of av ailab le for sale inve stme nt		-	-	-	-	-	-	-	-	-	-	-	-
Profit (Los s) for the p eriod ende d at 3 1 Dec embe r 200 7		-	-	-	-	-		- -	-	-	-	21,19 0,023	21,19 0,023
Othe r			-	-	-	1,280 ,144	-	-	95,24 4	(1,28 0,144 )	-	-	95,24 4
Balan ce at 31 D ber 2 007 ecem		700,0 00,00 0	-	-	-	1,340 ,138	-	-	95,24 4	271,2 25,62 7	-	21,19 0,023	993,8 51,03 2

SONAE INDÚSTRIA,SGPS,S.A.

CASH FLOW STATEMENT

OPERATING ACTIVITIES	31.12.2007		31.12.2006
Cash receipts from trade debtors	3,130,284		2,651,272
Cash paid to trade creditors	2,790,801		2,451,890
Cash paid to employees	2,964,461		2,788,387
Operational Cash Flow	-2,624,978		-2,589,005
Corporate income tax paid / received Other cash receipts and payments relating to operating activities	-513,209 -159,118		1,150,058 431,818
Net cash flow from operating activities [1]		-2,270,887		-3,307,245
INVESTMENTS ACTIVITIES:
Cash receipts arising from:
Financial investments	42,578,805		46,085,197
Tangible assets	2,275		41
Intangible assets
Interest assets and similar income	5,174,487		2,631,747
Dividends	5,403,768	53,159,335	20,706,168	69,423,153
Cash payments owing to:
Financial investments	340,776,612		856,753
Tangible assets	4,935		11,737
Intangible assets	3,150	340,784,697		868,490
Increase / decrease in granted loans		-350,081,750		143,235,173
Net cash flow from investing activities [2]		62,456,387		-74,680,511
FINANCIAL ACTIVITIES
Cash receipts arising from:
Cash payments owing from:
Interest and similar costs	32,760,170		26,130,589
Dividends
Others		32,760,170		26,130,589
Increase / decrease in loans		-35,785,794		165,468,583
Net cash flow from financing activities [3]		-68,545,964		139,337,994
Net increase / decrease in cash and cash equivalents		-8,360,463		61,350,239
Cash and cash equivalents - opening balance		97,771,288		36,421,049
Cash and cash equivalents - close balance		89,410,825		97,771,288

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2007

(Amounts expressed in euros)

1. Introduction

SONAE INDÚSTRIA, SGPS, S.A. is based at Lugar do Espido, Via Norte,Apartado 1096, 4470-909 Maia, Portugal.

2. Main Accounting Policies

The main accounting policies adopted in preparing the accompanying financial statements are as follows:

2.1. Basis of Preparation

The accompanying financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) or by the former Standing Interpretations Committee (SIC), effective 1 January 2007.

International Financial Reporting Standard (IFRS7), effective for annual periods beginning on or after 1 January 2007, was applied for the first time on these financial statements.

The accompanying financial statements have been prepared from the books and accounting records of the company on a going concern basis, except for financial instruments that they are recorded at their fair value (Note 2.9).

2.2 Investments in Group and associated companies

Assets and liabilities of each Group company are measured at their fair value at the date of acquisition adjusted for acquisition related expenses. Financial investments in Group and

Associated Companies are tested for imparity when appropriate. If an impairment loss exists, it is recorded as a cost.

Revenues from financial investments (dividends received) are recorded on the Profit and Loss statement of the period in which distribution is decided and announced.

2.3 Tangible Assets

Tangible assets acquired up to 1 January 2004 (transition date to IFRS) are recorded at their deemed cost, which corresponds to their acquisition cost or revaluated acquisition cost, in accordance with generally accepted accounting principles in Portugal at that date, net of depreciation and accumulated impairment losses.

Tangible assets acquired after that date, are recorded at acquisition cost, net of depreciation and accumulated impairment losses.

Depreciation is calculated on a straight line basis, as from the date the asset is first used, over the expected useful life for each class of assets.

Depreciation rates used correspond to the following expected useful lives of the underlying assets:

	Years
Plant and Machinery	15
Fixtures and Fittings	4

Maintenance and repair costs related to tangible assets are recorded directly as expenses in the year they are incurred.

Tangible assets in progress represent fixed assets still under construction/development and are stated at acquisition cost net of impairment losses. These assets are depreciated from the date they are completed or start being used.

Gains or losses arising from the sale or write-off of tangible assets are determined as the difference between the sale price and the accounting net value at the sale/write-off date and are registered as Other Operational Income/ Other Operational Losses.

2.4 Intangible Assets

Intangible assets are stated at acquisition cost, net of depreciation and accumulated impairment losses. Intangible assets are only recognized if it is likely that they will generate future economic benefits, if they are controlled by the company and if their cost can be reliably measured.

Development expenses are recognized as an intangible asset if the company demonstrates technical feasibility and intention to complete the asset, ability to sell or use it and the probability that the asset will generate future economic benefits. Development expenses which do not fulfil these conditions are recorded as an expense in the period in which they are incurred.

Internal costs associated with maintenance and software development are recorded as an expense in the period in which they are incurred. Only costs directly attributable to projects for which the generation of future economic benefits is probable are capitalized as intangible assets.

Amortization is calculated on a straight line basis, as from the date the asset is first used, over the expected useful life which is normally 5 years.

2.5 Accounting for leases

When accounting for leases in which the company is the lessee, the lease contracts are classified as (i) a finance lease if the risks and rewards incidental to ownership lie with the lessee and (ii) as an operating lease if the risks and rewards incidental to ownership do not lie with the lessee.

A lease is classified as a financial or an operating lease dependent on the substance of the transaction rather than the form of the contract.

Lease payments within operating lease contracts are recognized as expenses on a straight line basis over the lease term.

2.6. Impairment of non-current assets, except for goodwill

Assets are assessed for impairment at the end of each year, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recorded on the income statement under Provisions and impairment losses.

The recoverable amount is the higher of an asset's fair value net of costs incurred on sale and its value in use. Fair value less sale related costs is the amount obtainable from the sale of an asset in an arm's length transaction less the costs of disposal. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if this is not possible, for the cash-generating unit to which the asset belongs.

Reversal of impairment losses recognized in prior years is only recorded when it is concluded that the impairment losses recognized for the asset no longer exist or have decreased. This analysis is performed whenever there is an indication that the impairment loss previously recognized has been reversed. The reversal is recorded on the income statement as Other Operational income. However, the increased carrying amount of an asset due to a reversal of an impairment loss is recognized to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognized for that asset in prior years.

2.7. Borrowing costs

Borrowing costs are recognized as an expense in the period in which they are incurred.

2.8. Provisions

Provisions are recognized when, and only when, the company has an obligation (legal or constructive) resulting from a past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of that obligation. Provisions are reviewed and adjusted at the balance sheet date to reflect the best estimate as of that date.

2.9. Financial Instruments

a) Investments

Investments are classified into the following categories:

• Investments measured at fair value through profit or loss
• Available-for-sale investments

Investments measured at fair value through profit or loss include the investments held for trading by de company to be sold within a short period of time. They are classified as current assets in the balance sheet.

Available-for-sale investments are stated as non current assets except if they are intended to be sold within the next 12 months as from the balance sheet date.

All purchases and sales of investments are recognized on the trade date, independently of the settlement date.

Investments are initially measured at cost, which is the fair value of the consideration paid for them, including transaction costs.

Available-for-sale investments and investments measured at fair value through profit or loss are subsequently carried at fair value, without any deduction for transaction costs which may be incurred on sale, by reference to their quoted market price at the balance sheet date. Investments in equity instruments that do not have a quoted market price and whose fair value cannot be reliably measured are stated at cost, less impairment losses.

Changes in the fair value of investments measured at fair value through profit or loss are included in the income statement for the period.

Gains or losses arising from a change in fair value of available-for-sale investments are recognized directly in equity, under Fair value reserve, included in Reserves and retained earnings until the investment is sold or otherwise disposed of, or until it is determined to be impaired, at which time the cumulative gain or loss previously recognized in equity is transferred to net profit or loss for the period.

b) Accounts receivable

Receivables are stated at net realizable value corresponding to their nominal value less impairment losses (recorded under the caption Impairment losses in accounts receivable).The impairment losses are recognized in "Impairment loss in costumers" The impairment losses are recorded when the company knows that will never receive the trade receivables.

The amount of the impairment is the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the financial assets original effective interest rate, which is deemed zero whenever payments are expected to be received over a one-year period.

The receivables are recorded as currents assets, except when its maturity is greater than twelve months from the balance sheet date, situation when they are classified as non-current assets.

c) Classification as equity or liability

Financial liabilities and equity instruments are classified and accounted for based on their contractual substance, independently from the legal form they assume.

d) Loans

Loans are recorded as liabilities at their nominal value, net of up-front fees and commissions related to the issuance of those instruments. Financial expenses are calculated based on the effective interest rate and are recorded in the income statement on an accruals basis, in accordance with the accounting policy defined in Note 2.13. The portion of the effective interest charge relating to up-front fees and commissions, if not paid in the period, is added to the book value of the loan.

e) Trade accounts payable

Accounts payable are stated at their nominal value.

f) Derivatives instruments

The company uses derivatives in the management of its financial risks, only to hedge such risks. Derivatives are not used by the company for trading purposes.

Derivatives classified as cash flow hedge instruments (Swaps) are used by the company mainly to hedge interest risks on loans obtained. Conditions established for these cash flow hedge instruments are identical to those of the corresponding loans in terms of base rates, calculation rules, rate setting dates and repayment schedules of the loans and for these reasons they qualify as perfect hedges. Inefficiencies that may arise are recorded on the Profit and Loss statement.

The company's criteria for classifying a derivative instrument as a cash flow hedge instrument include:

• The hedge transaction is expected to be highly effective in offsetting changes in cash flows attributable to the hedged risk;

• The effectiveness of the hedge can be reliably measured;

• There is adequate documentation of the hedging relationships at the inception of the hedge;

• The forecasted transaction that is being hedged is highly probable.

Cash flow hedge instruments used by the company are initially accounted for at cost and subsequently adjusted to their corresponding fair value. Changes in fair value of these cash flow hedge instruments are recorded in equity under the caption Hedging reserves, included in Reserves and retained earnings on the balance sheet, and then recognized in the income statement over the same period in which the hedged instrument affects income statement.

The fair value of these financial instruments is calculated with resource to derivative valuation software and was based on the present value, at balance sheet date, of future cash flows of both the fixed and variable legs of the derivative instrument.

Hedge accounting of derivative instruments is discontinued when the instrument matures or is sold. Whenever a derivative instrument can no longer be qualified as a hedging instrument, the fair value differences recorded in equity under the caption Hedging reserve are transferred to profit or loss of the period or to the carrying amount of the asset that resulted from the hedged forecast transaction. Subsequent changes in fair value are recorded in the income statement.

These derivative instruments over which no hedge accounting was applied are initially stated at cost, if any, and then adjusted to their fair value. Changes in fair value, calculated with resource to specific software, are accounted for as financial items on the profit and loss statement.

When embedded derivatives exist, they are accounted for as separate derivatives when the risks and the characteristics are not closely related to economic risks and characteristics of the host contract, and this is not stated at fair value. Gains and losses are taken through the profit and loss statement.

Additionally, the company also negotiates, in specific situations, interest derivatives in order to hedge fair values. In these cases, derivatives are stated at fair value through profit or loss. When the hedged instrument is not measured at fair value (i.e. loans which are recorded at amortized cost) the book value is adjusted by the amount which is effectively hedged through profit or loss.

Derivative instruments are stated on the balance sheet under Other non current assets, Other current assets, Other non current liabilities and Other current liabilities.

g) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash at banks, term deposits and other treasury applications which mature in less than three months and for which the risk of change in value is insignificant.

In the statement of cash flows, cash and equivalents also include bank overdrafts, which are included in the balance sheet item Borrowings.

2.10. Retirement benefit plans

As referred in Note 14, the company has an insurance policy for employees which, at the date of retirement (age 65) will pay an equivalent of 24 months salary. All employees hired prior to 31/12/94 are covered by this policy.

It is a Defined Benefits Plan in the form of an insurance policy, established with the "Fidelidade" insurance company.

2.11. Contingent assets and liabilities

Contingent liabilities are not recorded in the financial statements. Instead they are disclosed in the notes to the financial statements, unless the probability of a cash outflow is remote, in which case, no disclosure is made.

Contingent assets are not recorded in the financial statements but disclosed when future economic benefits are probable.

2.12. Income tax

Income tax for the year is determined based on the taxable income of the Company, considering the interim period profit and, when relevant, deferred taxation.

In 2007, Agloma – Soc.Ind.de Madeiras Aglomeradas,S.A was included in the Special Group Tax Regime that also includes the following companies: Euroresinas – Indústrias Quimicas,S.A., Sonae Indústria de Revestimentos,S.A., Ecociclo – Energia e Ambiente,S.A., Maiequipa – Gestão Florestal,S.A., Movelpartes – Componentes para a Industria de

Mobiliário,S.A. and Sonae Serviços de Gestão,S.A..Resoflex – Mobiliário e Equipamento de Gestão was exclued after the merger ocurred in December 2007.

Deferred taxes are calculated using the balance sheet liability method, reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are calculated and annually reviewed using the tax rates in place or announced and thereby expected to apply at the time the temporary differences are expected to reverse.

Deferred tax assets are recognised only when it is probable that sufficient taxable profits will be available against which the deferred tax assets can be used, or when taxable temporary differences are recognised and expected to reverse in the same period. At each balance sheet date a review is made of the deferred tax assets recognised, which are reduced whenever their future use is no longer likely.

Deferred tax assets and liabilities are recorded in the income statement, except if they relate to items directly recorded in equity. In these cases the corresponding deferred tax is recorded in equity.

2.13. Revenue recognition and accrual basis

Revenue from services rendered is recognised in the income statement taking into consideration the stage of completion of the transaction at the balance sheet date.

Dividends are recognised as income in the year they are attributed to shareholders.

Income and expenses are recorded in the year to which they relate, independently of the date of the corresponding payment or receipt. Income and expenses for which their real amount is not known are estimated.

Other current assets and Other current liabilities include income and expenses of the reporting year which will only be invoiced in the future. Those captions also include receipts and payments that have already occurred but will only correspond to income or expenses of future years, when they are to be recognised in the income statement.

2.14. Capital gains and losses

Capital gains and losses that result from the sale or write-off of tangible and intangible assets and of investments are presented on the profit and loss statement as the difference between the sale price and the net book value at date of sale or write-off, under the caption Other Operating Profits and Losses.

2.15. Balances and transactions expressed in foreign currencies

Exchange gains and losses arising from differences between historical exchange rates and those prevailing at the date of collection, payment or the date of the balance sheet, are recorded as income or expenses of the period, except for those related to non-monetary assets or liabilities, for which adjustments to fair value are directly recorded under equity.

2.16. Subsequent events

Events after the balance sheet date that provide additional information about conditions that existed at the balance sheet date (adjusting events), are reflected in the financial statements. Events after the balance sheet date that are non-adjusting events are disclosed in the notes when material.

2.17. Risk management

• a) Market Risk Management Policy
• i). Interest Rate Risk

As a result of the relevant portion of floating rate debt on Sonae Indústria Balance Sheet and the consequent cash flows related to interest payments, the company is exposed to interest rate risk, and it is particularly exposed to the risk of variation of Euro interest rates, as most of its floating rate debt is denominated in Euro.

As a general rule, Sonae Indústria,SGPS does not hedge its exposure to floating interest rates.

As an exception to its general rule, Sonae Indústria may engage into interest rates derivatives. If this is the case, the following is observed:

• Derivatives are not used for trading, profit making, or speculative purposes;

• The Company only engage in derivative transactions with Investment Grade Financial Institutions;

• Derivatives match exact periods, settlement dates and base interest rate of the underlying exposures;

• Maximum financial charges on the aggregate of the derivative and the underlying exposures are always known and limited on the inception of the hedging period;

• Quotes from at least two Financial Institutions are considered before closing any interest rate hedging deal.

ii) Other Price Risks

As at 31st December 2007, Sonae Indústria did not hold material investments classified as "available-for-sale".

b) Liquidity Risk Management Policy

Liquidity risk management in Sonae Indústria aims to ensure that the company is able to timely obtain the financing required to properly carry on its business activities, implement its strategy, and meet its payment obligations when due, while avoiding the need of having to obtain funding under unfavourable terms.

For this purpose, Liquidity management at the Group comprises:

• consistent financial planning and cash flow forecasting at country and consolidated levels with different time horizons (weekly, monthly, annual and business plan);

• diversification of financing sources;

• diversification of the maturities of the debt issued in order to avoid excessive concentration of debt repayments in short periods of time;

• arrangement of committed (and uncommitted) credit facilities, commercial paper programs, and other facilities (such as a Securitization of Receivables program) with relationship banks, ensuring the right balance between satisfactory liquidity and adequate commitment fees;

3. Tangible Assets

During the periods ended 31 December 2007 and 31 December 2006, movements in tangible assets, accumulated depreciation and impairment losses were as follows:

				Dez-07
	Land & Building	Plant & Machinery	Vehicles	Tools	Fixtures & Fittings	Other Tangible Assets	Tangible Assets in Progress	Total
Gross Value Opening Balance Mergers		38.299			126.461			164.760
Acquisitions Disposals							4.889	4.889
Transfers Exchange rate effect		2.349			2.540		-4.889
Closing Balance		40.647			129.001			169.648
Accumulated Depreciations & Imparment Losses
Opening Balance Mergers		14.326			114.370			128.695
Depreciations Disposals Transfers		9.782			6.496			16.278
Exchange rate effect
Closing Balance Net Value		24.107 16.540			120.866 8.135			144.973 24.675
				Dez-06
	Land & Building	Plant & Machinery	Vehicles	Tools	Fixtures & Fittings	Other Tangible Assets	Tangible Assets in Progress	Total
Gross Value
Opening Balance		29.923			130.459			160.382
Mergers Acquisitions							10.256	10.256
Disposals					3.998		1.880	5.878
Transfers		8.376					-8.376	0
Exchange rate effect
Closing Balance		38.299			126.461		0	164.759
Accumulated Depreciations & Imparment Losses
Opening Balance Mergers		5.928			107.355			113.282
Depreciations		8.398			11.013			19.411
Disposals					3.998			3.998
Transfers
Exchange rate effect
Closing Balance		14.326			114.370			128.695
Net Value		23.973			12.091			36.064

4. Intangible Assets

During the periods ended 31 December 2007 and 31 December 2006, movements in intangible assets, accumulated depreciation and impairment losses were as follows:

			Dez-07
	R&D Expenses	Patents, Royalties & Other Rights	Software	Other Intangible Assets	Intangible Assets in Progress	Total
Gross Value
Opening Balance	62 187					62 187
Mergers
Acquisitions Disposals					3 150	3 150
Transfers
Exchange rate effect
Closing Balance	62 187				3 150	65 337
Accumulated Depreciations & Imparment Losses
Opening Balance	33 168					33 168
Mergers
Depreciations	12 438					12 438
Disposals
Transfers Exchange rate effect
Closing Balance	45 606					45 606
Net Value	16.581	-	-	-	3.150	19.731
			Dez-06
	R&D Expenses	Patents, Royalties & Other Rights	Software	Other Intangible Assets	Intangible Assets in Progress	Total
Gross Value
Opening Balance	62 187					62 187
Mergers
Acquisitions
Disposals Transfers
Exchange rate effect
Closing Balance	62 187					62 187
Accumulated Depreciations & Imparment Losses
Opening Balance Mergers	20 730					20 730
Depreciations	12 438					12 438
Disposals Transfers
Exchange rate effect
Closing Balance	33 168					33 168
Net Value	29.019	-	-	-	-	29.019

5. Financial instruments

		Loans and	Assets at fair value through	Hedge	Available-for-sale		Assets out of scope of
	Note	receivables	profit or loss	derivatives	assets	Sub-total	IFRS 7	Total
31 December 2007
Non current assets
Available for sale investments	6				117 922	117 922		117 922
Other non current assets	8	680 160 458				680 160 458		680 160 458
Current assets
Customers	9	442 702				442 702		442 702
Other current debtors	9	700 032				700 032	619 557	1 319 589
Other current assets	10						332 365	332 365
Derivative instruments	20			136 807		136 807		136 807
Cash and cash equivalents	11	89 410 824				89 410 824		89 410 824
Total		770 714 016		136 807	117 922	770 968 745	951 922	771 920 667
31 December 2006
Non current assets
Available for sale investments	6				17 922	17 922		17 922
Other non current assets	8	988 568 166				988 568 166		988 568 166
Current assets
Customers	9	776 381				776 381		776 381
Other current debtors	9	7 970				7 970	371 449	379 419
Other current assets	10						144 204	144 204
Derivative instruments	20
Cash and cash equivalents	11	97 771 288				97 771 288		97 771 288
Total		1087 123 805			17 922	1087 141 727	515 653	1087 657 380
	Note	Liabilities at fair value through profit or loss	Hedge derivatives	Other financial Liabilities	Sub-total	Liabilities out of scope of IFRS 7	Total
31 December 2007
Non current liabilities
Bank loans - net of short term portion	13			75 625 000	75 625 000		75 625 000
Debentures - net of short term portion	13			431 336 457	431 336 457		431 336 457
Current assets
Bank loans	13			6 250 000	6 250 000		6 250 000
Debentures	13			100 000 000	100 000 000		100 000 000
Trade creditors	15			612 675	612 675		612 675
Other creditors	16			86 308 938	86 308 938	874 092	87 183 030
Other current liabilities	17					8 937 489	8 937 489
Total				700 133 070	700 133 070	9 811 581	709 944 651
31 December 2006
Non current liabilities Bank loans - net of short term portion	13			82 825 000	82 825 000		82 825 000
Debentures - net of short term portion	13			530 273 929	530 273 929		530 273 929
Current assets
Bank loans	13			6 250 000	6 250 000		6 250 000
Trade creditors	15			494 315	494 315		494 315
Other creditors	16			114 895 574	114 895 574	240 479	115 136 053
Other current liabilities	17					7 054 935	7 054 935
Total				734 738 818	734 738 818	7 295 414	742 034 232

6. Investments

At 31 December 2007 and 31 December 2006, details of investments were as follows:

	31.12.2007		31.12.2006
	Non Current	Current	Non Current	Current
Investment Group Companies
Opening Balance	634.824.394		754.797.511
Acquisition	341.106.989		156.753
Disposal	(42.588.781)		(120.129.870)
Closing Balance	933.342.602		634.824.394
Accumulated Imparement Losses	(11.500.469)		(11.500.469)
	921.842.133		623.323.924
Other financial aplications
Opening Balance	17.922		17.922
Acquisition	100.000		-
Disposal	-		-
Closing Balance	117.922		17.922
Derivate financial instruments
Opening Balance
Acquisition
Disposal
Closing Balance		136.807
		136.807
	921.960.055	136.807	623.341.846	-

The amount recognised as disposal of Investments in Group Companies relates to the liquidation of Sonae Espanha amounting to 9.976 euros and to the reduction in share capital of several group companies.

The investment in Agloma – Soc.Ind.de Madeira Aglomerada,S.A. was reduced by 24.908.450 euros;

The investment in Sonae Industria – Produção e Comercialização de Derivados de Madeira,S.A. was reduced by 843.300 euros;

The investment in Siaf Imobiliária,S.A. was reduced by 4.990 euros;

The investment in Sonae Industria de Revestimentos,S.A. was reduced by 16.822.065 euros.

The amount recognized during the period as acquisition under Investments in Group Companies is related to:

• The acquisition of 51% of share capital of Ipaper – Industria de Papeis Impregnados,S.A from Investalentejo, SGPS, SA for the amount of 24 900 euros and an additional increase in investment on this company to offset accumulated losses in. the amount of 100 000 euros.;

• Acquisition of 130.000 shares of Imoplamac – Gestão de Imóveis,S.A. amounting to 6.000.000 euros:

• Acquisition in the Madrid stock exchange of 32.482.393 shares of Tafisa – Tableros de Fibras,S.A. amounting to 50.022.885 euros;

Increase in capital share of Tafisa – Taberos de Fibras,S.A.: Sonae Industria,SGPS,S.A. subscribed for and fully paid up 184.608.252 shares amounting to 284.959.204 euros.

The amount recognized in the period as acquisitions under the item Other financial applications is related to the subscription for 20.000 participation units of INEGI in the amount of 100 000 euros.

Interest rate hedge derivatives of Sonae Industria 2005/2008 bonds ( note 2) were recorded at fair value.

The accumulated impairment losses relate to the investment in Agloma – Sociedade de Madeiras Aglomeradas,S.A., Maiequipa – Gestão Florestal,S.A. and Sonae Indústria Brasil.

At 31 December 2007, Sonae Industria,SGPS had the following holdings in Group and Associated Companies:

%	Acquisition	Shareholder´s	Net
Share	Value	Funds	Profit
		Dez-07	Dez-07
100,00%	5.838.525	6.876.648	603.506
100,00%	3.438.885	675.941
100,00%	8.180.114	6.692.989	642.179
99,98%	21.726.867	12.589.808	212.879
100,00%	6.000.000	1.063.415	237.075
100,00%	490.252	256.427
100,00%	2.000.000	3.066.355	141.540
20,00%	159.615	1.674.112	276.873
0,02%	25.142	6.372.570	3.067.998
96,63%	849.919.750	502.375.424	13.209.390
100,00%	631.267	1.087.119	391.297
0,02%	5.000	68.692.631	9.159.735
2,81%	3.025.625	80.636.527	20.287.431
0,20%	5.000	3.544.812	931.065
0,02%	10	4.598.269	445.634
100,00%	31.896.550	23.161.370
				29.577 a) -351 a) 1.034.648 a)

a) The values recorded for the holdings in Agloma, Maiequipa and Sonae Industria Brasil were estimated to be higher than their recoverable value, therefore the company recognized impairment charges on prior year's balance sheet under the heading Investments in associated companies (note 18).

b) The amounts stated as shareholders' funds and net profit of Sonae Indústria, PCDM, SA were prepared in accordance with IFRS/IAS;

c) Changes in the acquisition cost of Movelpartes – Componentes para a Indústria de Mobiliário, S.A. and Euroresinas – Indústrias Químicas, S.A. are due to the merger processes which took place in both companies during the period;

d) In 2007 several group companies reduced share capital by cancellation of shares: - Sonae Indústria de Revestimentos, S.A. reduced share capital by 16 825 200 euros, from previous 26 825 200 euros to 10 000 000 euros by means of cancellation of 3 365 040 shares owned by Sonae Indústria, SGPS, SA, with a face value of 5 euros;

• Agloma – Sociedade Industrial de Madeira Aglomerada, S.A. reduced share capital by 24 949 000 euros, from previous 25 000 000 euros to present 51 000 euros by means of cancellation of 8 110 treasury shares and 4 981 690 shares owned by Soane Indústria, SGPS, SA, with a face value of 5 euros.

• Siaf – Imobiliária, S.A. reduced share capital by 22 949 000 euros, from previous 23 000 000 euros to present 51 000 euros, by means of cancellation of 106 540 treasury shares, 4 482 262 shares owned by Tafiber, Tableros de Fibras Ibéricos, SL and 998 shares owned by Sonae Indústria, SGPS, SA, with a face value of 5 euros;

• Sonae Indústria – Produção e Comercialização de Derivados de Madeira, S.A. reduced share capital by 30 000 000 euros, from previous 48 868 700 euros to present 18 868 700 euros, by means of cancellation of 3 376 394 shares owned by Tafiber, Tableros de Fibras Ibéricos, SL, 2 454 946 shares owned by Somit Imobiliária, SA and 168 660 shares owned by Sonae Indústria, SGPS, SA, with a face value of 5 euros.

7. Deferred tax

Details of deferred tax asset at December 31, 2007 and December 31, 2006 were as follows:

Deferred tax assets
31.12.07	31.12.06
3.047.624	3.047.624
-	-
6.200.000	-
9.247.624	3.047.624
31.12.07	31.12.06
3.047.624	0
-	3.047.624
6.200.000	-
6.200.000	3.047.624
	3.047.624
	Deferred tax assets 9.247.624

8. Other Non Current Assets

Details of Other Non Current Assets at December 31, 2007 and December 31, 2006, were as follows:

	31.12.07	31.12.06
Loans Granted To Group Companies (Nota 2.2 e 22)	680 160 458	988 969 071
Other Loans Granted	0	0
Tax Recoverable	0	0
Other Non- Current Assets	0	0
	680 160 458	988 969 071
Accumulated Imparment Losses (Nota 18)		400 905
	680 160 458	988 568 166

Loans granted to Group companies have a medium and long term maturity and they yield interest at an average rate of 5,516%.

9. Trade and Other Current Debtors and State and Others Public Entities

At 31 December 2007 and 31 December 2006, details of Current Trade Debtors were as follows:

	31.12.07	31.12.06
Current Accounts	442 702	776 381
Bills Receivable	0	0
Doubtful Debtors	0	0
	442 702	776 381
Accumulated Imparment Losses	0	0
	442 702	776 381

At 31 December 2007 and 31 December 2006, detail of trade debtors maturities was as follows:

		Ageing of Trade Debtors
		31.12.2007	31.12.2006
Not Due		408.873	732.962
Due and not impaired
	0 - 30 days	33.829	43.419
	30 - 90 days	0	0
	+ 90 days	0	0
		33.829	43.419
Due and impaired
	0 - 90 days	0	0
	90 - 180 days	0	0
	180 - 360 days	0	0
	+ 360 days	0	0
		0	0
	Total	442.702	776.381

At 31 December 2007 and 31 December 2006, details of Other Current Trade Debtors and State and other public entities were as follows:

	31.12.07	31.12.06
State & Other Public Entities
Income Tax	1 025 846	960 725
Value Added Tax	305 348	173 452
Social Security Contribuitions
Others Debtors	619 557	371 449
Assets out of scope of IFRS7	1 950 751	1 505 626
Other Debtors	700.032	7.970
Financial instruments	700.032	7.970

At 31 December 2007 and 31 December 2006, Others Debtors matured as follows:

		Ageing of Other Debtors
		31.12.2007	31.12.2006
Not Due Due and not impaired		0	0
	0 - 30 days	700.032	7.970
	30 - 90 days	0	0
	+ 90 days	0	0
		700.032	7.970
Due and impaired
	0 - 90 days	0	0
	90 - 180 days	0	0
	180 - 360 days	0	0
	+ 360 days	0	0
		0	0
Total		700.032	7.970

10. Other Current Assets

Details of Other Current Assets at 31 December 2007 and 31 December 2006 were the following:

	31.12.07	31.12.06
Accrued Revenue	327 375	137 696
Deferred Costs	4 990	6 507
	332 365	144 204
Accumulated Impairment Losses	0	0
Assets out of scope of IFRS7	332 365	144 204

Other current assets mainly include interest due but not paid related to loans to group companies.

11. Cash and Cash equivalents

At 31 December 2007 and 31 December 2006 detail of Cash and cash equivalents was the following:

	31.12.07	31.12.06
Cash at Hand	1 192	957
Deposits	247 565	61 318 245
Treasury Apllications	89 162 066	36 452 086
Cash & Cash Equivalents - Balance Sheet	89 410 824	97 771 288
Bank Overdrafts	0	0
Cash & Cash Equivalents - Cash Flows Statement	89 410 824	97 771 288

Cash & equivalents comprises cash at hand, deposits, treasury applications and term deposits with less than three months maturity, and for which the risk of value change is insignificant.

The item Treasury applications is composed by a Cash Reserve of 18.481.066 euros related to the Group Securitization program, and by various financial operations with Group companies amounting to 70.681.600 euros.

12. Share Capital

On December 31, 2007, the share capital, fully underwritten and paid, is represented by 140.000.000 ordinary shares, not entitled to fixed income, with a face value of 5 euros.

The following entity had more than 20% of the subscribed capital on 31 December 2007:

Entity	%
Efanor Investimentos, SGPS, S. A.	31,9

13. Loans

At 31 December 2007 and 31 December 2006 Sonae Industria, SGPS, S.A had the following outstanding loans:

	31.12.07				31.12.06
		Reductions/Repayments	Nominal Value		Reductions/Repayments		Nominal Value
	Current	Non Current	Current	Non Current	Current	Non Current	Current	Non Current
Bank Loans	6 250 000	15 625 000	6 250 000	15 625 000	6 250 000	21 875 000	6 250 000	21 875 000
Debentures	100 000 000	431 336 457	100 000 000	435 000 000		530 273 929		535 000 000
Obligations Under Finance Leases
Other Loans		60 000 000		60 000 000		60 950 000		60 950 000
Bank Overdrafts
Hedge Derivatives
Gross Debt	106 250 000	506 961 457	106 250 000	510 625 000	6 250 000	613 098 929	6 250 000	617 825 000
Investments
Cash & Cash Equivalents - Balance Sheet	89 410 824		89 410 824		97 771 288		97 771 288
Net Debt	16 839 176	506 961 457	16 839 176	510 625 000	- 91 521 288	613 098 929	- 91 521 288	617 825 000
Total Net Debt		523 800 633	527 464 176		521 577 641			526 303 712

The loans have the following repayment schedule:

	31.12.07	31.12.06
2007		67 200 000
2008	106 250 000	106 250 000
2009	86 250 000	86 250 000
2010	191 250 000	156 250 000
2011	3 125 000	3 125 000
Após 2011	230 000 000	205 000 000
	616 875 000	624 075 000

At December 31, 2007, the contracted loans are summarized as follows:

a) Sonae Indústria 2004 bonds, issued on 15 October 2004, with a principal of 80.000.000 euros. Principal will be paid in a single bullet payment 5 years after issue date. Interest is calculated using Euribor 6 months plus 87.5 basis points and paid semi annually in arrears on 15 April and 15 October;

b) Sonae Indústria 2005/2013 bonds, issued on 31 March 2005, with a principal amount of 55.000.000 euros, and a bullet repayment 8 years after issue date. Interest is calculated using Euribor 6 months plus 87.5 basis points, paid semi annually in arrears on 31 March and 30 September;

c) Sonae Indústria 2005/2008 bonds, issued on 27 April 2005, with a principal amount of 100.000.000 euros and a bullet repayment 3 years after issue date. Interest is calculated using Euribor 6 months plus 100 basis points, paid semi annually in arrears on 27 April and October;

d) Sonae Indústria 2005/2010 bonds, issued on 27 April 2005, with a principal amount of 150.000.000 euros and a bullet repayment 5 years after issue date. Interest is calculated using Euribor 6 months plus 110 basis points, paid semi annually in arrears on 27 April and October.

e) During 1H05 a loan contracted by Sonae SGPS SA with the European Investment Bank, in the total amount of 50.000.000 euros, was transferred to Sonae Indústria SGPS, SA. The loan pays interest quarterly, at market rates, and will be redeemed in 16 consecutive and equal semi annual instalments, the first of which occurred on 30 June 2003. On 31 December 2007, the principal outstanding was 21 875 000 euros;

f) Sonae Indústria 2006/2014: 50.000.000 euros Bond issued on 28 March 2006, to be repaid in one payment at maturity in 8 years. Interest is calculated on EURIBOR 6 months plus 87.5 basis points and will be paid twice a year on 28 March and 28 September;

g) On 25 January 2006, Sonae Indústria signed a Commercial Paper agreement of up to 100.000.000 euros, with a number of financial institutions. The programme matures on 27 January 2016. At 31 December 2007, the balance was keep at 60.000.000 euros. Interest is calculated at the Euribor rate that matches the maturity of the issue.

h) Sonae Indústria 2006/2013 50.000.000 euros Bond issued on 3 July 2006, to be repaid in one payment at maturity in 7 years. The company has the option of total or partial repayment (by reduction of nominal value of bonds) from July 2011. Interest is calculated on EURIBOR 6 months plus 86 basis points and will be paid twice a year on 3 January and 3 July;

i) Sonae Indústria 2006/2014 (second issue) 50.000.000 euros Bond issued on 2 August 2006, to be repaid in one payment at maturity in 8 years. Interest is calculated on EURIBOR 6 months plus 80 basis points and will be paid twice a year on 2 February and 2 August;

14. Pension Fund Liabilities

Sonae Industria – Produção e Comercialização de Derivados de Madeira, S.A, has an insurance contract for employees under which they will receive at retirement age (65) the equivalent of 24 months salary. All employees hired up to 31/12/94 are covered by this contract, Sonae Indústria, SGPS, S.A. employees are also covered by this plan.

It is a Defined Benefits Plan in the form of an insurance contract, established with Fidelidade, an insurance company.

According to actuarial studies carried out by the fund manager, total liabilities for services provided, taking into account salary growth, amounted to 345.830 euros and the market value of the fund is 107.751 euros. The company had a provision of 238.079 euros.

The actuarial assumptions were as follows:

Pension Growth Rate:0% Forecasted Income Rate: 6% Expected Salary Growth Rate: 3% Technical Actuarial Rate: 4% Mortality Rate: TV 88/90

15. Trade Creditors

At 31 December 2007 and 31 December 2006 all amounts recorded under this item resulted from normal operations.

Trade creditors mature as follow:

	Maturity of Trade Creditors
	31.12.2007	31.12.2006
To be paid
< 90 days	612.675	494.315
90 - 180 days	0	0
> 180 days	0	0
	612.675	494.315

16. Other Creditors and State & Other Public Entities

	31.12.07	31.12.06
State & Other Public Entities
Income Tax	321 076	545 251
Social Security Contributions	31 106	26 463
Others	80	50
Liabilities out of scope of IFRS7	352 261	571 764
Other Creditors
Loans From Group Companies (Nota 22)	86 308 938	114 894 000
Fixed Assets Suplliers		47
Fornecedores Imobil. c/c CP		1 528
Others
Financial Instrumets	86.308.938	114.895.574
Others Creditors	874.092	240.479
Liabilities out of scope of IFRS7	874.092	240.479

At 31 December 2007 and 31 December 2006 details of this item were as follows:

The Company and its subsidiaries each year grant their employees that belong to the functional group Executive a compensation which is related to the value added in the period for the shareholders. This compensation will be paid after a three-year period if the employee is still in the Group.

This liability is stated on the balance sheet under Other creditors and is stated on the profit and loss statement under Personnel costs. If the employee ceases functions during the period over which payment of previously recognised liabilities is deferred, liabilities will be derecognised from the balance sheet against Personnel costs on the profit and loss statement.

17. Other Current Liabilities

At 31 December 2007 and 31 December 2006 this item had the following detail:

	31.12.07	31.12.06
Accrued Costs
Insurance	955	4 913
Holidays	198 427	235 673
Bonus	604 762	430 590
Interests	7 723 898	6 377 259
External Supllies & Services	409 447	6 500
Liabilities out of scope of IFRS7	8 937 489	7 054 935

18. Provisions & Accumulated Impairment Losses

Changes in provisions and accumulated impairment losses during the period ended December, 2007 were the following:

Description	Opening Balance	Increases	Utilisation	Reductions	Closing Balance
Accumulated Imparment Losses on Investments (Nota 6)	11 500 469	0	0	0	11 500 469
Accumulated Imparment Losses on Other Non Current Assets (Nota 8 )	400 905	0	0	400 905	0
	11 901 374	0	0	400 905	11 500 469

Impairment losses are offset against the corresponding asset. Reduction of impairment losses on Other non current assets is related to the loan to the subsidiary Sonae Espanha which was written off when this company was liquidated.

19. Operational Leases

In 2007, charges for operational lease payments in the amount of 126.293 euros were recorded on the profit and loss statement. In 2006, operational lease payments amounted to 64.722 euros.

In addition, at the balance sheet date, the company had irrevocable operational lease contracts with the following payment maturities:

	31.12.07	31.12.06
2007		47.925
2008	119.364	34.638
2009	95.659	14.750
2010	73.908
After 2010	23.595
	312.526	97.313

20. Financial Derivatives

The fair value of derivative instruments are stated as follows:

	Other Current Assets
	31.12.07	31.12.06
Derivatives at fair value throught reserves	136.807	-
	136.807	-

Maturity of derivatives instruments

	2008	2009
Derivatives at fair value throught reserves	145.789	-8.982
	145.789	-8.982

Derivatives at fair value through reserves

They are made up by interest rate derivatives, mainly swaps, which consist on cash flow hedges. Changes in the fair value of these financial instruments were recorded under Hedging reserves, included in the caption Reserves and retained earned on the balance sheet, for the amount of 95 244 euros. No amounts related to instruments which matured in 2007 were transferred from reserves to profit or loss

21. Financial Risks

The liquidity risk described on note 2.17., b), related to gross debt referred to on note 13, can be analysed as follows:

	Maturity of gross debt (Nota 13)	Interest	Total
2008	106.250.000	29.811.566	136.061.566
2009	86.250.000	27.960.684	114.210.684
2010	191.250.000	23.833.519	215.083.519
2011	3.125.000	14.173.572	17.298.572
2012	25.000.000	20.290.579	45.290.579
2013	105.000.000	11.196.331	116.196.331
>2013	100.000.000	4.030.133	104.030.133
	616.875.000	131.296.384	748.171.384

The calculation of interest in the previous table was based on interest rates at 31 December 2007 applicable to each item of debt. Gross debt maturing in 2008 includes scheduled repayment of debt along with the repayment of debt as at end 2007 maturing within less than one year (although some credit limits might be rolled over).

		Total amount of hired credit limit
	31.12.2007	31.12.2006
Commitment < 1 ano	30.000.000	45.000.000
Commitment > 1 ano	60.000.000
	Total 90.000.000	45.000.000

The analysis of interest rate risk, described on note 2.17., a), i), consisted on calculating the way net profit before tax would had been impacted if there would had been a change of +0.75 or -0.75 percentage points in actual 2007 interest rates.

		Sensitivity Analysis
			2007			2006
		"Notional"	Effect in profit and loss (Euros)		"Notional"	Effect in profit and loss (Euros)
			0,75%	-0,75%		0,75%	-0,75%
Gross Debt
	Group	-86.308.938	-755.406	755.406	-114.894.000	-968.949	968.949
	External	-616.875.000	-3.395.064	3.395.064	-624.075.000	-2.910.827	2.910.827
		-703.183.938	-4.150.470	4.150.470	-738.969.000	-3.879.775	3.879.775
Financial Investments
		50.000.000
		50.000.000
Loans to Group Companies		750.841.458	6.477.405	-6.477.405	1.005.278.071	6.905.815	-6.905.815
Treasury Applications		18.481.066	219.151	-219.151	20.143.086	158.528	-158.528
		769.322.524	6.696.556	-6.696.556	1.025.421.157	7.064.342	-7.064.342
			2.546.086	-2.546.086		3.184.567	-3.184.567

22. Related Parties

Balances and transactions with related parties may be summarized as follows:

Transactions	Sales & Services Rendered		Purchases & Acquired Services		Interest Income		Interest Expenses
	31.12.07	31.12.06	31.12.07	31.12.06	31.12.07	31.12.06	31.12.07	31.12.06
Parent Company & Group Companies - Agloma	2 793 177 1 636	3 039 763 1 842	1 249 426	1 155 071	45 354 962	38 284 683	4 082 404 1 391 897	3 752 982 1 509 905
- Agloma Investimentos					2 426		255 966
- Ecociclo	8 213	10 339			75 488	91 062
- Ecociclo II					16 198
- Euroresinas	13 164	25 020			1 551 802	935 816	217	112
- Glunz	597 079	639 200
- Imoplamac	3 273	3 684		13 174	151 687
- SInd-pcdm	347 088	461 485	473 886	78 429	2 515 101	949 401		532
- Isoroy	434 878	532 866
	3 273	4 073			60 555	51 158
- Maiequipa
- Movelpartes	4 049	7 285					75 033	24 990
- Resoflex	1 500	9 254					24 294	22 254
- Sc - Consultadoria			17 332	980
- Siaf Imobiliária	3 273	3 684			134 411		331 435	454 418
- Siaf Energia	1 985	2 318			239 450	244 619	13 494
- Sonae Industria Revestimentos - Socelpac	22 086	13 777	8 379	142 931	138 707		325 627	570 191 502 230
- Somit	1 636	1 842			1 396
- Somit Imobiliária	1 636	1 842					1 606 839	660 921
- Solinca			28 262	54 852
- Sonae ,sgps			363 896	319 582
- Sonae Uk	205 523	165 033	8 051	238 761
- Spanboard		33 500		4 220
- Sonae Serviços de Gestão	7 855	4 123	55 001	44 588		193	57 602	7 429
- Sonae Tafisa Benelux		8 102
- Tafisa Canadá	398 545	374 279		887
- Tafisa Espanha	377 991	528 599	826	16 559
- Tafisa South Africa	358 496	206 451		488
- Tavapan		1 165
- Taiber					40 467 740	36 012 434
- Tradema				1 261
- Imosede			21 028	8 650
- Novis			4 015	3 441
- Mch				20 701
- Praedium III			9 018	5 269
- Optimus			16 759	15 679
- Mds			6 960
- Digitmarket			376
- Smp			180
- Cronosaude			1 370
- Efanor			66 000
- Sonae Imobiliária III			918
- Box Lines				2 845
- Equador			167 168	181 774
Associated Companies	3 409	10 047
- Ipaper	3 409	10 047

Remuneration of the Board of Directors of the Company is detailed as follows:

Total fixed salaries: 701.839
Total bonus:	261.902
	963.741

Balance	Accounts Receivable		Accounts Payable		Loans
					Obtained		Granted
	31.12.06	31.12.06	31.12.06	31.12.06	31.12.06	31.12.06	31.12.06	31.12.06
Parent Company & Group Companies	442 702	776 382	490 872	212 892	86 308 938	114 894 000	750 841 458	988 969 071
- Agloma	165	186			23 170 000	47 951 000
- Agloma Investimentos					11 167 938
- Ecociclo	901	1 043					741 966	312 486
- Ecociclo II							1 597 000
- Euroresinas	1 650	14 302					31 568 916	20 934 190
- Sonae Espanha								400 905
- Glunz	81 569	158 736
- Imoplamac	330	371					3 353 000
- SInd-pcdm	66 952	109 615	28 238	21 353			68 414 822	18 031 073
- Isoroy	60 918	137 508
- Maiequipa	330	411					1 189 193	846 406
- Movelpartes	558	2 698			2 965 000	1 403 000
- Resoflex		929				918 000
- Sc - Consultadoria			5 244	2 702
- Siaf Imobiliária	330	743				16 658 000	4 732 489
- Siaf Energia	199	234			1 065 000		4 214 405	4 006 905
- Sonae Industria Revestimentos	2 294	4 879	865	1 260		16 708 000	5 185 000
- Socelpac
- Somit	165	186
- Somit Imobiliária	165	186			46 161 000	30 067 000
- Solinca			2 850	49 284
- Sonae ,sgps			50 447	90 647
- Sonae Uk	48 939	49 156		3 155
- Spanboard		2 792		4 220
- Sonae Serviços de Gestão	842	416	5 546	4 496	1 780 000	1 189 000
- Sonae Tafibra Benelux		675
- Tafisa Canadá	84 551	113 002
- Tafisa Espanha	56 177	112 645	345 822	140
- Tafisa South Africa	29 875	53 011		483
- Taiber							629 844 667	944 337 106
- Tradema	5 794	10 621
- Tavapan		97
- Efanor			19 965
- Novis			837	491
- Optimus			2 102	2 182
- Box Lines				3 442
			1 005
- Praedium III - Mds				109
				5 019
- Mch			27 952	23 909
- Equador
Associated Companies		1 940						100 000
- Ipaper		1 940						100 000

23. Services Rendered

Details of Services Rendered are presented below:

Services Rendered	31.12.07	31.12.06
Internal Cmmunication	299.356	351.121
Consolidation & Management Control		129.390
Legal	142.723	165.792
Health & security	100.267	454.438
Administration	1.369.875	1.254.827
Engineering	491.349	272.951
Others	393.018	421.292
TOTAL	2.796.587	3.049.812

24. Other Operational Costs

	31.12.07	31.12.06
Taxes	226.039	96.453
Losses in disposal financial investments	9.976	74.044.674
Others	57.624	63.981
	293.639	74.205.108

25. Financial Results

	31.12.07	31.12.06
Financial Expenses:
Interest Expenses	34 656 778	24 422 525
Exchange Losses	1 165	5 652
Others	464 328	637 381
Financial Results	11 995 281	13 822 301
	47 117 552	38 887 859
Financial Revenues
Interest Income	47 075 615	38 882 239
Exchange Gains	374	5 620
Others	41.563	-
	47.117.552	38.887.859

26. Gains on Investments

The company received dividends of 5.403.768 euros from the following companies:

Agloma – Soc.Ind.Madeira Aglomerada,S.A.	1.068.190 €
Sonae Industria de Revestimentos,S.A.	784.404 €
Sonae Industria – Produção e Comercialização Derivados Madeira,S.A.	323.488 €
Imoplamac – Gestão de Imóveis,S.A.	1.465.724 €
Maiequipa – Gestão Florestal,S.A.	115.908 €
Euroresinas – Industrias Químicas,S.A.	1.646.054 €

27. Income Taxation

The income and deferred taxation recorded at 31 December 2007 and 2006 were:

	31.12.07	31.12.06
Income taxation	(655.394)	(672.279)
Deferred taxation	(6.200.000)	(3.047.624)
	(6.855.394)	(3.719.903)

The income taxation includes tax savings from the tax perimeter of 774.932 euros along with income tax on specific items and local taxes in the amount of 148 629 euros.

A deferred tax asset related to tax losses carried forward amounting to 6 200 000 euros was recognised as a result of expected taxable net profits to take place over the next periods.

Reconciliation of Earnings before taxes with taxes for the year may be detailed as follows:

	31.12.07	31.12.06
Net income/(loss) before tax Income taxation	14.334.629 3.583.657	21.882.981 6.017.820
Non deductible incomes Non-deductible provisions (e.g. restructuring and other risks & charges) Non deductible assets adjustments (e.g.debt and inventory) Capital gains/losses on the sale of fixed assets		20.538.643
Dividends	1.350.942	5.694.196
Others	13.358	11.886
	1.364.300	26.244.725
Non deductible losses Non-deductible provisions (e.g. restructuring and other risks & charges) Capital gains/losses on the sale of fixed assets	446.319
Others		158.469
Income taxation	446.319 2.665.676	158.469 -20.068.435
Utilisation of prior year losses without deferred tax assets	-2.665.676
Deferred tax assets recognized	-6.200.000	-3.047.624
Current tax - prior year adjustment	148.620	12.179
Fiscal saving from fiscal perimeter	-774.932	-690.794
Excess/insufficiency of valuation	-29.082	6.335
	-6.855.394	-3.719.904

28. Earnings Per Share

Earnings per share, excluding the effect of discontinued operations, were calculated as follows:

	31.12.07	31.12.06
Net Profit
Net Profit Considered for Basic EPS Calculation (Periodic Net Profit)	21 190 023	25 602 884
Net Profit Considered for Diluted EPS Calculation	21 190 023	25 602 884
Number of Shares
Weighted Average Number of Shares for Basic EPS Calculation	140 000 000	140 000 000
Weighted Average Number of Shares for Diluted EPS Calculation	140 000 000	140 000 000
Net Profit Per Share	0,151	0,183

During 2007, no effect from discontinued operations was recorded.

29. Financial Statements Approval

These financial statements were approved by the Board of Directors and authorised for issuance on 5 March 2008.

Consolidated Financial Statements

CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2007 AND 2006

(Amounts expressed in Euros)

ASSETS Notes 31.12.07 31.12.06 NON CURRENT ASSETS: Tangible assets 12 1 342 821 348 1 234 559 373 100 086 856 51 105 176 Goodwill 9, 15 10 836 148 510 166 Intangible assets 13 8 270 032 8 410 688 Investment properties 14 3 414 225 2 985 727 Associated undertakings and non consolidated undertakings 11 Investment available for sale 11 1 602 518 1 409 864 Deferred tax asset 16 48 605 752 60 007 308 Other non current assets 17 1 632 731 1 284 956 Total non current assets 1 517 269 610 1 360 273 258 CURRENT ASSETS: Inventories 18 257 715 327 213 971 609 Trade debtors 19 260 140 025 290 208 628 Other current debtors 20 21 839 466 23 056 810 State and other public entities 22 30 154 245 18 785 614 14 778 315 55 603 220 Other current assets 21 4 769 781 Investments 11 65 883 548 189 289 129 Cash and cash equivalents 23 Total current assets 650 510 926 795 684 791 TOTAL ASSETS 2 167 780 536 2 155 958 049 SHAREHOLDERS' FUNDS, MINORITY INTERESTS AND LIABILITIES Share capital 24 700 000 000 700 000 000 Legal Reserve 24 1 340 138 59 994 Reserves and retained earnings 24 - 184 863 692 - 212 328 870 Net profit (loss) for the period - Group 78 612 713 32 311 969 Total shareholders' funds 595 089 159 520 043 093 Minority interests 25 33 742 417 28 100 792 628 831 576 548 143 885 LIABILITIES: NON CURRENT LIABILITIES: Long term bank loans - net of short-term portion 26 187 543 520 134 085 215 Non convertible debentures 26 431 336 457 530 273 929 Long term Finance Lease Creditors - net of short-term portion 26 51 100 454 41 897 417 Other loans 26 34 506 252 95 856 073 Pensions liabilities 30 22 935 627 24 984 515 Other non current liabilities 29 124 751 509 111 284 832 Deferred tax liabilities 16 69 968 231 57 635 679 Provisions 34 40 061 308 35 380 272 Total non current liabilities 962 203 358 1 031 397 932 CURRENT LIABILITIES: Short term portion of long term bank loans 26 38 874 701 39 959 384 Short term bank loans 26 16 730 627 97 996 052 Short term portion of long term non convertible debentures 26 100 000 000 Short term portion of Finance Lease Creditors 26 3 465 063 2 483 759 Other loans 26 504 957 411 087 Trade creditors 31 226 228 686 258 824 535 Taxes and Other Contributions Payable 32 29 638 918 27 741 983 Other current liabilities 33 155 539 419 141 969 877 Provisions 34 5 763 231 7 029 555 Total current liabilities 576 745 602 576 416 232		IFRS
	SHAREHOLDERS' FUNDS:
	TOTAL SHAREHOLDERS' FUNDS
	TOTAL SHAREHOLDERS' FUNDS AND LIABILITIES	2 167 780 536	2 155 958 049

The notes are an integral part of the consolidated financial statements

The Board of Directors

CONSOLIDATED PROFIT AND LOSS ACCOUNT

FOR THE PERIODS ENDED AT 31 DECEMBER 2007 AND 2006

(Amounts expressed in Euros)

			IFRS
	Notes	31.12.07	2º. Sem. 07	31.12.06
Operating revenues
Sales	42	2 056 119 499	984 040 028	1 692 333 903
Services rendered	42	10 165 769	4 766 196	6 981 465
Negative goodwill	9	685 753	426 059	19,565,777
Other operating revenues	3, 37	128 937 845	79 704 301	119 474 376
Total operating revenues		2 195 908 866	1 068 936 584	1 838 355 521
Operating costs
Cost of sales		1 016 305 254	466 719 378	847 678 904
(Increase) / decrease in production		- 17 237 755	- 13 415 234	- 7 873 782
External supplies and services		524 439 121	255 620 804	463 165 266
Staff expenses		290 460 537	147 946 144	244 471 593
Depreciation and amortisation	12, 13	116 805 491	59 424 555	107 971 033
Provisions and impairment losses	3, 11, 12, 13, 34	32 970 366	26 426 596	35 088 175
Other operating costs	38	27 131 640	18 174 281	27 795 419
Total operating costs		1 990 874 654	960 896 524	1 718 296 608
Operational profit / (loss)		205 034 212	108 040 060	120 058 913
Financial profits	39	60 585 335	30 469 084	51 525 288
Financial costs	39	141 126 430	71 896 551	119 302 883
Gains and losses in associated companies		127 321	- 28 884	- 5 205
Gains and losses in investments		82 274	1 199	72 557
Current profit / (loss)		124 702 712	66 584 908	52 348 670
Taxation	40	35 272 535	24 724 403	18 702 317
Consolidated net profit / (loss) afer taxation		89 430 177	41 860 505	33 646 353
Profit / (loss) after taxation from descontinued operations		-	-	-
Consolidated net profit / (loss) for the period		89 430 177	41 860 505	33 646 353
Attributable to:
Equity Holders of Sonae Industria		78 612 713	33 695 656	32 311 969
Minority Interests		10 817 464	8 164 849	1 334 384
Profit/(Loss) per share
Excluding discontinued operations:
Basic	41	0.5615	0.2407	0.2308
Diluted	41	0.5615	0.2407	0.2308
From discontinued operations:
Basic	41	-	-	-
Diluted	41	-	-	-

The notes are an integral part of the consolidated financial statements

The board of directors

CONSOLIDATED MOVEMENTS IN SHAREHOLDERS' FUNDS

FOR THE PERIODS ENDED AT 31 DECEMBER 2007 AND 2006

(Amounts expressed in Euros)

		Att ribu
			Res and erv es			Min orit y	Tot al
		Sha re	ine d reta	Net		Inte ts res	Equ ity
	Not es	Ca pita l	nin ear gs	fit/( s) Pro Los	Tot al
Bal Jan t 1 y 2 006 anc e a s a uar		700 00 0 0 00	- 25 2 8 48 817	36 383 59 1	483 53 4 7 74	44 960 79 3	528 49 5 5 67
Ap pria tion of sol ida ted ult of 2 005 pro con res :
Tra nsf o le gal and ain ed nin er t ret res erv es ear gs			36 383 59 1	- 3 6 3 83 591
Ch in c ion ang es onv ers res erv es Ch in f air val of h edg e fi cia l in stru nts ang es ue nan me			- 12 74 6 6 92		- 12 74 6 6 92	- 1 785 92 5	- 14 53 2 6 17
, f ta ion et o xat n			1 2 25 189		1 2 25 189	11 8 7 90	1 3 43 979
Inv nt i olid d c ies est ate me n c ons om pan Co Pr ofit for						- 1 356 36 4	- 1 356 36 4
lida ted /(Lo ss) the riod nso pe end ed at 3 1 D mb er 2 006 ece				32 311 96 9	32 311 96 9	1 3 34 384	33 646 35 3
Oth ers			15 717 85 3		15 717 85 3	- 1 5 1 70 886	54 6 9 67
Bal s 3 1 D mb er 2 006 anc e a ece		700 00 0 0 00	- 2 12 268 87 6	32 311 96 9	520 04 3 0 93	28 100 79 2	548 14 3 8 85
Bal t 1 Jan y 2 007 anc e a s a uar		700 00 0 0 00	-21 2 2 68 876	32 311 96 9	520 04 3 0 93	28 100 79 2	548 14 3 8 85
Ap pria tion of sol ida ted ult of 2 006 pro con res : nsf Tra er t o le gal and ret ain ed nin res erv es ear gs			32 311 96 9	-32 31 1 9 69
Ch in c ion ang es onv ers res erv es			- 5 10 935		- 5 10 935	2 0 33 338	1 5 22 403
Ch in f air val of h edg e fi cia l in stru nts ang es ue nan me , net of tax atio n			95 24 4		95 244		95 244
Inv nt i olid d c ies est ate me n c ons om pan						-7 3 14 987	-7 3 14 987
Co ofit /(Lo ss) for lida ted Pr the riod nso pe
end ed at 3 1 D mb er 2 007 ece				78 612 71 3	78 612 71 3	10 817 46 4	89 430 17 7
Oth ers			-3 150 95 6		-3 150 95 6	105 81 0	-3 0 45 146
Bal s 3 1 D mb er 2 007 anc e a ece		700 00 0 0 00	- 18 3 5 23 554	78 612 71 3	595 08 9 1 59	33 742 41 7	628 83 1 5 76

The notes are an integral part of the consolidated financial statements

The board of directors

CONSOLIDATED CASH FLOWS STATEMENTS

FOR THE PERIODS ENDED AT 31 DECEMBER 2007 AND 2006

(Amounts expressed in Euros)

Receipts from trade debtors 2 038 157 176 1 673 124 336 Payments to trade creditors 1 585 970 495 1 273 235 770 Payments to staff 287 617 251 237 782 110 Net cash flow from operations 164 569 430 162 106 456 Payment / (receipt) of corporate income tax 20 759 615 9 659 575 Other receipts / payments relating to operating activities 67 877 118 40 058 705 211 686 933 192 505 586 Net cash flow from operating activities (1) INVESTMENT ACTIVITIES Cash receipts arising from: 27 299 494 81 944 704 Investments 62 294 623 1 147 225 Tangible and intangible assets 123 537 96 883 Loans granted 812 476 7 164 502 Investment subventions 4 525 330 4 764 495 Interest and similar charges 82 275 55 815 Dividends 95 137 735 95 173 624 Cash Payments arising from: 86 755 123 177 535 737 Investments 186 585 168 99 993 857 Tangible and intangible assets 1 265 810 329 270 Loans granted 274 606 101 277 858 864 - 179 468 366 - 182 685 240 Net cash used in investment activities (2) FINANCING ACTIVITIES Cash receipts arising from: 13 987 945 210 570 425 Loans obtained 30 090 000 Set up of jointly controlled companies 670 639 Increase in share capital 14 658 584 240 660 425 Cash Payments arising from: 130 306 896 123 741 992 Loans obtained 50 026 830 45 597 123 Interest and similar charges 3 162 143 5 893 556 Finance leases - repayment of principal Others 3 026 246 186 522 115 175 232 671 - 171 863 531 65 427 754 Net cash used in financing activities (3) - 139 644 964 75 248 100 Net increase in cash and cash equivalents (4) = (1) + (2) + (3) - 83 378 3 007 610 Effect of foreign exchange rate 188 716 342 116 475 852 Cash and cash equivalents at the beginning of the period 23 49 154 756 188 716 342 Cash and cash equivalents at the end of the period 23	OPERATING ACTIVITIES	Notes	31.12.07	31.12.06

The notes are an integral part of the consolidated financial statements

The board of directors

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2007 (Amounts expressed in euros)

1. INTRODUCTION

SONAE INDÚSTRIA, SGPS, SA, whose head-office is at Lugar do Espido, Via Norte, Apartado 1096, 4470-909 Maia, Portugal, is the parent company of a group of companies as detailed in notes 5 to 7 ("Group"). The Group's operations and business segments are described in Note 42.

2. MAIN ACCOUNTING POLICIES

The main accounting policies adopted in preparing the accompanying consolidated financial statements are as follows:

2.1. Basis of Preparation

These consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (IFRS) and the International Accounting Standards (IAS) issued by the International Accounting Standards Board (IASB) and with Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) or by the former Standing Interpretations Committee (SIC), effective 1 January 2007.

International Financial Reporting Standard (IFRS) 7, effective for annual periods beginning on or after 1 January 2007, was applied for the first time on these consolidated financial statements.

In the year ended 31 December 2007 the following Interpretations issued in 2006 became applicable: IFRIC 7 – Applying the restatement approach under IAS 29 Financial reporting in

hyperinflationary economies; IFRIC 8 – Scope of IFRS 2, IFRIC 9 – Reassessment of embedded derivatives and IFRIC 10 – Interim financial reporting and impairment. These Interpretations had no relevant impact on the Group's accounting policies.

At 31 December 2007 the following standards and interpretations had been issued: IAS 23 – Borrowing costs (as revised in 2007), IFRS 8 – Operating segments, IFRIC 13 – Customer loyalty programmes, IFRIC 11 IFRS 2 – Group and treasury shares transactions and IFRIC 12 - Service concession arrangements. As these standards and interpretations were not compulsorily applicable for the year beginning 1 January 2007, the Group decided not to apply them. No relevant effects are estimated for future consolidated financial statements from the application of these standards and interpretations, except for IFRS 8 whose application is mandatory for annual periods beginning on or after 1 January 2009.

The accompanying consolidated financial statements have been prepared from the books and accounting records of the companies included in the consolidation (Note 5) on a going concern basis and under the historical cost convention, except for financial instruments which are stated at fair value (Note 2.12).

2.2. Consolidation Principles

The consolidation methods adopted by the Group are as follows:

a) Investments in Group companies

Investments in companies in which the Group owns, directly or indirectly, more than 50% of the voting rights at Shareholders' General Meetings and is able to establish financial and operational policies so as to benefit from its activities (definition of control normally used by the Group), are included in the consolidated financial statements using the full consolidation method. Equity and net profit attributable to minority shareholders are shown separately, under the caption Minority interests, in the consolidated balance sheet and in the consolidated income statement, respectively. Companies included in the consolidated financial statements are listed in Note 5.

When losses attributable to minority interests exceed the minority interest in the equity of the Group company, the excess, and any further losses attributable to minority interests, are charged against the equity holders of Sonae except to the extent that minority shareholders have a binding obligation and are able to cover such losses. If the Group company subsequently reports profits, such profits are allocated to the equity holders of Sonae until the minority's share of losses previously absorbed by the equity holders of Sonae has been recovered.

Assets and liabilities of each Group company are measured at their fair value at the date of acquisition. Any excess of the cost of acquisition over the Group's interest in the fair value of the identifiable net assets acquired is recognised as goodwill (Note 2.2.d)). Any excess of the Group's share in the fair value of the identifiable net assets acquired over cost, is recognised as income in profit or loss for the period of acquisition, after reassessment of the estimated fair value. Minority interests include their proportion of the fair value of net identifiable assets and liabilities recognised on acquisition of Group companies.

The results of Group companies acquired or disposed of during the period are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Adjustments to the financial statements of Group companies are performed, whenever necessary, in order to adapt accounting policies to those used by the Group. All intragroup transactions, balances, income and expenses and distributed dividends are eliminated on consolidation.

b) Financial Investments in jointly owned companies

Financial investments in joint ventures (companies that the Group holds together with third parties and in which joint control is established in a shareholders' agreement) are accounted for through the proportionate consolidation method, as from the date the joint control is acquired or established. Under this method, the assets, liabilities, profits and losses of these companies are incorporated proportionately to the control attributable and line by line, in the Group's financial statements in appendix.

The excess value resulting from the difference between the acquisition cost and the fair value of the assets and liabilities of the joint-venture at the time of acquisition is recorded as goodwill (Note 2.2.d). If the difference between the acquisition cost and the fair value of the assets at the time of acquisition is negative, it is recognized as income in the period.

Transactions, balances and dividends between the companies are eliminated proportionately to the control attributable to the Group.

Joint-venture companies are detailed in note 6.

c) Investments in associated companies

Investments in associated companies (companies where the Group exercises significant influence but does not establish financial and operational policies – usually corresponding to holdings between 20% and 50% in a company's share capital) are accounted for in accordance with the equity method.

Under the equity method, investments are recorded at cost, adjusted by the amount corresponding to the Group's share of changes in equity (including net profit) of associated companies and are offset against losses or profits in the period and against dividends received.

Any excess of the cost of acquisition over the Group's share in the fair value of the identifiable net assets acquired is recognised as goodwill (Note 2.2.d). Any excess of the Group's share in the fair value of the identifiable net assets acquired over cost is recognised as income in the profit or loss for the period of acquisition, in results related to associated companies.

An assessment of investments in associated companies is performed when there is an indication that the asset might be impaired. Any impairment loss is disclosed in the income statement. Impairment losses recorded in prior years that are no longer justifiable, are reversed.

When the Group's share of losses exceeds the carrying amount of the investment, the investment is reported at nil value and recognition of losses is discontinued, unless the Group is committed beyond the value of its investment.

The Group's share in unrealized gains arising from transactions with associated companies is eliminated. Unrealized losses are eliminated, but only to the extent that there is no evidence of impairment of the asset transferred.

Investments in associated companies are disclosed in Note 7.

d) Goodwill

The excess of the cost of acquisition of investments in Group, jointly controlled and associated companies over the Group's share in the fair value of the assets and liabilities of those companies at the date of acquisition is shown as Goodwill (Note 15). The excess of the cost of acquisition of investments in foreign companies over the fair value of their identifiable assets and liabilities at the date of acquisition is calculated using the

functional currency of each of those companies. Translation to the Group's currency (Euro) is made using the closing exchange rate. Exchange rate differences arising from this translation are disclosed in Reserves and retained earnings.

Goodwill is not amortised, but it is subject to impairment tests on an annual basis. Impairment losses identified in the period are disclosed in the income statement under Provisions and impairment losses, and cannot be reversed.

Any excess of the Group's share in the fair value of identifiable assets and liabilities in group, jointly controlled and associated companies over cost, is recognised as income in the profit or loss for the period, at the date of acquisition, after reassessment of the fair value of the identifiable assets and liabilities acquired.

e) Translation of financial statements of foreign companies

Assets and liabilities denominated in foreign currencies in the individual financial statements of foreign companies are translated to Euro using exchange rates at the balance sheet date. Profit and loss and cash flows are converted to Euro using the average exchange rate for the period. Exchange rate differences originated after 1 January 2004 are recorded as equity under Translation reserves in Reserves and retained earnings. Exchange rate differences that originated prior to 1 January 2004 (date of transition to IFRS) were written-off through Retained earnings

Goodwill and fair value adjustments arising from the acquisition of foreign companies are recorded as assets and liabilities of those companies and translated to Euro using exchange rates at the balance sheet date.

Whenever a foreign company is sold, accumulated exchange rate differences are recorded in the income statement as a gain or loss on the disposal.

Exchange rates used on translation of foreign group, jointly controlled and associated companies are listed below:

		31.12.07		31.12.06
	Closing	Average		Closing	Average
	rate	rate		rate	rate
Great Britain Pound	0.7333	0.6840		0.6715	0.6816
Brazilian Real	2.5963	2.6612		2.8118	2.7279
South African Rand	10.0301	9.6544		9.2123	8.4381
Canadian Dollar	1.4449	1.4657		1.5281	1.4227
American Dollar	1.4721	1.3684		1.3170	1.2544
Swiss Franc	1.6547	1.6425		1.6069	1.5727
Polish Zloty	3.5935	3.7814		3.8310	3.8942

Source: Bloomberg

2.3. Tangible assets

Tangible assets acquired up to 1 January 2004 (transition date to IFRS) are recorded at acquisition cost, or revaluated acquisition cost, in accordance with generally accepted accounting principles in Portugal until that date, net of depreciation and accumulated impairment losses.

Tangible assets acquired after that date are recorded at acquisition cost, net of depreciation and accumulated impairment losses.

Depreciation is calculated on a straight line basis, as from the date the asset is first used, over the expected useful life for each class of assets.

Depreciation rates used correspond to the following estimated useful lives of underlying assets:

	Years
Buildings	50
Plant & Machinery	15
Vehicles	5
Tools	4
Fixtures and Fittings	10
Other Tangible Assets	5

Maintenance and repair costs related to tangible assets are recorded directly as expenses in the year they are incurred.

Tangible assets in progress represent fixed assets still under construction/development and are stated at acquisition cost net of impairment losses. These assets are depreciated from the date they are completed or start being used.

2.4. Intangible assets

Intangible assets are stated at acquisition cost, net of depreciation and accumulated impairment losses. Intangible assets are only recognised if it is probable that future economic benefits will flow from them, if they are controlled by the Group and if their cost can be reliably measured.

Expenditure on research associated with new technical know-how is recognised as an expense recorded in the income statement when it is incurred.

Expenditure on development is recognised as an intangible asset if the Group demonstrates the technical feasibility and its intention to complete the asset, its ability to sell or use it and the probability that the asset will generate future economic benefits. Expenditure on development, which does not fulfil these conditions, is recorded as an expense in the period in which it is incurred.

Internal costs associated with maintenance and development of software are recorded as an expense in the period in which they are incurred. Only costs directly attributable to projects for which the generation of future economic benefits is probable are capitalized as intangible assets.

Amortisation is calculated on a straight line basis, as from the date the asset is first used, over the expected useful life which normally is 5 years.

Brands and patents with indefinite useful lives are not amortised, but are subject to impairment tests on an annual basis.

2.5. Accounting for leases

Accounting for leases where the Group is the lessee

Lease contracts are classified as (i) a finance lease if the risks and rewards incidental to ownership lie with the lessee and (ii) as an operating lease if the risks and rewards incidental to ownership do not lie with the lessee.

Whether a lease is classified as a finance or an operating lease depends on the substance of the transaction rather than the form of the contract.

Tangible assets acquired through finance lease contracts are recorded as assets and corresponding obligations as liabilities in the balance sheet. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. Both the finance charge and the depreciation expense for depreciable assets are taken to the income statement in the period in which they are incurred.

Lease payments under operating lease contracts are recognised as an expense on a straight line basis over the lease term.

2.6. Investment Properties

Investment properties are recorded at acquisition cost net of depreciation and of accumulated impairment losses. These are registered as a result of land and buildings used in discontinued operations and that the Group had established lease contracts with third parties.

2.7. Government grants

Government grants are recorded at fair value when there is reasonable assurance that they will be received and that the Group will comply with the conditions attaching to them.

Grants received as compensation for expenses, namely grants for personnel training, are recognised as income in the same period as the relevant expense.

Grants related to depreciable assets are disclosed as Other non-current liabilities and are recognised as income on a straight line basis over the expected useful lives of those assets.

2.8. Impairment of non-current assets, except for goodwill and deferred taxes

Assets are assessed for impairment at each balance sheet date whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in the income statement under Provisions and impairment losses.

The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm's length transaction less the costs of disposal. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if this is not possible, for the cash-generating unit to which the asset belongs.

Reversal of impairment losses recognised in prior years is only recorded when it is concluded that the impairment losses recognised for the asset no longer exist or have decreased. This analysis is performed whenever there is an indication that the impairment loss previously recognised has been reversed. The reversal is recorded in the income statement as Other Operational income. However, the increased carrying amount of an asset due to a reversal of an impairment loss is recognised to the extent it does not exceed

the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised for that asset in prior years.

2.9. Borrowing costs

Borrowing costs are normally recognised as an expense in the period in which they are incurred.

Borrowing costs directly attributable to the acquisition, construction or production of tangible and intangible assets are capitalised as part of the cost of the qualifying asset. Borrowing costs are capitalised from the time of preparation of the activities to construct or develop the asset up to the time the production or construction is complete or when asset development is interrupted. Any income earned on funds temporarily invested pending their expenditure on the qualifying asset, is deducted from the borrowing costs that qualify for capitalisation.

2.10. Inventories

Consumer goods and raw materials are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis.

Finished goods and work in progress are stated at the lower of the weighted average production cost or net realisable value. Production cost includes cost of raw materials, labour costs and overheads (including depreciation of production equipment based on normal levels of activity).

Net realisable value is the estimated selling price less estimated costs of completion and estimated costs necessary to make the sale.

Differences between cost and net realisable value, if negative, are shown as operating expenses under Cost of sales or Changes in stocks of finished goods and work in progress, depending on whether they refer to consumer goods and raw materials or finished goods and work in progress.

2.11. Provisions

Provisions are recognised when, and only when, the Group has an obligation (legal or constructive) resulting from a past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of that obligation. Provisions are reviewed and adjusted at the balance sheet date to reflect the best estimate as of that date.

Restructuring provisions are recorded by the Group whenever a formal and detailed restructuring plan exists and that plan has been communicated to the parties involved.

2.12. Financial Instruments

a) Investments

Investments are classified into the following categories:

• Investments measured at fair value through profit or loss;
• Available-for-sale investments;
• Held-to-maturity investments.

Investments measured at fair value through profit or loss include the investments held for trading acquired by the Group to be sold within a short period of time. They are classified as current assets on the consolidated balance sheet.

The Group classifies as available-for-sale the investments which cannot be regarded as investments measured at fair value through profit or loss or as held-to-maturity investments.

Available-for-sale investments are stated as non current assets except if they are intended to be sold within the next 12 months as from the balance sheet date.

Held-to-maturity investments are classified as non-current assets unless they mature within 12 months of the balance sheet date. Investments classified as held to maturity have defined maturities and the Group has the intention and ability to hold them until the maturity date.

All purchases and sales of investments are recognised on the trade date, independently of the settlement date.

Investments are initially measured at cost, which is the fair value of the consideration paid for them, including transaction costs.

Available-for-sale investments and investments measured at fair value through profit or loss are subsequently carried at fair value, without any deduction for transaction costs which may be incurred on sale, by reference to their quoted market price at the balance sheet date. Investments in equity instruments that do not have a quoted market price and whose fair value cannot be reliably measured, are stated at cost, less impairment losses.

Changes in the fair value of investments measured at fair value through profit or loss are included in the consolidated income statement for the period.

Gains or losses arising from a change in fair value of available-for-sale investments are recognised directly in equity, under Fair value reserve, included in Reserves and retained earnings until the investment is sold or otherwise disposed of, or until it is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is transferred to net profit or loss for the period.

b) Accounts receivable

Receivables are stated at net realisable value, corresponding to their nominal value less impairment losses, recorded under the caption Impairment losses in accounts receivable, and thereby reflect their net realisable value.

Impairment losses are recognised following objective evidence that part or the whole amount receivable will not be paid as long as the loss can be reliably estimated. For that, each group company takes into consideration market information showing that the customer is insolvent along with historical data of overdue and not paid amounts receivable.

Recognised impairment losses correspond to the difference between the carrying amount and the present value of the estimated cash flows, discounted at the original effective interest rate, which is nil whenever payment is expected to occur within less than twelve months.

Accounts receivable are stated in the consolidated balance sheet as current assets unless they mature after twelve months as from the balance sheet date, in which case they will be stated as non current assets.

c) Classification as equity or liability

Financial liabilities and equity instruments are classified and accounted for based on their contractual substance, independently from the legal form they assume.

d) Loans

Loans are recorded as liabilities at their nominal value, net of up-front fees and commissions related to the issuance of those instruments. Financial expenses are calculated based on the effective interest rate and are recorded in the income statement on an accruals basis, in accordance with the accounting policy defined in

Note 2.9. The portion of the effective interest charge relating to up-front fees and commissions, if not paid in the period, is added to the book value of the loan.

e) Trade accounts payable

Accounts payable are stated at their nominal value.

f) Derivatives

The Group uses derivatives in the management of its financial risks, only to hedge such risks. Derivatives are not used by the Group for trading purposes.

Derivatives classified as cash flow hedge instruments (Swaps) are used by the Group mainly to hedge interest risks on loans obtained. Conditions established for these cash flow hedge instruments are identical to those of the corresponding loans in terms of base rates, calculation rules, rate setting dates and repayment schedules of the loans and for these reasons they qualify as perfect hedges. Inefficiencies that may arise are recorded on the Profit and Loss statement.

The Group's criteria for classifying a derivative instrument as a cash flow hedge instrument include:

• the hedge transaction is expected to be highly effective in offsetting changes in cash flows attributable to the hedged risk;
• the effectiveness of the hedge can be reliably measured;
• there is adequate documentation of the hedging relationships at the inception of the hedge;
• the forecasted transaction that is being hedged is highly probable.

Cash flow hedge instruments used by the Group are initially accounted for at cost and subsequently adjusted to their corresponding fair value. Changes in fair value of these cash flow hedge instruments are recorded in equity under the caption Hedging reserves, included in Reserves and retained earnings on the consolidated balance sheet, and then recognised in the income statement over the same period in which the hedged instrument affects income statement.

The fair value of these financial instruments is calculated with resource to derivative valuation software and was based on the present value, at balance sheet date, of future cash flows of both the fixed and variable legs of the derivative instrument.

Hedge accounting of derivative instruments is discontinued when the instrument matures or is sold. Whenever a derivative instrument can no longer be qualified as a hedging instrument, the fair value differences recorded in equity under the caption Hedging reserve are transferred to profit or loss of the period or to the carrying amount of the asset that resulted from the hedged forecast transaction. Subsequent changes in fair value are recorded in the income statement.

In some cases derivative instruments were negotiated to hedge cash flows mainly related to exchange rate hedges (forwards) of loans and trade transactions which do not consist in perfect hedging relations therefore not qualifying for hedge accounting. Notwithstanding, they significantly mitigate the effect on loans and accounts receivable denominated in foreign currencies of changes in exchange rates which the Group intends to hedge.

These derivative instruments over which no hedge accounting was applied are initially stated at cost, if any, and then adjusted to their fair value. Changes in fair value, calculated with resource to specific software, are accounted for as financial items on the consolidated profit and loss statement.

When embedded derivatives exist, they are accounted for as separate derivatives when the risks and the characteristics are not closely related to economic risks and characteristics of the host contract, and this is not stated at fair value. Gains and losses are taken through the profit and loss statement.

Additionally, the Group also negotiates, in specific situations, interest derivatives in order to hedge fair values. In these cases, derivatives are stated at fair value through profit or loss. When the hedged instrument is not measured at fair value (i.e. loans which are recorded at amortised cost) the book value is adjusted by the amount which is effectively hedged through profit or loss.

Derivative instruments are stated on the consolidated balance sheet under Other non current assets, Other current assets, Other non current liabilities and Other current liabilities.

g) Equity instruments

Equity instruments are those that represent a residual interest on the Group's net assets and are recorded at the amount received, net of costs incurred with their issuance.

h) Own shares

Own shares are recorded at acquisition cost as a reduction to equity. Gains or losses arising from sales of own shares are recorded in Reserves and retained earnings under Other reserves.

i) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash at banks, term deposits and other treasury applications which mature in less than three months and are subject to insignificant risk of change in value.

In the consolidated statement of cash flows, cash and cash equivalents also include bank overdrafts, which are included in the balance sheet caption Borrowings.

2.13. Post-employment benefits

As referred to in Note 30, some of the Group companies are committed to provide benefits to their employees when they get retired. These commitments are considered as defined benefit plans, and autonomous pension funds have been established to this effect:

In order to estimate its obligations, the Group obtains, annually, actuarial valuations according to the "Projected Unit Credit Method". When unrecognised cumulative actuarial gains and losses exceed the greater of 10% of the present value of the defined benefit obligation and 10% of the fair value of plan assets, these are recorded as income or expense on a straight line basis over the average remaining service period of the participants.

Past service costs are recorded immediately when benefits are being paid. Otherwise, these are recorded on a straight line basis over the average remaining service period until they vest (generally, the date of retirement if they still work for the Group).

Obligations recorded at the closing balance sheet date reflect the present value of obligations for defined benefits adjusted for actuarial gains or losses and/or past service costs not recorded, net of the fair value of net assets of the pension fund.

2.14. Contingent assets and liabilities

Contingent liabilities are not recorded in the consolidated financial statements. Instead they are disclosed in the notes to the financial statements, unless the probability of a cash outflow is remote, in which case, no disclosure is made.

Contingent assets are not recorded in the consolidated financial statements but disclosed when future economic benefits are probable.

2.15. Income tax

Income tax for the period is calculated based on the taxable income of companies included on consolidation and considers deferred taxation.

Current income tax is determined based on the taxable income of companies included on consolidation and includes deferred taxation, in accordance with the tax rules in force in the respective country of incorporation, considering the period profit and using the estimated effective average annual income tax rate.

Deferred taxes are calculated using the balance sheet liability method, reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are calculated and annually remeasured using the tax rates that have been enacted or substantively enacted and therefore are expected to apply in the periods when the temporary differences are expected to reverse.

Deferred tax assets are recognised only when it is probable that sufficient taxable profits will be available against which the deferred tax assets can be used, or when taxable temporary differences are recognised and expected to reverse in the same period. At each balance sheet date a review is made of the deferred tax assets recognised, which are reduced whenever their future use is no longer probable

Deferred tax assets and liabilities are recorded in the income statement, except if they relate to items directly recorded in equity. In these cases the corresponding deferred tax is recorded in equity.

2.16. Revenue recognition and accrual basis

Revenue from the sale of goods is recognised in the income statement when the risks and benefits have been transferred to the buyer and the amount of the revenue can be measured

reasonably. Sales are recognised net of sales taxes and discounts and other expenses arising from the sale, and are measured as the fair value of the amount received or receivable.

Revenue from services rendered is recognised in the income statement taking into consideration the stage of completion of the transaction at the balance sheet date.

Dividends are recognised as income in the year they are attributed to the shareholders.

Income and expenses are recorded in the year to which they relate, independently of the date of the corresponding payment or receipt. Income and expenses for which their real amount is not known are estimated.

Other current assets and Other current liabilities include income and expenses of the reporting year which will only be invoiced in the future. Those captions also include receipts and payments that have already occurred but will only correspond to income or expenses of future years, when they will be recognised in the income statement.

2.17. Capital gains and losses

Capital gains and losses that result from the sale or write-off of tangible and intangible assets and of investments are presented on the profit and loss statement as the difference between the sale price and the net book value at date of sale or write-off, under the caption Other Operating Profits and Losses.

2.18. Balances and transactions expressed in foreign currencies

Transactions in currencies other than the Euro, are translated to Euro using the exchange rate as at the transaction date.

At each balance sheet date, all monetary assets and liabilities expressed in foreign currencies are translated to the functional currency of each foreign company at the exchange rates as at that date. All non-monetary assets and liabilities recorded at fair value and stated in foreign currencies are converted to the functional currency of each company, using the exchange rate at the date the fair value was determined.

Exchange gains and losses arising from differences between historical exchange rates and those prevailing at the date of collection, payment or the date of the balance sheet, are recorded as income or expenses of the period, except for those related to non-monetary assets or liabilities, for which adjustments to fair value are directly recorded under equity.

When the Group wants to reduce currency exposure, it negotiates hedging currency derivatives (Note 2.12.f)).

2.19. Liability for medium and long term incentives plan

The Company and its subsidiaries each year grant their employees that belong to the functional group Executive a compensation which is related to the value added in the period for the shareholders. This compensation will be paid after a three-year period if the employee is still in the Group.

This liability is stated on the consolidated balance sheet under Other non current liabilities and Other current liabilities and is stated on the consolidated profit and loss statement under Personnel costs. If the employee ceases functions during the period over which payment of previously recognised liabilities is deferred, liabilities will be derecognised from the balance sheet against Personnel costs on the profit and loss statement.

2.20. Subsequent events

Events after the balance sheet date that provide additional information about conditions that existed at the balance sheet date (adjusting events), are reflected in the consolidated financial statements. Events after the balance sheet date that are non-adjusting events are disclosed in the notes when material.

2.21. Segment information

All business and geographic segments of the Group are identified annually.

Information regarding business and geographic segments identified is included in Note 42.

2.22. Judgments and estimations

The most significant estimations included in these consolidated financial statements refer to:

• a) Useful lives of tangible and intangible assets;
• b) Impairment tests on goodwill and other tangible and intangible assets;
• c) Adjustments to assets, namely fair value adjustments;
• d) Calculation of provisions and pensions liabilities.

These estimations were based on the best available information at the date these consolidated financial statements were prepared and were based on the knowledge and experience of present and past events. Notwithstanding, some situations may occur in future

periods which were not included in present estimations as they were not foreseeable. Changes to estimations after these financial statements date will be prospectively corrected through profit or loss in accordance with IAS 8.

Main estimations and assumptions relating to future events included in these consolidated financial statements are described in the correspondent notes.

2.23. Risk management

a) Credit Risk Management Policy

i) Receivables (Customers)

Sonae Indústria Credit Risk derives mainly from its account receivables items related with its operating activity.

The main objective of Sonae Indústria Credit Risk Management is to guarantee the effective collection of its operating receivables according to the negotiated payment terms.

In order to mitigate Credit Risk related with potential Customers default on payment of outstanding receivables, Group companies exposed to this type of risk:

• have in place credit management procedures and credit approval processes;

• have local (per country) credit risk committees;

• have dedicated teams for credit management and collections;

• establish and review credit limits for their Customers, monitoring effective exposure to their Customers;

• have insurance policies in place where viable;

• make use of credit rating agencies, if needed;

• make use of legal proceedings in order to recover bad debt, if applicable

ii) Other financial assets other than Trade debtors

In addition to its operating activities, Group companies have financial assets, related mainly with its activities involving Financial Institutions, such as cash deposits, financial investments and derivatives with positive market value. As a result, Credit Risk arises from the potential counterparty default from these Financial Institutions.

As a rule, Group companies only engage in financial operations with Investment Grade Financial Institutions. On the other hand, generally speaking, exposure related with this type of financial assets is widely spread and short lived.

b) Market Risk Management Policy

i). Interest Rate Risk

As a result of the relevant portion of floating rate debt on Sonae Indústria consolidated Balance Sheet and the consequent cash flows related to interest payments, the company is exposed to interest rate risk, and it is particularly exposed to the risk of variation of Euro interest rates, as most of its floating rate debt is denominated in Euro.

As a general rule, Sonae Indústria does not hedge its exposure to floating interest rates.

This approach is based on the principle of the existence of a negative correlation between the interest rate levels and the "operating cash flow before net interest charges", which creates a natural hedge on the "operating cash flow after net interest charges" for Sonae Indústria. The rationale behind this principle is as follows:

• Sonae Indústria is mainly exposed to the Euro area on its operating activity and, as referred before, it is also mainly exposed to the Euro currency in what concerns to its floating rate debt.

• Sonae Indústria operating activity is cyclical in the sense it is tied to business cycles of the overall economy and particularly of the construction sector (and also of the furniture sector on its own). This is mostly due to the nature of our products, and to the fact that they are commodity-like and durable goods, performing better when there are good economic conditions.

• Under regular economic circumstances, when there is a strong level of economic activity and demand, inflation tends to increase. Since nominal interest rates are a function of inflation and also because the European Central Bank (ECB) has as its main mission keeping price stability, it normally acts in order to relieve inflationary tensions by increasing interest rates. Opposite effects occur when there is a weak level of activity and demand, with low pressure on prices.

• When activity and demand are strong in the Euro Area, Sonae Indústria tends to have superior economic performance and operating cash flow generation. On the other hand, when economic conditions are strong, ECB tends to increase interest rates in order to refrain demand and avoid price increases, which is reflected on higher net interest charges for Sonae Indústria, creating a natural hedge on "operating

cash flow after net interest charges". The same principle (with opposite signs) applies on economic downturn situations.

• It is our understanding that, apart from the Euro interest rate, the same rationale applies to other interest rates to which Sonae Indústria is exposed such as the Pound Sterling and the Canadian Dollar, or to the South African Rand and Brazilian Real (while acknowledging that in emerging markets, interest rate behaviour is influenced by other effects not directly related with domestic economic conditions).

As an exception to its general rule, Sonae Indústria may engage into interest rates derivatives. If this is the case, the following is observed:

• Derivatives are not used for trading, profit making, or speculative purposes;

• Group companies only engage in derivative transactions with Investment Grade Financial Institutions;

• Derivatives match exact periods, settlement dates and base interest rate of the underlying exposures;

• Maximum financial charges on the aggregate of the derivative and the underlying exposures are always known and limited on the inception of the hedging period;

• Quotes from at least two Financial Institutions are considered before closing any interest rate hedging deal.

ii) Foreign Exchange Risk

As a geographically diversified Group with subsidiaries located in four different continents, Sonae Indústria is exposed to foreign exchange risk. Consolidated Balance Sheet and Profit and Loss are is exposed to foreign exchange translation risk and Sonae Indústria subsidiaries' are exposed to foreign exchange risk of both translation and transaction type.

Foreign exchange risk relates to the possibility of registering gains or losses resulting from the change in exchange rates.

Transaction risk arises when there is exchange risk related to a cash flow in other than a subsidiary local currency. Sonae Indústria subsidiaries cash flows are largely denominated in the subsidiary local currency. This is valid independently of the nature

of the cash flows, i.e.: operating or financial, and provides a degree of natural currency hedging, reducing the Group's transaction risk. In line this rationale, as a principle, Sonae Indústria's subsidiaries financial debt is denominated in their local currency.

As a Group rule, whenever possible and economically viable, subsidiaries aim to offset assets and liabilities denominated in the same foreign currency.

Also as a rule, in situations where relevant exchange risk arises from trade in other than the subsidiary local currency, exchange risk should be mitigated through the use of short term forward exchange agreements performed by the subsidiary exposed to that risk. Sonae Indústria subsidiaries do not engage in forward exchange rate agreements with trading, speculative or profit making purposes.

Translation risk arises from the fact that for each accounting period, the Financial Statements of the subsidiaries denominated in other than Euro local currencies, must be translated or converted into Euro in order to prepare the Consolidated Financial Statements of the Group. As exchange rates vary between periodical financial statements and the referred subsidiaries assets' do not match their liabilities, volatility in the consolidated accounts arise as a result of conversion at different exchange rates.

As a policy, translation risk in connection with the conversion of the Equity investments on foreign non Euro subsidiaries is not hedged as these are considered long-term investments and it is assumed that hedging will not add value in the long term. Gains and losses related to the translation at different exchange rates of Equity investments in foreign non Euro subsidiaries are accounted under the Conversion Reserve.

Some Sonae Indústria subsidiaries concede or receive intercompany funding on currencies other than their local currency. Whenever this happens, intercompany funding is always denominated in the currency of the other Group counterparty. It is Sonae Indústria policy to hedge systematically the outstanding amount of this intercompany funding in order to reduce volatility on subsidiaries (and consolidated) financial statements. This volatility arises from the fact that, there is no offset of the Exchange Rate gain or loss registered in the Profit and Loss of the Group counterparty with the intercompany asset or liability denominated in other than its local currency (gain or loss registered as a result of the change in value of its foreign currency intercompany asset or liability), on the side of the other Group counterparty (and as a result, on the Consolidated accounts).

These intercompany loans hedges are done through forward exchange rate agreements, performed by the subsidiary exposed to the exchange rate risk and rolled over consistently on a semi-annual basis. Quotes from at least two Financial Institutions are considered before closing any of these foreign exchange hedging deals. These foreign exchange rate derivatives are also not used for trading, profit making, or speculative purposes.

iii) Other Price Risks

As at 31st December 2007, Sonae Indústria did not hold material investments classified as "available-for-sale".

c). Liquidity Risk Management Policy

Group Liquidity risk management aims to ensure that the Group is able to timely obtain the financing required to properly carry on its business activities, implement its strategy, and meet its payment obligations when due, while avoiding the need of having to obtain funding under unfavourable terms.

For this purpose, Liquidity management at the Group comprises:

• consistent financial planning and cash flow forecasting at country and consolidated levels with different time horizons (weekly, monthly, annual and business plan);

• diversification of financing sources;

• diversification of the maturities of the debt issued in order to avoid excessive concentration of debt repayments in short periods of time;

• arrangement of committed (and uncommitted) credit facilities, commercial paper programs, and other facilities (such as a Securitization of Receivables program) with relationship banks, ensuring the right balance between satisfactory liquidity and adequate commitment fees;

3. RELEVANT EVENTS

On 17 April 2006 a fire broke out on production line 2 at the factory in Lac Megantic, Canada, destroying a significant part of this line's assets. In addition, Line 1 was also forced to stop for almost 2 months. The Group's insurance policy covers asset and operating losses

and the compensation received will be sufficient to replace production capacity prior to the fire with new assets and to cover operating losses resulting from the stoppage of both production lines, for a period of up to 18 months.

At closing date of these financial statements, performance tests on line 2 were still being carried out. Accordingly, the assets were stated on the consolidated balance sheet as Assets in progress.

As a result, consolidated financial statements include, as from the occurrence date, the following effects:

Year 2006

• An impairment loss corresponding to the carrying amount of the destroyed assets (38 115 481 euros), stated on the consolidated profit and loss statement under caption Provisions and impairment losses, along with the corresponding insurance compensation (38 115 481 euros), stated on the consolidated profit and loss statement under caption Provisions and impairment losses and on the consolidated balance sheet under Other current assets;
• An insurance compensation corresponding to the estimation of incurred operating losses (31 025 219 euros), recognised on the consolidated profit and loss statement under Other operating gains and on the consolidated balance sheet under Other current assets.

Year 2007:

• Gain corresponding to the cash advance paid by the insurance companies as compensation for the investment on line 2, amounting to 10 703 722 euros, included in the consolidated profit and loss statement under Other operating revenues. As no reliable information is available to estimate the amount receivable, the accumulated gain recognized in profit or loss in 2006 and 2007 correspond to the cash advances paid by the insurance companies, recognized in accordance with IAS 16, § 65 and 66.
• An estimated insurance compensation for operating losses incurred until October, amounting to 23 486 496 euros, stated on the consolidated profit and loss statement under Other operating revenues. The accumulated gain recognised in 2006 and 2007 are the estimated operating losses for which cash advances were paid by the insurance companies.

At closing date of these consolidated financial statements, definite amounts to recognise as compensation for operating and asset losses are still being discussed with the insurance companies.

4. CHANGES IN ACCOUNTING POLICIES AND CORRECTION OF ERRORS

No changes to the accounting policies mentioned in note 2 and no corrections to prior period errors were made.

5. GROUP COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS

Group companies included in the consolidated financial statements, their head offices and percentage of capital held by the Group as at 31 December 2007 and 31 December 2006 are as follows:

	COMPANY	HEAD OFFICE			PERCENTAGE OF CAPITAL HELD		TERMS FOR INCLUSION
				31.12.07		31.12.06
			Direct	Total	Direct	Total
	Agepan Eiweiler Management, GmbH	Eiweiler (Germany)	100,00%	98,78%	100,00%	91,16%	a)
	Agepan Flooring Products, SARL	Luxemburg	100,00%	98,78%	100,00%	91,16%	a)
1)	Agloma Investimentos, SGPS, S. A.	Maia (Portugal)	100,00%	98,82%			a)
	Agloma - Sociedade Industrial de Madeira Aglomerada, S.A.	Oliveira do Hospital (Portugal)	100,00%	100,00%	100,00%	100,00%	a)
2)	Aserraderos de Cuellar, S.A.	Madrid (Spain)	100,00%	98,82%			a)
	Cia. De Industrias y Negocios, S.A.	Madrid (Spain)	100,00%	98,78%	100,00%	91,16%	a)
	Darbo, SAS	Linxe (France)	100,00%	98,78%	100,00%	91,16%	a)
	Ecociclo, Energia e Ambiente, S. A.	Maia (Portugal)	100,00%	100,00%	100,00%	100,00%	a)
	Ecociclo II – Energias, S. A.	Maia (Portugal)	100,00%	100,00%	100,00%	100,00%	a)
	Euro Decorative Boards Ltd.	Knowsley (United Kingdom)	100,00%	98,78%	100,00%	91,16%	a)
	Euromegantic Lteé	Lac Mégantic (Canada)	100,00%	98,78%	100,00%	91,16%	a)
	Euroresinas - Indústrias Quimicas, S.A.	Maia (Portugal)	100,00%	100,00%	100,00%	100,00%	a)
	GHP, GmbH	Meppen (Germany)	100,00%	98,78%	100,00%	91,16%	a)
	Glunz AG	Meppen (Germany)	100,00%	98,78%	100,00%	91,16%	a)
	Glunz Service GmbH	Hamm (Germany)	100,00%	98,78%	100,00%	91,16%	a)
	Glunz UK Holdings, Ltd.	Londres (United Kingdom)	100,00%	98,78%	100,00%	91,16%	a)
	Glunz UkA GmbH	Hamm (Germany)	100,00%	98,78%	100,00%	91,16%	a)
	Hornitex Polska	Poznan (Poland)	100,00%	98,78%	100,00%	91,16%	a)
3)	IM Impregnation Management GmbH	Meppen (Germany)	100,00%	98,78%			a)
4)	Impaper Europe GmbH & Co. KG	Meppen (Germany)	100,00%	98,78%			a)
5)	Imoplamac – Gestão de Imóveis, S. A.	Maia (Portugal)	100,00%	100,00%			a)
6)	Ipaper – Indústria de Papeis Impregnados, S. A.	Maia (Portugal)	100,00%	100,00%			a)
7)	Isoroy Casteljaloux, SA	Casteljaloux (France)	100,00%	98,78%			a)
	Isoroy, SAS	Boulogne (France)	100,00%	98,78%	100,00%	91,16%	a)
	Maiequipa - Gestão Florestal, S.A.	Maia (Portugal)	100,00%	100,00%	100,00%	100,00%	a)
	Megantic B.V.	Amsterdão (The Netherlands)	100,00%	98,78%	100,00%	91,16%	a)
	Movelpartes – Comp. para a Indústria do Mobiliário, S.A.	Paredes (Portugal)	100,00%	100,00%	100,00%	100,00%	a)
	OSB Deustchland	Germany	100,00%	98,78%	100,00%	91,16%	a)
	Poliface Brasil, Ltda.	São Paulo (Brazil)	99,99%	99,99%	99,99%	99,99%	a)
	Poliface North America	Baltimore (USA)	100,00%	98,78%	100,00%	91,16%	a)
	Racionalización y Manufacturas Florestales, S.A.	Madrid (Spain)	100,00%	98,78%	100,00%	91,16%	a)
8)	Resoflex – Mobiliário e Equipamentos de Gestão, S.A.	Vila de Conde (Portugal)	100,00%	100,00%	100,00%	100,00%	a)
	SCS Beheer, BV	The Netherlands	100,00%	98,78%	100,00%	91,16%	a)

	Siaf – Soc. de Iniciativa e Aproveitamentos Florestais, S.A.	Mangualde (Portugal)	100,00%	98,78%	100,00%	91,16%	a)
	Sociedade de Iniciativa e Aproveit. Florestais - Energias, S.A.	Mangualde (Portugal)	100,00%	98,78%	100,00%	91,18%	a)
	Société Industrielle et Financière Isoroy	Rungis (France)	100,00%	98,78%	100,00%	91,16%	a)
	Somit – Imobiliária, S.A.	Oliveira do Hospital (Portugal)	100,00%	98,78%	100,00%	91,16%	a)
9)	Somit – Soc. de Madeiras Industrializadas e Transform., S. A.	Oliveira do Hospital (Portugal)	100,00%	98,82%			a)
	Sonae – Serviços de Gestão, S. A.	Maia (Portugal)	100,00%	100,00%	100,00%	100,00%	a)
10)	Sonae España, S. A.	Madrid (Spain)	99,94%	99,94%	99,94%	99,94%	a)
	Sonae Indústria – Prod. e Comerc. Derivados Madeira, S. A.	Mangualde (Portugal)	100,00%	98,82%	100,00%	91,41%	a)
	Sonae Indústria – Soc. Gestora de Participações Sociais, S.A.	Maia (Portugal)	MÃE	MÃE	MÃE	MÃE	MÃE
	Sonae Indústria Brasil, Ltda.	São Paulo (Brazil)	100,00%	100,00%	100,00%	100,00%	a)
	Sonae Indústria de Revestimentos, S.A.	Maia (Portugal)	100,00%	100,00%	100,00%	100,00%	a)
	Sonae Novobord (Pty) Ltd	Woodnead (South Africa)	100,00%	98,78%	100,00%	91,16%	a)
	Sonae Tafibra (UK) Ltd	Knowsley (United Kingdom)	100,00%	98,78%	100,00%	91,16%	a)
	Sonae Tafibra Benelux, B. V.	Woerden (The Netherlands)	100,00%	98,78%	100,00%	91,16%	a)
	Sonae UK, Limited	Knowsley (United Kingdom)	100,00%	98,78%	100,00%	91,16%	a)
	Spanboard Products Ltd	Belfast (United Kingdom)	100,00%	98,78%	100,00%	91,16%	a)
	Tableros de Fibras, S.A.	Madrid (Spain)	98,42%	98,78%	91,16%	91,16%	a)
	Tableros Tradema, S.L.	Madrid (Spain)	100,00%	98,78%	100,00%	91,16%	a)
	Tafiber, Tableros de Fibras Ibéricas, S.L.	Madrid (Spain)	100,00%	98,78%	100,00%	91,16%	a)
	Tafibra South Africa, Limited	South Africa	100,00%	98,78%	100,00%	91,16%	a)
	Tafibras, S.A.	Curitiba (Brazil)	54,32%	53,66%	54,32%	49,55%	a)
	Tafisa Brasil, S.A.	Curitiba (Brazil)	100,00%	62,24%	100,00%	57,46%	a)
	Tafisa Canadá Societé en Commandite	Lac Mégantic (Canada)	99,99%	98,78%	99,99%	91,16%	a)
	Tafisa France S.A.S.	Rungis (France)	100,00%	98,78%	100,00%	91,16%	a)
	Tafisa U.K.Ltd.	Knowsley (United Kingdom)	100,00%	98,78%	100,00%	91,16%	a)
	Taiber, Tableros Aglomerados Ibéricos, S.L.	Madrid (Spain)	100,00%	98,78%	100,00%	91,16%	a)
	Tavapan, SA	Tavannes (Switzerland)	100,00%	98,78%	100,00%	90,36%	a)
	Tecnologias del Medio Ambiente, S.A.	Barcelona (Spain)	100,00%	98,78%	100,00%	91,16%	a)
	Tool, GmbH	Meppen (Germany)	100,00%	98,78%	100,00%	90,36%	a)

a) Majority of voting rights.

• 1) Company acquired 24 April 2007;
• 2) Company acquired 24 April 2007;
• 3) Company incorporated 10 September 2007;
• 4) Company incorporated 17 September 2007;
• 5) Company acquired 1 January 2007;
• 6) Acqusition of 51% of share capital on 24 April 2007, corresponding to the whole shares owned by third parties until then. Subsequent merger into Euroresinas – Indústrias Químicas, SA on 31 May 2007;
• 7) Company acquired on 31 August 2007;
• 8) Company mergered into Movelpartes Componentes para a Indústria de Mobiliários, S. A. on 1 August 2007;
• 9) Company acquired 24 April 2007;
• 10) Company liquidated 28 May 2007.

These group companies are consolidated using the full consolidation method as described in Note 2.2.a).

6. JOINT VENTURES

The joint ventures, their head offices, percentage of share capital held and balance sheet on 31 December 2007 and 31 December 2006 are as follows:

COMPANY	HEAD OFFICE	PERCENTAGE OF CAPITAL HELD 31.12.07 31.12.06
		Direct	Total	Direct	Total
Agepan Tarkett Laminate Park GmbH & Co. KG	Eiweiler (Germany)	50,00%	49,39%	50,00%	45.58%
Tarkett Agepan Laminate Flooring SCS	Luxembourg	50,00%	49,39%	50,00%	45.58%
Tecmasa, Reciclados de Andalucia, S. L.	Alcalá de Guadaira (Spain)	50,00%	49,39%	50,00%	45.58%

Joint venture companies have been consolidated using the proportionate consolidation method, as explained in note 2.2.b).

7. INVESTMENTS IN ASSOCIATED COMPANIES

Associated companies, their head offices and the percentage of share capital held as at 31 December 2007 and 31 December 2006 are as follows:

	COMPANY	HEAD OFFICE		PERCENTAGE OF CAPITAL HELD
				31.12.2007		31.12.2006
			Direct	Total	Direct	Total
1)	Ipaper - Indústria de Papéis Impregnados, S. A.	Maia (Portugal)			49,00%	49,00%
	Promodeco – Proj. Imobiliário Decoração e Constr., Lda.	Maia (Portugal)	27,60%	27,18%	27,60%	25,23%
	Serradora Boix	Barcelona (Spain)	31,25%	30,87%	31,25%	28,49%
	Sonaegest	Maia (Portugal)	20,00%	20,00%	20,00%	20,00%

1) Shares representing 51% of share capital which correspond to the total amount of shares owned by third parties until then were acquired 24 April 2007. As from this date, the company was included in the consolidated financial statements by the full consolidation method until it was mergered into Euroresinas – Indústrias Químicas, SA on 31 May 2007.

Associated companies are recognised in the consolidated financial statements using the equity method, as referred in Note 2.2.c).

8. CHANGES TO THE CONSOLIDATION PERIMETER

Comparability of consolidated financial statements as at 31 December 2007 and 31 December 2006 is affected by the companies that were included and excluded in the consolidation perimeter during 2006 and 2007.

Companies included in 2007:

	COMPANY	HEAD OFFICE	% OF CAPITAL HELD AT ACQUISITION / INCORPORATION DATE
			Direct	Total
1)	Agloma Investimentos, SGPS, S. A.	Maia (Portugal)	100,00%	98,82%
2)	Aserraderos de Cuellar, S.A.	Madrid (Spain)	100,00%	98,82%
3)	IM Impregnation Management GmbH	Meppen (Germany)	100,00%	98,78%
4)	Impaper Europe GmbH & Co. KG	Meppen (Germany)	100,00%	98,78%
5)	Imoplamac – Gestão de Imóveis, S. A.	Maia (Portugal)	100,00%	100,00%
6)	Isoroy Casteljaloux, SA	Casteljaloux (France)	100,00%	98,78%
7)	Somit – Soc. de Madeiras Industrializadas e Transform., S. A.	Oliveira do Hospital (Portugal)	100,00%	98,82%

1) Company acquired 24 April 2007;

2) Company acquired 24 April 2007;

3) Company incorporated 10 September 2007;

4) Company incorporated 17 September 2007;

5) Company acquired 1 January 2007;

6) Company acquired 31 August 2007;

7) Company acquired 24 April 2007;

The inclusion of these companies in the consolidation perimeter did not materially affect the comparability of the consolidated balance sheets as at 31 December 2007 and 2006. The comparability of the consolidated profit and loss statements for 2007 and 2006 was affected as follows:

	Year 2007	Companies entering perimeter in 2007	Intragroup eliminations	Year 2007 comparable basis	Year 2006
	[1]	[2]	[3]	[1] - [2] - [3]
Operating revenues
Sales	2 056 119 499	13 964 118	- 15 143 199	2 057 298 580	1 692 333 903
Services rendered	10 165 769	2 426 060	- 3 147 457	10 887 166	6 981 464
Negative goodwill	685 753			685 753	19 565 777
Other operating revenues	128 937 845	185 709		128 752 136	119 474 376
Total operating revenues	2 195 908 866	16 575 887	- 18 290 656	2 197 623 635	1 838 355 521
Operating costs
Cost of sales	1 016 305 254	7 351 331	- 15 143 199	1 024 097 122	847 678 904
(Increase) / decrease in production	- 17 237 755	- 495 281		- 16 742 474	- 7 873 782
External supplies and services	524 439 121	3 962 776	- 3 147 457	523 623 802	463 165 266
Staff expenses	290 460 537	1 930 765		288 529 772	244 471 593
Depreciation and amortisation	116 805 491	564 346		116 241 145	107 971 033
Provisions and impairment losses	32 970 366	2 606		32 967 760	35 088 175
Other operating costs	27 131 640	218 306		26 913 334	27 795 419
Total operating costs	1 990 874 654	13 534 849	- 18 290 656	1 995 630 461	1 718 296 608
Operational profit / (loss)	205 034 212	3 041 038		201 993 174	120 058 913
Financial profits	60 585 335	638 886		59 946 449	51 525 288
Financial costs	141 126 430	1 509 878		139 616 552	119 302 883
Net financial profit / (loss)	- 80 541 095	- 870 992		- 79 670 103	- 67 777 595
Gains and losses in associated companies	127 321			127 321	- 5 205
Gains and losses in investments	82 274			82 274	72 557
Current profit / (loss)	124 702 712	2 170 046		122 532 666	52 348 670
Taxation	35 272 535	369 114		34 903 421	18 702 317
Consolidated net profit / (loss) after taxation	89 430 177	1 800 932		87 629 245	33 646 353
Consolidated net profit / (loss) for the period Attributable to:	89 430 177	1 800 932		87 629 245	33 646 353
Equity holders of Sonae Indústria	78 612 713	1 786 161		76 826 552	32 311 969
Minority interests	10 817 464	14 771		10 802 693	1 334 384

Companies excluded in 2007:

	COMPANY	HEAD OFFICE	% OF CAPITAL HELD AT
				LIQUIDATION DATE
			Direct	Total
1)	Sonae España, S. A.	Madrid (Spain)	99,94%	99,94%

1) Company liquidated 28 May 2007.

The exclusion of this company from the consolidation perimeter in 2007 did not materially affect the comparability of the consolidated financial statements for 2007 and 2006.

Companies included in 2006:

	Company	Head Office	Percentage of capital held at date of acquisition / incorporation
			Direct	Total
1)	Agepan Eiweiler Management, GmbH	Eiweiler (Germany)	100,00%	91,16%
2)	Agepan Flooring Products, SARL	Luxemburg	100,00%	91,16%
3)	Agepan Tarkett Laminate Park GmbH & Co. GK	Eiweiler (Germany)	50,00% 45,58%
4)	Darbo, SAS	Linxe (France)	100,00%	91,16%
5)	Ecociclo II – Energias, S. A.	Maia (Portugal)	100,00%	100,00%
6)	GHP, GmbH	Meppen (Germany)	100,00%	91,16%
7)	Hornitex Polska	Poznan (Poland)	100,00%	91,16%
8)	Tarkett Agepan Laminate Flooring SCS	Luxemburg	50,00%	45,58%
9)	Tecmasa, Reciclados de Andalucia, S. L.	Alcalá de Guadaira (Spain)	50,00%	45,58%

1) Company incorporated 6 September 2006;

2) Company incorporated 23 March 2006;

3) Company incorporated 6 September 2006;

4) Company acquired 14 September 2006;

5) Company incorporated 24 November 2006;

6) Company acquired 1 July 2006;

7) Company acquired 1 July 2006;

8) Company incorporated 5 July 2006;

9) Company incorporated 4 October 2006.

The inclusion of these companies in the consolidation perimeter during 2006 did not affect the comparability of the consolidated balance sheets at 31 December 2007 and 31 December 2006.

The comparability of the consolidated profit and loss statements for 2007 and 2006 was affected by the companies included in 2006. Due to the high degree of integration of these operations, it is not possible to quantify their impact accurately.

Companies excluded in 2006:

	Company	Head Office	Percentage of capital held at date
				of acquisition / incorporation
			Direct	Total
1)	Isoroy Transformation S.A.S.	St. Dizier (France)	99,99%	91,16%
2)	Socelpac, SGPS, SA	Maia (Portugal)	100,00%	100,00%

1) Company sold 4 September 2006;

2) Company liquidated 31 May 2006.

The exclusion of these companies from the consolidation perimeter during 2006 did not affect the comparability of the consolidated financial statements at 31 December 2007 and 31 December 2006.

9. BUSINESS COMBINATIONS

At 28 July 2006, Sonae Indústria, SGPS, S.A. made an offer for 39 546 174 shares of its subsidiary Tableros de Fibras, S.A. (Tafisa) corresponding to the total amount of shares owned by third parties. In May 2007 the conclusion of this process led to the acquisition of 32 482 393 shares, with Sonae Indústria, SGPS, S.A. increasing direct and indirect ownership to 98,42% of Tafisa shares from 91,16% previously.

The business combination originated by the acquisition of the aforementioned Tafisa shares considered the accounts of Tafisa and its subsidiaries prepared in accordance with International Accounting Standards (IAS) / International Financial Reporting Standards (IFRS) and no adjustments to fair value of assets and liabilities were recognised.

At 1 January 2007 Sonae Indústria, SGPS, S.A. acquired 90% of the shares of Imoplamac – Gestão de imóveis, S.A.. Subsequently, at 16 April 2007, the remaining 10% of shares were acquired. The acquired assets were recognised for their fair value, according to an independent appraisal.

At 24 April 2007, Sonae Indústria Group acquired all the shares of Agloma Investimentos, SGPS, S.A., which held all the shares of Somit – Sociedade de Madeiras Industrializadas e Transformadas, S.A. and Aserraderos de Cuellar, S.A.. The acquired assets were recognised for their fair value, based on an independent appraisal.

At 24 April 2007 Sonae Indústria, SGPS, S.A. acquired 51% of the shares of Ipaper – Indústria de Papeis Impregnados, S.A. which caused the ownership to increase from 49% to 100% and was followed by a change in consolidation method, as mentioned in note 7. When consolidating the company, the carrying amount of assets and liabilities was recorded as no relevant difference to their fair values was anticipated.

At 31 August 2007 Sonae Indústria, SGPS, SA acquired all the shares of Isoroy Casteljaloux, SA. The carrying amount of assets and liabilities was used in the consolidation of this company as no relevant difference to their fair value was estimated.

Euros	Offer for TAFISA	Agloma Invest. Somit Cuellar	Isoroy Casteljaloux	Ipaper	Imoplamac	Total
Cost
Acquisition cost	50 022 885	15 454 000	100 000	634 044	6 000 000	72 210 929
Costs attributable to the combination	330 377					330 377
	50 353 262	15 454 000	100 000	634 044	6 000 000	72 541 306
Fair value of net assets at aqcuisition date	89 960 812	15 305 633	1 413 819	313 603	6 259 694	113 253 562
Direct ownership percentage acquired	7.26%	100.00%	100.00%	100.00%	100.00%
Total ownership percentage acquired	7.26%	98.82%	98.78%	100.00%	100.00%
Goodwill (Note 15)	43 822 197	328 973		320 441		44 471 611
Negative goodwill			1 297 136		259 694	1 556 830

The assets acquired and goodwill arising on consolidation are detailed as follows:

The fair value of net assets at the acquisition date of Tafisa shares, in the amount of 89 960 812 euros, correspond to the consolidated net assets of this company and its subsidiaries.

Negative goodwill arising on the consolidation of Isoroy Casteljaloux, in the amount of 1 297 136 euros, is justified by the existing expectation at acquisition date of future profits which are expected to result from synergies with present Group operations.

In 2007 an adjustment to the cost of GHP GmbH (acquired 1 July 2006) was recorded which caused an adjustment to the negative goodwill recognised in 2006 for the amount of -871 077 euros. This adjustment was stated under Negative goodwill on the consolidated profit and loss statement.

In August 2007 the subsidiary Tableros de Fibras SA (Tafisa) increased its share capital in the amount of 291 687 779 euros which was subscribed for by Sonae Indústria at a proportion higher than the previous ownership percentage, which caused ownership of Tafisa to increase from 98,42% to 98,72%. As a result, a goodwill was recorded in the amount of 5 356 957 euros.

The fair value of net assets at acquisition date is detailed as follows:

	Agloma Invest., Somit e Cuellar			Imoplamac
	Carrying amount at acquisition date	Fair value adjustments	Fair value at acquisition date	Carrying amount at acquisition date	Fair value adjustments	Fair value at acquisition date
Non current assets
Tangible and intangible assets	11 979 111	-5 526 041	6 453 070	21 173 545	3 642 044	24 815 589
Other non current assets	9 269 397		9 269 397
Current assets	19 487 009		19 487 009	2 622 119		2 622 119
Non current liabilities	10 491 310		10 491 310	14 547 852	967 642	15 515 494
Current liabilities	9 412 533		9 412 533	5 662 520		5 662 520
Net assets	20 831 674	-5 526 041	15 305 633	3 585 292	2 674 402	6 259 694

10. FINANCIAL INSTRUMENTS

In the Consolidated Balance Sheets at 31 December 2007 and 31 December 2006, the following financial instruments are included:

		Loans	Assets at fair value				Assets out of scope
	Note	and receivables	through profit or loss	Hedge derivatives	Available-for-sale assets	Sub-total	of IFRS 7	Total
31 December 2007
Non current assets
Available for sale investments	11				1 602 518	1 602 518		1 602 518
Other non current assets	17	1 578 390				1 578 390	54 341	1 632 731
Current assets
Customers	19	260 140 025				260 140 025		260 140 025
Other current debtors	20	21 057 227				21 057 227	782 239	21 839 466
Other current assets Investments	21 11		5 047 080	136 807		5 183 887	9 594 428	14 778 315
Cash and cash equivalents	23	65 883 548				65 883 548		65 883 548
Total		348 659 189	5 047 080	136 807	1 602 518	355 445 596	10 431 007	365 876 603
31 December 2006
Non current assets Available for sale investments	11				1 409 864	1 409 864		1 409 864
Other non current assets	17	1 206 203				1 206 203	78 753	1 284 956
Current assets Customers	19	290 208 628				290 208 628		290 208 628
Other current debtors	20	22 828 001				22 828 001	228 808	23 056 809
Other current assets	21		5 829 177	698 931		6 528 108	49 075 112	55 603 220
Investments	11	4 769 781				4 769 781		4 769 781
Cash and cash equivalents	23	189 289 129				189 289 129		189 289 129
Total		508 301 742	5 829 177	698 931	1 409 864	516 239 714	49 382 673	565 622 387
		Note	Liabilities at fair value through profit or loss	Hedge derivatives	Other financial Liabilities	Sub-total	Liabilities out of scope of IFRS 7	Total
31 December 2007
Non current liabilities
Bank loans - net of short term portion		26			187 543 520	187 543 520		187 543 520
Debentures - net of short term portion		26			431 336 457	431 336 457		431 336 457
Finance lease creditors - net of short term po Other loans		26 26			51 100 454 34 506 252	51 100 454 34 506 252		51 100 454 34 506 252
Other non current liabilities		29	216 079		1 119 165	1 335 244	123 416 265	124 751 509
Current assets
Bank loans Debentures		26 26			55 605 328 100 000 000	55 605 328 100 000 000		55 605 328 100 000 000
Finance lease creditors		26			3 465 063	3 465 063		3 465 063
Other loans		26			504 957	504 957		504 957
Trade creditors		31			226 228 686	226 228 686		226 228 686
Other current liabilities		33	942 442		29 910 576	30 853 018	124 686 401	155 539 419
Total			1 158 521		1 121 320 458	1 122 478 979	248 102 666	1 370 581 645
31 December 2006
Non current liabilities
Bank loans - net of short term portion		26			134 085 215	134 085 215		134 085 215
Debentures - net of short term portion		26			530 273 929	530 273 929		530 273 929
Finance lease creditors - net of short term po		26			41 897 417	41 897 417		41 897 417
Other loans Other non current liabilities		26 29		836	95 856 073 507 005	95 856 073 507 841	110 776 991	95 856 073 111 284 832
Current assets
Bank loans		26			137 955 436	137 955 436		137 955 436
Debentures		26
Finance lease creditors		26			2 483 759	2 483 759		2 483 759
Other loans		26			411 087	411 087		411 087
Trade creditors		31			258 824 535	258 824 535		258 824 535
Other current liabilities		33	3 216 459	56 762	26 875 537	30 148 758	111 821 119	141 969 877
Total			3 216 459	57 598	1 229 169 993	1 232 444 050	222 598 110	1 455 042 160

11. INVESTMENTS

At 31 December 2007 and 31 December 2006, details of Investments are as follows:

	31.12.07		31.12.06
	Current	Non current	Current	Non current
Investment in group companies excluded from consolidation
Opening balance		42 726 009		42 726 009
Disposal
Liquidation
Closing balance		42 726 009		42 726 009
Accumulated impairment losses (Note 34)		42 661 176		42 661 176
Net investment in group companies excluded from consolidation		64 833		64 833
Investment in associated companies
Opening balance		2 920 894		3 148 389
Increase in share capital
Disposal
Effect of equity method application		428 498		- 227 495
Changes in consolidation perimeter
Transfer
Closing balance		3 349 392		2 920 894
Accumulated impairment losses (Note 34)
Net investment in associated companies		3 349 392		2 920 894

	31.12.07		31.12.06
	Current	Non current	Current	Non current
Available-for-sale investment
Opening balance		1 433 432		1 396 195
Acquisition		100 000		85 227
Disposal				20 489
Transfer
Currency translation effect		85 047		- 27 501
Closing balance		1 618 479		1 433 432
Accumulated impairment losses (Note 34)		15 961		23 568
Net available-for-sale investment		1 602 518		1 409 864
Investments
Opening balance	4 769 781		3 079 442
Acquisition	14 134 527		83 312 680
Disposal	18 904 308		81 622 341
Closing balance			4 769 781
Accumulated impairment losses (Note 34)
Net investments measured at fair value through profit and loss			4 769 781

Available-for-sale investment is made up of financial undertakings which do not fulfil the criteria to be stated as subsidiaries excluded from consolidation or as associates. They are recognised at cost as no relevant difference to their fair value is estimated.

12. TANGIBLE ASSETS

During 2007, movements in tangible assets, accumulated depreciation and impairment losses were as follows:

	2007
	Land and Buildings	Plant and Machinery	Vehicles	Tools	Fixtures and Fittings	Other Tangible Fixed Assets	Fixed Assets under construction	Total tangible assets
Gross cost:
Opening balance	464 461 863	1 881 653 116	10 101 675	9 411 014		57 066 427 12 910 283	58 146 152	2 493 750 530
Changes in consolidation perimeter	33 793 070	21 918 528	259 508	119 679	178 319	1 404 552	3 527 654	61 201 310
Capital expenditure	279 684	1 172 899	614 829	2 964	314 774	220 038	199 204 890	201 810 078
Disposals	12 329 999	63 391 441	338 165	373 130	1 859 683	76 914	173 015	78 542 347
Transfers and reclassifications	21 795 479	76 073 529	6 274 257	8 572 555	- 4 404 380	1 696 128	- 110 317 610	- 310 042
Exchange rate effect	325 665	3 765 088	110 345	- 132 537	143 156	- 17 573	1 183 015	5 377 159
Closing balance	508 325 762	1 921 191 719	17 022 449	17 600 545		51 438 613 16 136 514	151 571 086	2 683 286 688
Accumulated depreciation and impairment losses
Opening balance	130 141 937	1 062 716 318	8 400 501	6 565 770		39 628 914 11 394 270	343 447	1 259 191 157
Changes in consolidation perimeter	3 342 596	14 267 080	211 472	117 932	118 758	1 361 491		19 419 329
Charge for the period	12 576 431	110 040 619	1 557 996	1 936 737	4 690 823	614 300		131 416 906
Disposals	9 914 220	60 849 909	246 254	335 337	1 753 020	78 517		73 177 257
Transfers		- 2 545 190	3 712 989	3 495 773	- 4 708 796			- 45 224
Exchange rate effect	278 616	3 418 048	58 969	- 103 891	10 042	- 1 355		3 660 429
Closing balance	136 425 360	1 127 046 966	13 695 673	11 676 984		37 986 721 13 290 189	343 447	1 340 465 340
Carrying amount	371 900 402	794 144 753	3 326 776	5 923 561	13 451 892	2 846 325	151 227 639	1 342 821 348

	2006
	Land and Buildings	Plant and Machinery	Vehicles	Tools	Fixtures and Fittings	Other Tangible Fixed Assets	Fixed Assets under construction	Total tangible assets
Gross
Opening balance	399 281 939	1 645 040 536	13 234 771	8 116 441	45 754 871	12 820 081	16 320 975	2 140 569 614
Changes in consolidation perimeter	52 392 910	262 218 070	33 878		10 548 513	- 68 074	17 422 955	342 548 252
Capital expenditure	2 200 820	5 579 755	413 257	8 163	950 511	- 268 251	107 412 322	116 296 577
Disposal	6 672 303	41 374 848	879 023	95 130	2 286 630	186 772	16 086 111	67 580 817
Transfers and reclassifications	25 443 410	40 078 706	- 2 593 489	1 501 204	2 963 004	610 684	- 63 639 670	4 363 849
Exchange rate effect	- 8 184 913	- 29 889 103	- 107 719	- 119 664	- 863 842	2 615	- 3 284 319	- 42 446 945
Closing balance	464 461 863	1 881 653 116	10 101 675	9 411 014	57 066 427	12 910 283	58 146 152	2 493 750 530
Accumulated depreciation and impairment losse
Opening balance	92 741 075	863 283 400	9 127 212	5 278 556	31 330 191	10 853 450		1 012 613 884
Changes in consolidation perimeter	29 318 140	107 198 251			5 031 473	- 57 863		141 490 001
Charge for the period	12 742 729	135 718 826	603 528	1 392 699	5 324 355	763 461	343 447	156 889 045
Disposal	3 597 419	30 129 074	746 776	93 081	1 966 583	164 848		36 697 781
Transfer	251 778	1 551 869	- 476 963		466 204	22		1 792 910
Exchange rate effect	- 1 314 366	- 14 906 954	- 106 500	- 12 404	- 556 726	48		- 16 896 902
Closing balance	130 141 937	1 062 716 318	8 400 501	6 565 770	39 628 914	11 394 270	343 447	1 259 191 157
Carrying amount	334 319 926	818 936 798	1 701 174	2 845 244	17 437 513	1 516 013	57 802 705	1 234 559 373

Charges for the period include impairment losses in the amount of 15 465 324 euros. In 2006, impairment losses amounted to 50 156 311 euros, of which 38 115 481 euros related to the carrying amount of Tafisa Canada's tangible assets destroyed in the accident described on note 3. The effect of this impairment loss on the consolidated profit and loss statement for 2006 is also described on note 3.

Charges to impairment losses are detailed in note 34.

During 2007 and 2006 no interest paid or any other financial charges were capitalised, in accordance with conditions defined in note 2.9.

At 31 December 2007, mortgaged Land and buildings amounted to 24 925 000 euros (27 137 500 euros at 31 December 2006) as a guarantee for bank loans.

Closing balance 33 761 516 61 004 516 4 793 515	Closing balance 11 547 527 65 181 753 387 834
	712 964
100 272 511	77 830 078
7 312 711	5 472 194
13 647 950	12 127 686
3 478 705	229 792
677 072	638 072
25 116 438	18 467 744
75 156 073	59 362 334
	712 964

At 31 December 2007, details of assets bought through financial leases were as follows:

13. INTANGIBLE ASSETS

During 2007, movements in intangible assets, accumulated depreciation and impairment losses were as follows:

		2007
		Development Costs		Patents, Royalties And Other Rights		Software		Other Intangible Assets	Assets Under Development			Total intangible assets
	Internally generated	Non internally generated	Internally generated	Non internally generated	Internally generated	Non internally generated	Internally generated	Non internally generated	Internally generated	Non internally generated	Internally generated	Non internally generated	Total
Gross cost:
Opening balance Changes in consolidation perimeter		803 599		4 051 626 25	64 295	223 951		1 655 526 642 755	7 689	13 258	71 984	6 747 960 642 780	6 819 944 642 780
Capital expenditure Disposals				3 726					8 368 849	2 514 727	8 368 849	2 514 727 3 726	10 883 576 3 726
Transfers and reclassifications		- 350 297		- 25	4 932 415	546 683		354 756	- 4 713 180	- 548 521	219 235	2 596	221 831
Exchange rate effect		- 510		- 9 557	56				- 55 216		- 55 160	- 10 067	- 65 227
Closing balance		452 792		4 038 343	4 996 766	770 634		2 653 037	3 608 142	1 979 464	8 604 908	9 894 270	18 499 178
Accumulated amortisation and impairment losses
Opening balance		417 423		3 950 907	61 971	223 951		1 655 526			61 971	6 247 807	6 309 778
Changes in consolidation perimeter				25				633 555				633 580	633 580
Charge for the period		13 846		32 018	395 856	125 021		165 758			395 856	336 643	732 499
Disposals				3 726								3 726	3 726
Transfers				- 25								- 25	- 25
Exchange rate effect		- 360		- 10 129		56		1 357				- 9 076	- 9 076
Closing balance		430 909		3 969 070	457 827	349 028		2 456 196			457 827	7 205 203	7 663 030
Carrying amount		21 883		69 273	4 538 939	421 606		196 841	3 608 142	1 979 464	8 147 081	2 689 067	10 836 148

		2006
	Development Costs		Patents, Royalties And Other Rights		Software		Other Intangible Assets		Assets Under Development		Total intangible assets
	Internally generated	Non internally generated	Internally generated	Non internally generated	Internally generated	Non internally generated	Internally generated	Non internally generated	Internally generated	Non internally generated	Internally generated	Non internally generated	Total
Gross cost:
Opening balance		805 060		4 036 502		223 951		1 655 526	7 689	13 258	7 689	6 734 297	6 741 986
Changes in consolidation perimeter					63 454						63 454		63 454
Capital expenditure					827						827		827
Disposals
Transfers and reclassifications				12 910								12 910	12 910
Exchange rate effect		- 1 461		2 214	14						14	753	767
Closing balance		803 599		4 051 626	64 295	223 951		1 655 526	7 689	13 258	71 984	6 747 960	6 819 944
Accumulated amortisation and impairment losses
Opening balance		564 527		3 918 902		179 160		1 183 152				5 845 741	5 845 741
Changes in consolidation perimeter					60 329						60 329		60 329
Charge for the period		95 977		29 983	1 642	44 777		230 018			1 642	400 755	402 397
Disposals
Transfers		- 242 356						242 356
Exchange rate effect		- 725		2 022		14						1 311	1 311
Closing balance		417 423		3 950 907	61 971	223 951		1 655 526			61 971	6 247 807	6 309 778
Carrying amount		386 176		100 719	2 324				7 689	13 258	10 013	500 153	510 166

14. INVESTMENT PROPERTIES

During 2007, movements in investment properties, accumulated depreciation and impairment losses were as follows:

			2006
	Cost	Under construction	Total	Total
Gross cost:
Opening balance	8 788 398		8 788 398	9 237 766
Changes to consolidation perimeter
Increase
Disposals				380 000
Transfers				- 69 367
Closing balance	8 788 398		8 788 398	8 788 399
Accumulated depreciation and impairment losses:
Opening balance	377 711		377 711	252 254
Changes to consolidation perimeter
Charge for the period	140 655		140 655	154 590
Disposals				29 133
Transfers
Closing balance	518 366		518 366	377 711
Carrying amount	8 270 032		8 270 032	8 410 688

15. GOODWILL ARISING ON CONSOLIDATION

During 2007, movements in goodwill arising on consolidation, accumulated depreciation and impairment losses were as follows:

	31.12.2007	31.12.2006
	Goodwill
Gross value:
Opening balance	51 105 175	44 492 181
Increases	49 828 568	9 028 195
Decreases
Transfers and write-offs
Currency translation	- 846 887	-2 415 200
Closing balance	100 086 856	51 105 176
Accumulated impairment losses:
Closing balance

Goodwill is not amortised. Impairment tests on goodwill are performed on a yearly basis.

16. DEFERRED TAXES

At 31 December 2007 and 31 December 2006 deferred tax assets and liabilities were detailed according to underlying temporary differences as follows:

	Deferred tax assets		Deferred tax liabilities
	31.12.2007	31.12.2006	31.12.2007	31.12.2006
Difference between fair value and cost of tangible assets				2 502 275
Harmonisation adjusments			58 763 486	42 870 655
Provisions and impairment losses not accepted for tax purposes	4 397 809	10 780 570
Impairment of Assets	2 143 125	1 757 559
Tangible assets written off	4 548	13 910
Intangible assets written off	209 358	240 530
Deferred costs written off	193 609
Valuation of hedging derivatives	141 766	86 125		505 112
Revaluation of tangible fixed assets			3 295 958	2 651 114
Tax losses carried forward	41 497 076	47 128 614
Others	18 461		7 908 787	9 106 523
	48 605 752	60 007 308	69 968 231	57 635 679

	Deferred tax assets		Deferred tax liabilities
	31.12.2007	31.12.2006	31.12.2007	31.12.2006
Opening balance	60 007 308	52 685 592	57 635 679	43 136 143
Impact on results: Harmonisation adjusments Changes in provisions and impairment losses not accepted for tax purposes Impairment of Assets Derecognized intangible assets Derecognized tangible assets	- 6 567 788 385 567 - 9 362 - 31 172	7 184 972 1 757 559 - 170 782 - 59 008	8 581 750	2 335 368
Deferred costs written off Valuation of hedging derivatives Revaluation of tangible fixed assets Tax losses carried forward Others	- 38 985 65 101 - 6 619 938 250 137 - 12 566 440	- 43 328 - 3 396 749 5 272 664	- 481 985 - 322 798 1 614 326 9 391 293	551 458 - 17 874 7 007 368 9 876 320
Impact on reserves: Currency translation effect Recognition in Reserves	1 164 884	- 703 461 89 028	1 508 947	- 4 245 379 594 718
Impact of changes in the consolidation perimeter: Acquisitions	1 164 884	- 614 433	1 508 947 1 432 312	- 3 650 661 5 610 392
Previously offset deferred tax		2 663 485		2 663 485
Closing balance	48 605 752	60 007 308	69 968 231	57 635 679

In accordance with International Financial Reporting Standards / International Accounting Standards, on a yearly basis the Group performs an evaluation of the deferred tax asset relating to tax losses carried forward that was accounted for in previous years.

According to the estimation of taxable profit for the fiscal year 2007 and according to the tax return for the fiscal year 2006, tax losses carried forward and the corresponding deferred tax asset are detailed as follows:

	31.12.2007		31.12.2006
Limit date to be used	Tax loss carried forward	Deferred tax asset	Tax loss carried forward	Deferred tax asset
2007			84 657	21 164
2008			153 061	38 266
2009	378 636	94 659	544 023	136 005
2010	7 212 814	1 803 141	8 968 079	2 214 863
2011	161 732	40 433	11 157 189	1 128 983
2012	23 396 226	6 200 000	203 458	50 865
2014			1 528 502	496 763
2015			36 725	11 938
2016			38 865 008	12 245 372
2017	12 406 750	3 722 025	13 714 886	4 114 466
2018	3 740 985	1 122 296	3 740 985	1 122 293
2019	53 271	15 981	53 271	15 981
	47 350 414	12 998 535	79 049 844	21 596 959
Without time limit	105 772 167	28 498 541	84 998 784	25 531 655
Total	153 122 581	41 497 076	164 048 628	47 128 614

The stated amount of deferred tax asset related to tax losses carried forward was affected by a decrease in corporate income tax rates applicable to several group companies in coming years.

Furthermore, at 31 December 2007 and 31 December 2006, tax losses for which no deferred tax assets were recognised, are detailed as follows:

	31.12.2007			31.12.2006
Limit date to be used	Tax loss carried forward	Tax credit	Tax loss carried forward	Tax credit
2007	253 737	63 434
2008	3 240 690	810 306	5 720	1 564
2009	2 885 767	721 447	173 858	43 465
2010	4 378 441	1 096 699	83 551	22 956
2011	574 240	143 579	3 211 749	381 077
2012	26 516 598	7 019 513	62 900 153	15 725 038
2013	383 085	96 318
2014	32 967 957	9 890 469	20 999 339	6 299 801
2015	49	17
2016	66 749 192	20 043 443	50 945 246	15 283 574
2017	51 545 728	15 690 466	48 726 117	14 617 835
2018	88 047 862	26 560 927	95 081 602	28 524 481
2019	5 354 629	1 677 123	19 280 761	5 784 229
2020	1 082 928	379 025
2021	19 416 189	5 855 105	4 244 376	1 400 644
	303 397 092	90 047 871	305 652 472	88 084 664
Without time limit	780 665 412	237 392 833	786 519 961	284 461 788
Total	1 084 062 504	327 440 704	1 092 172 433	372 546 452

The amount of deferred tax asset relating to tax losses carried forward which was not recognised but was quantified in column Tax credit, was affected by a decrease in corporate income tax rates applicable to several group companies in coming years.

Deferred tax assets are offset against deferred tax liabilities in situations where the company generating the related temporary differences is legally entitled to offset the recognised amounts and intends to settle on a net basis or else to realise the assets and settle the liability simultaneously.

17. OTHER NON CURRENT ASSETS

At 31 December 2007 and 31 December 2006 details of Other non current assets on the Consolidated Balance sheet were as follows:

		31.12.2007		31.12.2006
		Gross Value	Impairment	Net Value	Gross Value	Impairment	Net Value
Other loans granted	Loans granted to associated companies Trade accounts receivable and other debtors Financial Instruments	14 132 899 149 962 1 558 542 15 841 403	14 132 899 130 114 14 263 013	19 848 1 558 542 1 578 390	14 132 897 266 671 1 069 671 15 469 239	14 132 897 130 139 14 263 036	136 532 1 069 671 1 206 203
Tax recoverable
Others		54 341		54 341	78 753		78 753
	Assets out of scope of IFRS 7	54 341		54 341	78 753		78 753
	Total	15 895 744	14 263 013	1 632 731	15 547 992	14 263 036	1 284 956
					Ageing of Trade Accounts
					Receivable and Other Debtors
				31.12.2007	31.12.2006
	Not due			654 120	26 750
		Due and not impaired
			< 6 months	6 592
			6 - 12 months	150	613
			> 1 year	897 680	1 042 308
				904 422	1 042 921
		Due and impaired
			< 6 months
			6 - 12 months
			> 1 year
	Total			1 558 542	1 069 671

18. INVENTORIES

At 31 December 2007 and 31 December 2006, details of Inventories on the Consolidated Balance Sheet were as follows:

	31.12.2007	31.12.2006
Merchandise	12 792 958	15 723 822
Finished and intermediate products	106 051 119	89 181 673
Products and working in progress	1 725 817	2 995 739
Raw Materials and Consumables	149 733 708	121 613 564
	270 303 602	229 514 798
Accumulated impairment losses on inventories (Note 31)	12 588 275	15 543 189
	257 715 327	213 971 609

19. TRADE DEBTORS

At 31 December 2007 and 31 December 2006, details of Trade Debtors on the Consolidated Balance Sheet were as follows:

	31.12.2007			31.12.2006
	Gross Value	Impairment	Net Value	Gross Value	Impairment	Net Value
Trade Debtors	276 859 705	16 719 681	260 140 024	308 719 485	18 510 857	290 208 628

	AGEING OF TRADE DEBTORS
	31.12.2007	31.12.2006
Not due	203 431 697	234 982 812
Due and not impaired
0 - 30 days	34 481 114	37 822 189
30 - 90 days	10 596 124	11 353 296
' + 90 days	9 347 670	7 589 968
	54 424 908	56 765 453
Due and impaired
0 - 90 days	4 590 668	2 912 238
90 - 180 days	613 443	1 049 767
180 - 360 days	2 844 742	872 262
+ 360 days	10 954 247	12 136 953
	19 003 100	16 971 220
Total	276 859 705	308 719 485

20. OTHER CURRENT DEBTORS

At 31 December 2007 and 31 December 2006, details of Other current debtors on the Consolidated Balance Sheet were as follows:

	31.12.2007			31.12.2006
	Gross Value	Impairment	Net Value	Gross Value	Impairment	Net Value
Other debtors	20 402 117	19 628	20 382 489	19 077 427	20 296	19 057 131
Advances to trade creditors	391 711		391 711	1 525 550		1 525 550
Goup companies	705 903	422 876	283 027	2 668 197	422 877	2 245 320
Financial Instruments	21 499 731	442 504	21 057 227	23 271 174	443 173	22 828 001
Outros Devedores	782 239		782 239	228 808		228 808
Assets out of scope of IFRS 7	782 239		782 239	228 808		228 808
Total	22 281 970	442 504	21 839 466	23 499 982	443 173	23 056 809

	Ageing of Other Debtors		Ageing of Advances to Trade Creditors		Ageing of Group Companies
	31.12.2007	31.12.2006	31.12.2007	31.12.2006	31.12.2007	31.12.2006
Not due	810 337	304 655	54 520	841	283 027	2 245 320
Due and not impaired
0 - 30 days 30 - 90 days + 90 days	14 467 597 136 347 4 934 015 19 537 959	6 197 846 27 622 12 510 013 18 735 481	48 217 81 234 207 740 337 191	16 772 1 252 182 255 755 1 524 709
Due and impaired
0 - 90 days 90 - 180 days 180 - 360 days	53 821	37 290
+ 360 days	53 821	37 290			422 876 422 876	422 877 422 877
Total	20 402 117	19 077 426	391 711	1 525 550	705 903	2 668 197

21. OTHER CURRENT ASSETS

At 31 December 2007 and 31 December 2006, details of Other current assets on the Consolidated Balance Sheet were as follows:

	31.12.2007				31.12.2006
	Gross Value	Impairment	Net Value	Gross Value	Impairment	Net Value
Derivatives instruments	5 183 887		5 183 887	6 528 108		6 528 108
Instrumentos financeiros	5 183 887		5 183 887	6 528 108		6 528 108
Accrued revenue	2 583 923		2 583 923	43 096 500		43 096 500
Deferred Costs	6 996 291		6 996 291	5 899 594		5 899 594
Others	14 214		14 214	79 018		79 018
Assets out of scope of IFRS 7	9 594 428		9 594 428	49 075 112		49 075 112
Total	14 778 315		14 778 315	55 603 220		55 603 220

22. STATE AND OTHER PUBLIC ENTITIES (CURRENT ASSETS)

At 31 December 2007 and 31 December 2006, details of State and Other Public Entities on the Consolidated Balance Sheet were as follows:

	31.12.2007	31.12.2006
State and other public entities:
Income Tax	7 556 685	4 905 409
Value Added Tax	15 994 345	11 303 377
Social Security Contribution	12 872	10 327
Others	6 590 344	2 566 501
	30 154 246	18 785 614

23. CASH AND CASH EQUIVALENTS

At 31 December 2007 and 31 December 2006, the detail of Cash and Cash Equivalents was as follows:

	31.12.2007	31.12.2006
Cash at hand	120 588	1 994 530
Bank deposits	30 644 304	103 065 901
Treasury applications	35 118 656	84 228 698
Cash and cash equivalents on the balance sheet (financial instruments)	65 883 548	189 289 129
Bank overdrafts	16 728 792	572 787
Cash and cash equivalents on the statement of cash flows	49 154 756	188 716 342

Bank overdrafts include credit balances on current accounts, and are included as Bank loans under current liabilities on the consolidated balance sheet's (note 26).

At 31 December 2007 there were bank deposits in the amount of 18 481 066 euros which related to the securitization facility described on note 26.3.

The balance of Treasury applications at 31 December 2007 and 31 December 2006 was composed of several very short term treasury applications at banks, with low risk (bank risk) and returns aligned with existing market applications with similar maturity and risk profiles.

24. SHAREHOLDERS' FUNDS

24.1. SHARE CAPITAL

At 31 December 2007 and 2006, Sonae Indústria's Share Capital was fully underwritten and paid and was comprised of 140 000 000 common shares, not entitled to fixed income, with a face value of 5 euros per share. At this date, neither the company nor any of its affiliates held any shares in the company.

24.2. LEGAL RESERVE

The caption Legal reserve includes the parent company's reserve set up in accordance with articles 295 and 296 of the Company Law.

24.3. RESERVES AND RETAINED EARNINGS

This caption includes:

• Reserves set up by the parent company and by its subsidiaries in accordance with statutory rules or by proposition of the respective Board of Directors approved by the General Shareholders' Meeting;

• Currency translation reserves resulting from the conversion to Euros of subsidiaries' financial statements which are expressed in a different functional currency;

• Prior periods' net profits pending application;

• Consolidation adjustments to any of the aforementioned components.

Sonae Indústria, SGPS, SA is included in the consolidation perimeter of its ultimate parent company, Efanor Investimentos, SGPS, SA.

25. MINORITY INTERESTS

Changes to this item during 2007 and 2006 were as follows:

	31.12.2007	31.12.2006
	28 100 792	44 960 793
Opening balance
Decrease / (increase) in ownership percentage on consolidated companies	- 7 314 987	-1 356 364
Change resulting from currency translation	2 033 338	-1 785 924
Net profit for the period attributed to minority interests	10 817 464	1 334 384
Others	105 810	-15 052 097
Closing balance	33 742 417	28 100 792

The item Decrease/(increase) in ownership percentage on consolidated companies includes mainly the change in minority interests resulting from the acquisition of Tafisa shares (Note 9) and the consequent increase in ownership percentage of subsidiaries held by Tafisa.

26. LOANS

As at 31 December 2007 and 31 December 2006 Sonae Indústria had the following outstanding loans:

			31.12.2007
	Amortised cost			Nominal value
	Current	Non current	Current	Non current	Fair value adjustment
Bank loans	55 605 328	187 543 520	55 605 328	187 543 520	-1 829 917
Debentures	100 000 000	431 336 457	100 000 000	435 000 000
Obligations under finance leases	3 465 063	51 100 454	3 465 063	51 100 454	9 888 477
Other loans	504 957	34 506 252	504 957	34 506 252
Gross debt	159 575 348	704 486 683	159 575 348	708 150 226	8 058 560
Investment
Cash and cash equivalent in balance sheet	65 883 548		65 883 548
Net debt	93 691 800	704 486 683	93 691 800	708 150 226	8 058 560
Total net debt	798 178 483		801 842 026

			31.12.2006
	Amortised cost		Nominal value		Fair value
	Current	Non current	Current	Non current	adjustment
Bank loans Debentures	137 955 436	134 085 215 530 273 929	137 955 436	134 085 215 535 000 000	-1 387 035
Obligations under finance leases Other loans	2 483 759 411 087	41 897 417 95 856 073	2 483 759 411 087	41 897 417 95 856 073	11 386 811
Gross debt	140 850 282	802 112 634	140 850 282	806 838 705	9 999 776
Investment Cash and cash equivalent in balance sheet	4 769 781 189 289 129		4 769 781 189 289 129
Net debt	- 53 208 628	802 112 634	- 53 208 628	806 838 705	9 999 776
Total net debt	748 904 006		753 630 077

The column "Fair value adjustment" includes the adjustments which would have to be made if the corresponding items were to be stated at fair value.

The aforementioned loans do not include loans granted by related parties.

26.1 Bank Loans

The bank loans and overdrafts presented in the table in note 26. are included in "Long Term Bank Loans – net of the Short Term portion", "Short Term portion of Long Term Bank Loans", "Non convertible debentures – net of the Short Term portion", "Short term portion of long term non convertible debentures" and "Short Term Bank Loans" on the Consolidated Balance Sheet and their composition as at 31 December 2007 are detailed in the following table:

			Bank loans
	Non current		Current
Company	Bank loans	Short term portion	Short term	Bank overdrafts	Total
Glunz AG	63 795 900	14 553 700		1 652 512	80 002 112
Sonae Indústria-SGPS,SA	75 625 000	6 250 000			81 875 000
Sonae Novobord (Pty) Ltd	36 901 124	6 436 240		2 891 176	46 228 541
Sonae UK,Ltd.	3 181 756	6 363 515			9 545 270
Sonae Ind., Prod. e Com.Deriv.Madeira,SA	3 375 000	4 252 149			7 627 149
Others	4 664 740	1 019 098	1 836	12 185 102	17 870 776
	187 543 520	38 874 702	1 836	16 728 790	243 148 848

a) During 2002 and 2003, Glunz AG., contracted a loan with the European Investment Bank for 119 000 000 Euros (made up by two components). The loan pays interest quarterly, indexed to a fixed rate of 3,64%, and will be redeemed in 16 consecutive and variable semiannual instalments, the first of which was made in June 2005. At 31 December 2007, outstanding principal was 78 349 600 euros.

b) During the first half of 2005, a loan contracted in 2001 by Sonae SGPS SA with the European Investment Bank, of 50 000 000 Euros, was transferred to Sonae Indústria SGPS, SA. The loan pays interest quarterly, at market rates, and will be redeemed in 16 consecutive semi-annual instalments. At 31 December 2007, the principal outstanding was 21 875 000 euros;

c) On 25 January 2006 Sonae Indústria SGPS, S. A. contracted commercial paper with several financial institutions for up to a maximum nominal amount of 100 000 000 euros. This programme will mature on 27 January 2016. At 31 December 2007, commercial paper issued amounted to 60 000 000 euros.

d) Sonae Novoboard raised ZAR 200 000 000 in debt from Firstrand Bank. The facility was issued at a fixed rate of 13.18%, interest is payable semi-annually, and principal is repaid in 14 consecutive and variable instalments, the first of which occurred in June 2003. As at 31 December 2007, the principal outstanding was 14 013 747 euros;

e) On 4 December 2006, Sonae Novobord contracted a loan from Santander Totta in ZAR (South African Rands) up to a maximum principal of 15 000 000 euros on withdrawal date. The loan has a three month maturity period and may be automatically renewed for equal periods. The facility was issued at a market rate and interest is payable quarterly. At 31 December 2007 the loan had been completely redeemed.

f) During the first half of 2007, Sonae Novobord contracted a loan with the European Investment Bank up to a maximum principal of 25 000 000 Euros. The loan pays interest at a market rate and will be redeemed in 14 consecutive and equal semi-annual instalments, the

first of which will be made in September 2010. At 31 December 2007, outstanding principal was 21 847 644 euros.

g) During first half 2007 Sonae Novobord contracted a loan with International Finance Corporation (IFC) of 71 800 000 ZAR. The loan pays interest at a market rate and will be redeemed in 16 consecutive and equal semi-annual instalments, the first of which will be made in June 2009. At 31 December 2007, outstanding principal was 7 158 460 euros.

h) Sonae UK signed a loan contract with the European Investment Bank, for GBP 35 000 000. This loan pays interest at market rates and is redeemable in 15 consecutive and equal semi-annual instalments, the first of which matured in June 2002. As at 31 December 2007, the principal outstanding was 9 545 271 euros;

i) In 2000, Sonae Indústria – Produção e Comercialização de Derivados de Madeira, SA contracted a 27 000 000 euro loan with the European Investment Bank. The loan pays interest semi-annually in arrears, at a fixed rate of 3.16%, and the principal is repaid in 16 consecutive semi-annual instalments. As at 31 December 2007, the principal outstanding was 6 750 000 euros;

j) During 2005, Tafisa Brasil contracted two loans from Santander Banespa of 80 000 000 reais. The loans pay interest at market rates and are automatically renewed at the end of each month. As at 31 December 2007, the loan had been completely repaid.

26.2 Bond Issues

a) Sonae Indústria 2004 bonds, issued on 15 October 2004, with a principal of 80 000 000 euros. Principal will be paid in a single bullet payment 5 years after issue date. Interest is calculated using Euribor six months plus 87.5 bps, and paid semi-annually in arrears on 15 April and 15 October;

b) Sonae Indústria 2005/2013 bonds, issued on 31 March 2005, with a principal amount of 55 000 000 euros, and a bullet repayment 8 years after issue date. Interest is calculated using Euribor six months plus 87.5 bps, paid semi-annually in arrears on 31 March and 30 September;

c) Sonae Indústria 2005/2008 bonds, issued on 27 April 2005, with a principal amount of 100 000 000 euros and a bullet repayment 3 years after issue date. Interest is calculated using Euribor six months plus 100 bps, paid semi-annually in arrears on 27 April and 27 October;

d) Sonae Indústria 2005/2010 bonds, issued on 27 April 2005, with a principal amount of 150 000 000 euros and a bullet repayment 5 years after issue date. Sonae Indústria may anticipate repayment, either partially or for the full amount of principal outstanding, at any interest payment date after April 2008, inclusive. Interest is calculated using Euribor six months plus 110 bps, paid semi-annually in arrears on 27 April and 27 October;

e) Sonae Indústria 2006/2014 bonds, issued on 28 March 2006, with a principal amount of 50 000 000 euros and a bullet repayment 8 years after issue date. Interest is calculated using Euribor six months plus 87,5 bps, paid semi annually in arrears on 28 March and 28 September;

f) Sonae Indústria 2006/2013 bonds, issued on 3 July 2006, with a principal amount of 50 000 000 euros and a bullet repayment 7 years after issue date. Sonae Indústria may anticipate repayment, either partially or for the full amount of principal outstanding, at any interest payment date after July 2011, inclusive. Interest is calculated using Euribor six months plus 86 bps, paid semi annually in arrears on 3 January and 3 July;

g) Sonae Indústria 2006/2014 bonds, issued on 2 August 2006, with a principal amount of 50 000 000 euros and a bullet repayment 8 years after issue date. Interest is calculated using Euribor six months plus 80 bps, paid semi annually in arrears on 2 February and 2 August.

26.3 Other Loans

Other loans, as detailed in the table in note 26, are included in the consolidated Balance Sheet, in "Other Financing" in Current Liabilities and Non-Current Liabilities, and had the following composition on 31 December 2007:

	Other Loans
Company	Long term		Short term
	Securitization	Others	Others
Sonae UK,Ltd.	16 631 645
Sonae Tafibra Benelux, BV	9 867 661
Glunz AG	5 024 887		56 327
Spanboard Products,Ltd	2 420 647		9 196
Sonae Ind., Prod. e Com.Deriv.Madeira,SA			46 318
Isoroy SAS	34 118		168 159
Tableros Tradema,S.L.	11 495
Others		515 799	224 957
	33 990 453	515 799	504 957

During 2004, Sonae Indústra SGPS SA together with its subsidiaries Soane Indústria – Produção e Comercialização de Madeira, S.A (then Sonae Tafibra – Gestão Comercial S.A), Tableros Tradema S.L (then Tafibra, Tableros Aglomerados e de Fibras, A.I.E), Isoroy S.A.S

(then Isoroy Diffusion S.N.C.), Glunz AG, Sonae Tafibra Benelux, B.V., Sonae (UK) Limited and Spanboard Products Limited, signed a Securitization facility of up to 120 000 000 euros, later increased to 150 000 000 euros (2006) and 175 000 000 (2007), with ABN Amro Bank, NV and TAPCO – Tulip Asset Purchase Company BV. This facility, which initially matured in March 2009, was rescheduled to March 2012. As at 31 December 2007, the principal outstanding was 33 990 453 euros.

Trade debtors securitized were kept on the consolidated balance sheet as the criteria set out in IAS 39 for their derecognition were not fully met, namely the whole risks related to the securitized assets were not completely transferred.

26.4 Financial lease creditors

Details of finance leases creditors at 31 December 2007 and at 31 December 2006 are as follows:

	Minimum			Present value
	lease payments			of minimum lease payments
	31.12.2007	31.12.2006	31.12.2007	31.12.2006
2007	-	7 134 059	-	2 483 758
2008	8 680 765	6 780 212	3 465 063	2 319 852
2009	8 521 200	6 620 369	3 585 532	2 367 727
2010	8 314 972	6 411 164	3 677 724	2 379 621
2011	8 105 780	6 172 911	3 782 999	2 372 999
2012	8 060 689		4 071 641
after 2012 (2011)	44 862 204	49 824 097	35 982 558	32 457 219
	86 545 610	82 942 812	54 565 517	44 381 176
Lease creditors - current			3 465 063	2 483 759
Lease creditors - non current			51 100 454	41 897 417

27. FINANCIAL DERIVATIVES

The fair value of derivative instruments are stated as follows:

	Other current assets (note 21)		Other current liabilities (note 33)		Other non current liabilities (note 29)
	31.12.07	31.12.06	31.12.07	31.12.06	31.12.07	31.12.06
Derivatives at fair value through profit or loss	5 047 080	5 829 177	942 442	3 216 459	216 079
Derivatives at fair value through reserves	136 807	698 932		56 762		836
	5 183 887	6 528 109	942 442	3 273 221	216 079	836

	Maturity of financial derivatives
	2008	2009
Derivatives at fair value through reserves	145 789	- 8 982
Derivatives at fair value through profit and loss	3 917 137	- 28 578
	4 062 926	- 37 560

Derivatives at fair value through profit or loss

They are made up by exchange rate derivatives (forwards) over which no hedge accounting was applied, and by interest rate derivatives (swaps) which consist on fair value hedges. Gains and losses resulting from changes in fair value are stated under the item Adjustments to fair value of financial instruments at fair value through profit or loss (note 39), which corresponds to a net loss of 598 669 euros.

Derivatives at fair value through reserves

They are made up by interest rate derivatives, mainly swaps, which consist on cash flow hedges. Changes in the fair value of these financial instruments were recorded under Hedging reserves, included in the caption Reserves and retained earning on the balance sheet, for the amount of 95 244 euros. No amounts related to instruments which matured in 2007 were transferred from reserves to profit or loss

28. FINANCIAL RISKS

The liquidity risk described on note 2.23., c), related to gross debt referred to on note 26, can be analysed as follows:

	Maturity of gross debt	Interests	Total
2008	159 575 348	42 685 790	202 261 138
2009	122 301 902	38 787 116	161 089 018
2010	214 220 544	32 904 094	247 124 638
2011	27 945 729	22 010 545	49 956 274
2012	84 572 381	26 795 341	111 367 722
2013	114 021 403	16 457 486	130 478 889
>2013	145 088 265	17 717 660	162 805 925
	867 725 572	197 358 032	1 065 083 604

The calculation of interest in the previous table was based on interest rates at 31 December 2007 applicable to each item of debt. Gross debt maturing in 2008 includes scheduled repayment of debt along with the repayment of debt as at end 2007 maturing within less than one year (although some credit limits might be rolled over).

Total amount of hired credit limit

	31.12.2007	31.12.2006
Commitment < 1year	101 026 304	138 766 826
Commitment > 1year	235 000 000	150 000 000
TOTAL	336 026 304	288 766 826

The analysis of interest rate risk, described on note 2.23., h), consisted on calculating the way net profit before tax would had been impacted if there would had been a change of +0.75 or -0.75 percentage points in actual 2007 interest rates.

Considering Euribor 6 months as a reference indicator for interest rates of Euro, a change of 0.75 percentage points corresponds to 2.3 times the standard deviation of that variable in 2007.

	Sensitivity Analysis
	"Notional" (Euros)	Effect in profit and loss (Euros)
		Var.	Var.
		0,75pp	-0.75pp
Gross debt excluding banks overdrafts
EUR	-779 188 507	-4 204 429	4 204 429
GBP	-28 470 911	- 232 060	232 060
BRL		- 43 571	43 571
ZAR	-43 337 364	- 214 466	214 466
	-850 996 782	-4 694 526	4 694 526
Financial derivatives
EUR	50 000 000
ZAR	11 370 573	- 50 299	50 299
	61 370 573	- 50 299	50 299
Treasury applications
EUR	18 481 066	290 269	- 290 269
BRL	16 637 589	24 056	- 24 056
	35 118 655	314 325	- 314 325
		-4 430 500	4 430 500

With respect to exchange rate risk, described on note 2.23., b), ii), the following calculations were performed:

1. Sensitivity analysis of balances denominated in a currency other than the functional currency of each company included in the consolidation, by considering a change of +1% and -1% in actual 2007 and 2006 exchange rates.

1.1. – Other non current assets and Other trade debtors net of Other non current liabilities and Other current liabilities

	Foreign currency amount		EUR equivalent			Sensitivity analisys
	31.12.2007	31.12.2006	31.12.2007 31.12.2006			2007		2006
					Var.		Var.
					-1%	1%	-1%	1%
CAD	113 800 000	109 164 034	78 759 842	71 438 035	- 787 598	787 598	- 714 380	714 380
GBP	16 271 830	12 790 143	22 188 430	19 047 080	- 221 884	221 884	- 190 471	190 471
ZAR	202 820 925		20 221 246		- 202 212	202 212

1.2.- Other financial assets net of Other financial liabilities

	Foreign currency amount		EUR equivalent			Sensitivity analisys
	31.12.2007	31.12.2006	31.12.2007	31.12.2006	2007
						Var.		Var.
					-1%	1%	-1%	1%
USD	3 766 568	8 825 235	2 558 630	6 701 001	- 25 586	25 586	- 67 010	67 010

1. Sensitivity analysis of existing derivatives to hedge the exchange rate risk set out on the

previous point

	Foreign currency amount			EUR equivalent		Sensitivity analisys
	31.12.2007	31.12.2006	31.12.2007	31.12.2006	2007		2006
					Var.		Var.
					-1%	1%	-1%	1%
CAD GBP ZAR	118 665 909 17 721 904 228 076 717	114 559 098 55 415 611 26 094 334	82 127 420 24 165 765 22 739 249	74 968 325 82 525 109 2 832 523	821 274 241 658 227 392	- 821 274 - 241 658 - 227 392	749 683 825 251 28 325	- 749 683 - 825 251 - 28 325

29. OTHER NON CURRENT LIABILITIES

At 31 December 2007 and 31 December 2006, details of Other non current liabilities were as follows:

	31.12.2007	31.12.2006
Derivative instruments	216 078	836
Goup companies	72 604	72 604
Other creditors	1 046 562	434 401
-	1 335 244	507 841
State and other public entities	45 800 911	33 772 070
Other creditors	77 615 354	77 004 921
Liabilities out of scope of IFRS 7	123 416 265	110 776 991
Total	124 751 509	111 284 832

The item State and other public entities – Others includes the owing amount of ICMS – Tax on Trade of Goods and Services Rendered to be paid by the subsidiary Tafisa Brasil in accordance with the terms of the agreement celebrated with the Government of the State of Paraná (Brazil), which considers postponing 90% of the payment of each parcel of tax for a twelve-year period, to be updated yearly according to 10% of FCA index.

Other creditors include 77 615 354 euros relating to deferred income-investment subventions.

31 December 2007	N+1	N+2	N+3	N+4	N+5	> N+5	Total
						72 604	72 604
Maturity of Other non current creditors	619 674				426 888		1 046 562
	619 674				426 888	72 604	1 119 166
31 December 2006	N+1	N+2	N+3	N+4	N+5	> N+5	Total
Maturity of Group Companies						72 604	72 604
Maturity of Other non current creditors	7 513					426 888	434 401
	7 513					499 492	507 005

30. PENSION FUND LIABILITIES

Various Group companies assumed the liability of giving their employees cash contributions to pension plans for old age, incapacity, early retirement, survival and post retirement medical care. These contributions are determined as a percentage that increases as a result of the number of years that the employee has worked at the company, and which is applied to a salary table that is negotiated on a yearly basis and correspond to defined benefits plans.

Current liabilities associated with past years of service are evaluated every year through actuarial studies and based on the "Projected Unit Credit" methodology. Actuarial assumptions employed on the last study prepared at 31 December 2006 were:

		South Africa				Germany
				Glunz AG		GHP GmbH	Tool GmbH
	31.12.07	31.12.06	31.12.07	31.12.06	31.12.07	31.12.06	31.12.07	31.12.06
Mortality table	PA (90)	A55	Richttafeln 2005 G	Richttafeln 2005 G	Richttafeln 2005 G	Richttafeln 2005 G	Richttafeln 2005 G	-
Salary growth rate	7,1%	5,5%	2,0%	5,0%	0,00%	0,00%	0,00%	-
Return on fund	9,0%	8,5%	4,0%	8.0%	4,10%	4,10%	4,10%	-
Actuarial tecnical rate	9,0%	8,5%	4,75%	8.0%	4,75%	4,75%	5,6%	-
Pension growth rate	6,1%	5,0%	1,5%	3,5%	1,50%	1,50%	1,50%	-

		France	Portugal
	31.12.07	31.12.06	31.12.07	31.12.06
Mortality table	TPG 1993	TPG 1993	TV 88/90	TV 88/90
Salary growth rate	2,0%	2,0%	3,0%	3,0%
Return on fund	-	-	6,0%	6,0%
Actuarial tecnical rate	4,5%	4,5%	4,0%	4,0%
Pension growth rate	2,0%	2,0%	0,0%	0,0%

In previous periods, pension funds and provisions for pension liabilities were created by various companies within the Group in the following countries:

South Africa:

The employees of Sonae Novobord (PTY) have the following benefit scheme:

Defined contribution plan composed of a number of assets that are managed by a third party. The Company is obliged to deliver the defined contributions. At 31 December 2007, no contributions were outstanding or unpaid.

Defined Benefit plan with a fund managed by a third party and calculated in accordance with International Accounting Standard 19 and based on actuarial studies performed by an independent party.

Post-Retirement Health Benefit scheme under which the Company will provide for 50% of eligible health expenses incurred after the employee's retirement.

In an actuarial study carried out on 31 December 2007, liabilities amounted to 50 594 915 ZAR (5 044 313 euros) covered by the market value of the fund of 42 727 904 ZAR (4 259 972 euros) and by a provision of 7 867 001 ZAR (784 340 euros), which is recorded as a Pension Liability in Non Current Liabilities on the Consolidated Balance Sheet.

Germany:

Glunz AG has a defined benefit plan and it has constituted a fund. The plan is calculated according to International Accounting Standard 19, and based on actuarial studies carried out by an independent party. The company has recorded a provision for Pension Liabilities in Non Current Liabilities of 16 937 270 euros, which fully provides for the liabilities calculated by the actuarial study reported to 31 December 2007. On the same date, the value of the fund constituted at the end of the year was 235 132 euros.

GHP GmbH has a defined benefit plan and it has constituted a fund. The plan is calculated according to International Accounting Standard 19. In an actuarial study dated 31 December 2007, liabilities amounted to 1 080 274 euros and were covered by the fund and by provisions for Pension Liabilities in Non Current Liabilities of 176 126 euros and 904 149 euros respectively.

Tool GmbH has a defined benefit plan and it has constituted a fund. The plan is calculated according to International Accounting Standard 19. In an actuarial report carried out at 31 December 2007, liabilities amounted to 90 658 euros and were covered by the fund and by provisions for Pension Liabilities in Non Current Liabilities of 16 728 euros and 73 930 euros respectively.

France:

Upon retirement of their employees, Isoroy SAS and Darbo SAS are obliged to pay a sum defined under the terms of the sector's collective labour agreement. An actuarial study calculated the liabilities of the two companies on 31 December 2007 to be 1 853 398 euros. This is fully covered by a provision that is recorded as a Pension Liability in Non Current Liabilities on the Consolidated Balance Sheet

Portugal:

Various Group companies have a defined benefit plan and funds managed by third parties, calculated in accordance with International Accounting Standard 19 and based on actuarial studies carried out by independent parties. Employees of eight companies hired until 31 December 1994 are covered by this plan under which they will receive as from retirement, a life long monthly payment equivalent to 20% of their salary at their retirement date. The liability for services provided as at 31 December 2007, based on an actuarial study on the same date, were calculated to be 3 693 963 euros. This was fully covered by the value of the fund and by a provision included as a Pension Liability in Non Current Liabilities on the Consolidated Balance Sheet, of 1 314 100 euros and 2 379 863 euros, respectively.

The main changes, during the periods ending 31 December 2007 and 31 December 2006, to the present value of these liabilities are presented below:

	31.12.2007	31.12.2006
Opening balance of obligations' present value	30 749 539	30 240 033
Interest cost	1 625 181	1 352 903
Current service cost	802 305	644 580
Actuarial (Gains)/Losses	-1 996 561	-1 050 134
Recognised past service cost		1 024 696
Paid pensions	1 879 438	1 671 546
Exchange rate effect	- 60 109	-1 035 535
Changes in consolidation perimeter	149 129	1 244 542
Closing balance of obligations' present value	29 390 046	30 749 539

At 31 December 2007 and 31 December 2006, the amount of liabilities for defined benefits recognised in the consolidated balance sheet is detailed as follows:

	31.12.2007	31.12.2006
Present value of obligations Actuarial Losses/(Gains) not recognised Fair value of plan assets	29 390 046 687 493 5 766 926	30 749 539 739 768 5 025 256
Pension liabilities	22 935 627	24 984 515

The impact of these liabilities on the 2007 and 2006 consolidated profit and loss statements is detailed as follows:

	31.12.2007	31.12.2006
Interest cost	1 625 181	1 385 652
Current service cost	802 305	598 404
Past service cost		1 024 696
(Increase) / Decrease in fair value of plan assets	288 088	- 296 156
Recognized actuarial (Gains)/Losses	-1 996 561	- 956 835
	719 013	1 755 761

31. TRADE CREDITORS

At 31 December 2007 and 31 December 2006, Trade creditors stated on the consolidated balance sheet showed the following maturities:

	MATURITY OF TRADE CREDITORS
	31.12.2007	31.12.2006
To be paid
< 90 days	222 708 799	255 725 113
90 - 180 days	2 072 418	1 923 569
	1 447 469	1 175 853
	226 228 686	258 824 535

32. STATE AND OTHER PUBLIC ENTITIES (CURRENT LIABILITIES)

At 31 December 2007 and 31 December 2006, State and other public entities had the following composition:

	31.12.2007	31.12.2006
State and other public entities
Income Tax	14 877 387	13 743 944
Value Added Tax	3 113 994	3 474 862
Social Security Contribution	8 841 810	7 945 825
Others	2 805 727	2 577 352
	29 638 918	27 741 983

33. OTHER CURRENT LIABILITIES

At 31 December 2007 and 31 December 2006, Other current liabilities were composed of:

	31.12.2007	31.12.2006
Group companies	201	814 434
Derivatives	942 442	3 273 221
Trade debtors advances	381 327	493 850
Fixed assets suppliers	23 143 342	8 415 384
Other creditors	6 385 706	17 151 869
Financial instruments	30 853 018	30 148 758
Outros credores	13 326 882	6 843 461
Accrued expenses:
Insurances	31 938	332 978
Personnel costs	29 311 940	29 390 350
Accrued financial expenses	8 637 046	6 713 869
Rappel discounts (annual quantity discounts)	33 428 206	31 745 244
External supplies and services	20 730 715	13 321 427
Other accrued expenses	12 445 931	13 157 603
Deferred income:
Investment subventions	6 768 391	10 314 172
Other deferred income	5 352	2 015
Liabilities out of scope of IFRS 7	124 686 401	111 821 119
Total	155 539 419	141 969 877

31 December 2007	< 90 days	90 - 180 days	> 180 days	Total
Maturity of Fixed assets' suppliers	21 574 773	595 449	973 120	23 143 342
Maturity of Other creditors	5 866 645	- 4 184	523 245	6 385 706
	27 441 418	591 265	1 496 365	29 529 048
31 December 2006	< 90 days	90 - 180 days	> 180 days	Total
Maturity of Fixed assets' suppliers	7 616 252	259 937	539 195	8 415 384
Maturity of Other creditors	4 536 986	18 341	12 596 542	17 151 869
	12 153 238	278 278	13 135 737	25 567 253

34. PROVISIONS AND ACCUMULATED IMPAIRMENT LOSSES

Movements occurred in provisions and accumulated impairment losses during the periods ended 31 December 2007 and 31 December 2006 were as follows:

	2007
Description	Opening balance	Exchange rate effect	Changes to perimeter	Increase	Utilizations	Other changes	Closing balance
Accumulated impairment losses on tangible assets (Note 12) Accumulated impairment losses on intangible assets (Note 13)	45 391 373	1 494 925	5 526 041	15 465 325 19 242	9 972	- 38 480 489	29 387 203 19 242
Accumulated impairment losses on other non-current assets (Note 17)	14 263 036					- 23	14 263 013
Accumulated impairment losses on trade debtors (Note 19) Accumulated impairment losses on other debtors (Note 20)	18 510 857 443 173	- 19 344	- 506 169	7 232 129	3 625 747 668	- 4 872 046	16 719 680 442 505
Provisions	42,409,827	1,653,997	770,723	10,253,670	11,411,299	2,147,621	45,824,539
Sub-total Accumulated impairment losses on investments (Note 11)	121 018 266 42 684 744	3 129 578	5 790 595	32 970 366	15 047 686	- 41 204 937 - 7 607	106 656 182 42 677 137
Accumulated impairment losses on inventories (Note 18)	15 543 189	84 451	142 851	2 865 174	5 791 213	- 256 177	12 588 275
Total	179 246 199	3 214 029	5 933 446	35 835 540	20 838 899	- 41 468 721	161 921 594

	2006
	Opening	Exchange	Changes to			Other	Closing
Description	balance	rate effect	perimeter	Increase	Utilizations	changes	balance
Accumulated impairment losses on tangible assets (Note 12)	877 301	- 2 624 908		49 464 568	262	- 2 325 326	45 391 373
Accumulated impairment losses on other non-current assets (Note 17)	14 132 921					130 115	14 263 036
Accumulated impairment losses on trade debtors (Note 19)	16 295 730	- 484 435	1 240 077	6 149 821	3 695 994	- 994 342	18 510 857
Accumulated impairment losses on other debtors (Note 20)	492 122					- 48 949	443 173
Provisions	22 532 468	- 508 572	688 045	20 520 721	3 609 825	2 786 990	42 409 827
Sub-total	54 330 542	- 3 617 915	1 928 122	76 135 110	7 306 081	- 451 512	121 018 266
Accumulated impairment losses on investments (Note 11)	42 722 928				16 747	- 21 437	42 684 744
Accumulated impairment losses on inventories (Note 18)	4 771 938	- 107 697	10 308 751	7 036 668	5 716 013	- 750 458	15 543 189
Total	101 825 408	- 3 725 612	12 236 873	83 171 778	13 038 841	- 1 223 407	179 246 199

Impairment losses are offset against the corresponding asset in the consolidated balance sheet.

The increases and utilizations of impairment losses on investments are recorded in Results from investments on the consolidated profit and loss statement.

The increase in impairment losses on tangible assets is recorded under Provisions and impairment losses on the consolidated profit and loss statement. The reduction is recorded under Other operating income on the consolidated profit and loss statement (Note 37)

The increases and reductions in trade creditor impairment losses are recorded under Provisions and impairment losses and Other operating revenues on the consolidated profit and loss statement, respectively.

The increases and reductions in inventory impairment losses are recorded under Cost of goods sold and Changes in production on the consolidated profit and loss statement, depending on the nature of the inventory.

Values included in the Other changes column related to impairment losses are related with the write-down of assets, offset by the previously recorded impairment loss.

35. OPERATING LEASE

At 31 December 2007 and 31 December 2006, the Group held irrevocable operating leases with the following lease payments:

	Minimun operating lease payments
	31.12.07	31.12.06
2007		8 568 812
2008	9 004 028	7 049 890
2009	7 372 202	4 277 993
2010	5 728 588	3 520 312
2011	3 433 475	2 662 137
2012	2 299 769
After 2012 (2011)	7 004 534	6 915 257
	34 842 596	32 994 401

36. RELATED PARTIES

Balances and transactions with related parties may be summarised as follows:

Balances		Accounts receivable		Accounts payable			Loans
						Obtained	Granted
	31.12.07	31.12.06	31.12.07	31.12.06	31.12.07	31.12.06	31.12.07	31.12.06
Parent company and group companies	1 467 636	9 402 672	4 405 491	9 253 321			247 833	2 007 687
Associated companies		400 719		807 532
Transactions	Sales and services rendered		Purchases and services obtained		Interest income		Interest expenses
	31.12.07	31.12.06	31.12.07	31.12.06	31.12.07	31.12.06	31.12.07	31.12.06
Parent company and group companies	8 593 508	10 517 966	36 774 622	56 983 722	348 049	47 609
Associated companies		1 873 328		4 741 860

Remuneration of the Board of Directors of the Company and its subsidiaries is detailed as follows:

	2007	2006
Total fixed salaries Total bonus	1 331 921 785 443	1 230 740 794 795
	2 117 364	2 025 535

37. OTHER OPERATING REVENUES

Details of Other operating revenues on the Consolidated Profit and Loss Statement for the periods ended 31 December 2007 and 31 December 2006 are as follows:

	31.12.2007	31.12.2006
Gains on disposals of tangible and intangible assets	38 178 887	18 564 247
Supplementary Revenue	6 671 751	22 682 065
Investment subventions	6 942 279	7 465 627
Tax received	5 612 484	8 886 645
Reversion of impairment losses	3 636 389	3 696 256
Gains on provisions	11 411 298	3 609 825
Others	56 484 757	54 569 711
	128 937 845	119 474 376

The item Others includes an estimated indemnity of 27 752 812 euros relating to the operating losses resulting from the accident referred to in Note 3.

The item Gains on disposal of tangible and intangible assets includes 10 703 722 euros related to the accident referred to in Note 3. It also includes 25 583 586 euros related to the sale by Tafisa of land located in Pontevedra, Spain.

38. OTHER OPERATING COSTS

Details of Other operating costs on the Consolidated Profit and Loss Statement for the 2007 and 2006 are as follows:

	31.12.2007	31.12.2006
Taxes	12 589 235	11 959 396
Losses on disposal of non current investments	65 440	269 511
Losses on disposal of tangible and intangible assets	1 357 869	1 035 305
Others	13 119 096	14 531 207
	27 131 640	27 795 419

39. FINANCIAL RESULTS

Financial results for the periods ended 31 December 2007 and 31 December 2006 were as follows:

	31.12.2007	31.12.2006
Financial expenses:
Interest expenses
related to bank loans and overdrafts	11 207 067	14 525 620
related to non convertible debentures	25 847 955	19 570 009
related to finance leases	5 445 381	2 646 320
related to hedged loans (hedge derivatives)	2 520 171
others	3 014 392	5 609 244
	48 034 966	42 351 193
Losses in currency translation
related to customers	1 224 681	2 030 190
related to suppliers	11 931 361	1 549 619
related to loans	16 975 473	23 369 886
others	249 827	758 599
	30 381 342	27 708 294
Cash discounts granted	24 462 717	20 436 456
Adjustment to fair value of financial instruments at fair value through profit or loss	25 260 904	18 535 737
Losses on valuation of hedging derivative instruments
Fair value of inefficient component of hedge derivatives
Other finance losses	12 986 501	10 271 203
	141 126 430	119 302 883
Financial revenues:
Interest income
related to bank loans	513 807	943 170
related to loans to related parties	326 120	153 971
Others	3 392 627	3 959 871
	4 232 554	5 057 012
Gains in currency translation
related to customers	1 315 901	401 436
related to suppliers	11 205 709	1 283 343
related to loans	15 227 246	11 013 635
others	437 857	870 048
	28 186 713	13 568 462
Cash discounts obtained	2 935 935	3 866 302
Adjustment to fair value of financial instruments at fair value through profit or loss	24 662 235	28 291 835
Gains in valuation of hedging derivative instruments
Fair value of inefficient component of hedge derivatives
Other finance gains	567 899	741 677
	60 585 335	51 525 288
Finance profit / (loss)	- 80 541 095	- 67 777 595

40. TAXES

Corporate income tax accounted for in 2007 and 2006 is detailed as follows:

	31.12.2007	31.12.2006
Current tax	19 224 040	14 098 661
Deferred tax	16 048 495	4 603 656
	35 272 535	18 702 317

Reconciliation of consolidated Earnings before taxes with taxes for the year may be detailed as follows:

		31.12.2007	31.12.2006
Consolidated net profit before tax		124 702 712	52 348 670
Tax rate		25.00%	27.50%
Expectable tax at rate 25.0%		31 175 678	14 395 884
Differences to foreign tax rates	(+)	4 263 678	- 939 188
Effect of provincial taxes	(+)	2 169 694	734 479
Consolidation adjustments	(-)	2 562 610	18 849 406
Permanent differences Non deductible costs Non taxed profits	(+) (-)	2 321 460 5 944 247	3 076 294 2 347 148
Tax losses carried forward Recognized deferred tax asset Reverted deferred tax asset Deferred tax asset not recognized in compliance with IAS 12 Utilization of tax losses carried forward whose deferred tax was not recognized in prior periods	(+) (+) (-) (+)	-16 124 022 6 711 269 -11 846 526 -4 878 467	-2 618 452 7 044 100 -17 864 533 -5 354 615
Effect on offsetting deferred tax liabilities related to depreciation	(+)	3 801 484	1 308 514
Effect of change in tax rates	(+)	5 298 541	3 279 488
Other deferred tax assets and liabilities not recognized in compliance with IAS 12	(+)	345 972	- 725 013
Others	(+)	-3 152 422	1 832 845
Consolidated corporate income tax		35 272 535	18 702 317

41. EARNINGS PER SHARE

Earnings per share, excluding the effect of discontinued operations, were calculated as follows:

	31.12.2007	31.12.06
Net Profit
Net profit considered to calculate basic earnings per share (Net Profit attributable to equity holders of Sonae Indústria)	78 612 713	32 311 969
Effect of potential shares Interest related to convertible bonds (net of tax)
Net Profit considered to calculate diluted earnings per share	78 612 713	32 311 969
Number of shares
Weighted average number of shares used to calculate basic earnings per share	140 000 000	140 000 000
Effect of potential ordinary shares from convertible bonds
Weighted average number of shares used to calculate diluted earnings per share	140 000 000	140 000 000

During 2007 no significant profit or loss occurred relating to discontinued operations.

42. SEGMENT INFORMATION

The main activity of the Group is the production of wood based panels and derivative products through industrial plants and commercial facilities located in Portugal, Spain, France, Germany, United Kingdom, Switzerland, The Netherlands, Canada, Brazil and South Africa. It is, therefore, an activity characterised by a high geographical dispersion of assets and markets and by a relative homogeneity of products. For segment analysis purposes, the geographic element is considered the main segmentation vector of the Group's activity and it determines how internal management and financial reporting systems are organised.

Geographic segments identified for 2007 are as follows:

• Portugal
• Spain
• France
• United Kingdom
• Germany
• Rest of Europe
• Brazil
• Canada
• South Africa

42.1. Geographic segments

The contribution of main geographic segments to the Consolidated Profit and Loss Statement for 2007, based on location of assets, are detailed as follows:

	2007
	Portugal	Spain	France	Un. Kingdom	Germany	Others	Brazil	Canada	South Africa	Consolidated
Operating income	334 374 720	418 473 405		325 911 811 126 711 946	849 871 324	265 305 458	154 560 534	126 362 128	106 654 048
Intersegmental eliminations	- 108 993 355	- 71 760 315	- 85 512 481		- 236 919 092	- 9 041 049	- 19 477		- 78 208
External Operating income	225 381 365	346 713 090		240 399 330 126 711 946	612 952 232	256 264 409	154 541 057	126 362 128	106 575 840	2 195 901 397
Allocated Operating Net Profit/(Loss)	33 123 816	57 409 611	3 342 741	4 642 553	26 055 638	- 1 788 991	30 790 081	27 578 013	23 944 782	205 098 244
Non Allocated Operating Net Profit/(Loss)										- 64 032
Financial Net Profit/(Loss)										- 80 541 095
Gains and losses in associated companies Gains and losses in investments										127 321 82 274
Taxation										35 272 535
Net Consolidated Profit/(Loss) after taxation										89 430 177
Attributable to Equity Holders of Sonae Industria										78 612 713
Attributable to Minority Interests										10 817 464

	2006
	Portugal	Spain	France	Un. Kingdom	Germany	Rest of Europe	Brazil	Canada	South Africa	Consolidated
Operating income		297 751 696 330 551 488 281 892 276		116 545 523	677 246 760	165 140 987	134 615 607	148 977 450	109 154 084
Intersegmental eliminations	- 104 691 595		- 45 803 659 - 94 601 746	- 505	- 168 607 638	- 6 946 701	- 2 679 896	- 99 421	- 85 469
External Operating income		193 060 101 284 747 829 187 290 530		116 545 018	508 639 122	158 194 287	131 935 711	148 878 029	109 068 615	1 838 359 242
Allocated Operating Net Profit/(Loss)	17 577 984		16 994 106 - 19 796 430	- 5 692 032	38 939 538	1 585 957	18 917 312	23 429 482	28 364 848	120 320 765
Non Allocated Operating Net Profit/(Loss)										- 261 852
Financial Net Profit/(Loss)										- 67 777 595
Gains and losses in associated companies										- 5 205
Gains and losses in investments										72 557
Taxation										18 702 317
Net Consolidated Profit/(Loss) after taxation										33 646 353
Attributable to Equity Holders of Sonae Industria										32 311 969
Attributable to Minority Interests										1 334 384

Contributions from the segments to the consolidated balance sheet as at 31 December 2007 and 31 December 2006, based upon geographic location of the assets, were as follows:

						31.12.07
	Portugal	Spain	France	Germany	United Kingdom	Brazil	Canada	South Africa	Others	Consolidated
Net segmental assets	279 136 716 282 750 638			239 769 252 553 835 059 133 361 753		150 665 372	208 658 216 128 326 386			26 823 472 2 003 326 864
Non current	197 300 234 200 897 540			158 912 176 393 424 206 100 194 373		117 280 536	189 598 189	96 594 869		935 772 1 455 137 895
Current	81 836 482	81 853 098		80 857 076 160 410 853 33 167 380		33 384 836	19 060 027	31 731 517	25 887 700	548 188 969
Investments in associated companies	815 475	2 533 917								3 349 392
Non-allocated net assets										161 104 281
Total net consolidated assets										2 167 780 537
Segmental Liabilities	53 362 318	75 294 614		78 713 295 198 444 814 23 407 161		65 358 705	33 244 793	20 892 961	10 885 854	559 604 515
Non current	5 773 781	21 295 844		13 506 626 86 691 442	4 499 651	47 855 681	1 275 043	819 414	2 679	181 720 161
Current	47 588 537	53 998 770		65 206 669 111 753 372 18 907 510		17 503 024	31 969 750	20 073 547	10 883 175	377 884 354
Non-allocated liabilities										979 344 445
Total consolidated liabilities										1 538 948 960
Investment in tangible
and intangible assets	13 038 436	18 510 138		9 492 951 37 659 285	4 297 967	4 216 357	89 877 107	35 336 004	265 409	212 693 654
Amortisation and depreciation	15 566 637	17 244 175		15 406 162 37 246 301	7 724 329	9 752 802	9 688 585	3 990 410	186 090	116 805 491

	2006
	Portugal	Spain	France	Germany	United Kingdom	Brazil	Canada	South Africa	Others	Consolidated
Net segmental assets	227 817 012 268 901 884			235 854 604 543 426 182 142 214 197		138 465 124	151 587 473 106 283 590			18 515 899 1 833 065 965
Non current	151 098 149 189 181 012			147 665 503 405 660 838 102 824 126		109 582 509	106 748 337	72 332 119		1 825 391 1 286 917 984
Current	76 718 863	88 666 032		76 133 603 138 974 504 39 390 071		28 882 615	44 839 136	33 456 783	19 086 374	546 147 981
Investments in associated companies	686 572	2 234 322								2 920 894
Non-allocated net assets										319 971 190
Total net consolidated assets										2 155 958 049
Segmental Liabilities	53 815 958	92 987 395		76 499 522 221 160 571 23 435 151		54 571 648	20 316 513	21 871 129	4 698 233	569 356 120
Non current	4 751 881	22 677 761		10 539 914 90 831 938	5 254 767	38 091 128	299 720	737 272	0	173 184 381
Current	49 064 077	70 309 634		65 959 608 130 328 633 18 180 384		16 480 520	20 016 793	21 133 857	4 698 233	396 171 739
Non-allocated liabilities										1 038 458 044
Total consolidated liabilities										1 607 814 164
Investment in tangible
and intangible assets	8 056 349	11 490 408		5 351 313 46 430 492	2 092 538	5 468 878	21 726 712	23 371 649	1 337 262	125 325 601
Amortisation and depreciation	14 261 686	16 135 774		15 262 671 30 402 755	7 831 471	9 154 818	10 612 197	4 165 191	144 470	107 971 033

Inter-segment transactions were executed at market prices and under identical conditions to those applied to third parties.

The average number of employees, by geography, were as follows.

31.12.2007	31.12.2006
	2 580
	1 097
	977
892	854
445	402
359	352
314	319
315	311
57	50
7 095	6 942
	2 623 1 058 1 032

Sales and Services Rendered in 2007 and 2006, based on geographic location of the external clients, were the following:

2007
Segment	'000 Euros
Germany	532 106	26%
Spain	303 956	15%
France	245 175	12%
Portugal	200 836	10%
Brazil	137 869	7%
United Kingdon	108 329	5%
South Africa	104 661	5%
North America	88 582	4%
Others	344 771	17%
Total	2 066 285

2006
Segment	'000 Euros
Germany	405 434	24%
Spain	266 218	16%
France	187 602	11%
Portugal	148 659	9%
North America	119 021	7%
Brazil	116 257	7%
South Africa	106 320	6%
United Kingdon	104 054	6%
Others	245 750	14%
Total	1 699 315

Cash flow by geographic segment, based on geographic location of the assets, were as follows:

							2007
Cash flows arising from:	Portugal	Spain		France	Germany	United Kingdom	Brazil	Canada	South Africa	Others	Inter-segment eliminations	Consolidated
Operating activities	36 653 029		25 055 766	13 335 866	22 036 908	14 881 795	42 144 474	43 249 578	22 727 299	-8 539 031	141 249	211 686 933
Investment activities		6 123 875	3 924 114	-1 076 071	-31 536 484	-1 767 604	-3 573 026	-40 595 885	-38 397 307	-1 347 065	-71 222 913	-179 468 366
Financing activities	-108 303 449		-88 389 349	-12 717 604	-18 585 572	-7 925 498	-23 845 247	-4 244 210	16 798 692	4 267 042	71 081 664	-171 863 531
Change in Cash and Cash Equivalents	-65 526 545		-59 409 469	- 457 809	-28 085 148	5 188 693	14 726 201	-1 590 517	1 128 684	-5 619 054		-139 644 964
							2006
Cash flows arising from:	Portugal	Spain	France	Germany	United Kingdom	Brazil	Canada	South Africa	Luxemburg	Others	Inter-segment eliminations	Consolidadted
Operating activities	33 689 601	27 817 596	4 179 852	16 919 932	105 239	44 184 412	28 580 368	24 588 855	15 079	2 160 777	10 263 875	192 505 586
Investment activities	-114 955 598	-121 152 540	-35 211 395	-77 867 769	-4 651 094	-4 732 978	-30 309 855	-18 447 253	38 079	6 335 001	218 270 162	-182 685 240
Financing activities	143 266 768	102 369 056	32 000 633	78 794 107	1 344 540	-36 876 284	-3 390 491	-16 578 642	60 572	-7 028 468	-228 534 037	65 427 754
Change in Cash and Cash Equivalents	62 000 771	9 034 112	969 090	17 846 270	-3 201 315	2 575 150	-5 119 978	-10 437 040	113 730	1 467 310		75 248 100

42.2. Business segments

In 2007, the segment of wood derivative products, which is the main business segment of the Group, accounted for more than 95% of both revenue and net assets and more than 90% of investment in tangible and intangible assets.

43. APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS

These consolidated financial statements were approved by the Board of Directors and authorised for issuance on 5 March 2008.

Statutory External Auditors' Report Statutory Audit Board's Report

Report and Opinion of the Statutory Audit Board on the Financial Statements

(Free translation from the original in Portuguese)

To the Shareholders of Sonae Indústria, SGPS, S.A.

In accordance with current law and the mandate we have been conferred, we herewith submit for your consideration our Report and Opinion regarding the activity undertaken by us together with the Consolidated and Individual Statements of Sonae Indústria SGPS, S.A. with respect to the year ended 31st December 2007, which are the Board of Directors' responsibility.

We have accompanied the evolution of the Company's activities and businesses as well as other companies within the consolidation perimeter and convened meetings on a regular basis in which the CFO was present throughout. The remit of our work encompassed compliance with the legal and statutory standards in force, risk management and internal control systems with all requested information having been received together with clarifications from the Board of Directors and various company departments, particularly the Internal Audit and its subsidiaries.

We have additionally monitored the process of preparation and disclosure of financial information as well as the review of consolidated and individual financial company statements and have received all requested information and clarifications from the Statutory External Auditor.

Within the scope of our mandate, we have verified the Consolidated and Individual Balance Sheet for the fiscal year ended 31st December 2007, the Consolidated and Individual Statement of Income by nature, Cash Flow Statements and Statements of Changes in Equity and corresponding Appendices for the same period. We have also verified the Management Report for the fiscal year ended 31st December 2007 issued by the Board of Directors and the Statutory External Auditor's Report on the Financial Statements, with which we agree.

In light of the above, we are of the opinion that information relating to the financial statements in question has been prepared according to the applicable accountancy norms, reflecting a true and appropriate image of assets and liabilities, the financial situation and results of both the company and other companies within its consolidation perimeter. The Management Report duly states the evolution of the businesses, performance and financial position of both the company and other companies within its consolidation perimeter businesses and contains a description of the main risks and uncertainties they are confronted with.

Therefore, we are of the opinion that the:

• a) Management Report, Consolidated and individual Balance Sheet for the fiscal year ended 31st December 2007, Consolidated and Individual Statement of Income by nature, Cash Flow Statements and Statements of Changes in Equity and corresponding Appendices for the same period, should be approved;
• b) Proposal for Appropriation of Results submitted to the Board of Directors should be approved.

Finally, we would like to express our gratitude to the Board of Directors, Company departments and Statutory External Auditor for their cooperation.

Maia, 5th March 2008 Statutory Audit Board

Óscar José Alçada da Quinta Armando Luís Vieira de Magalhães Jorge Manuel Felizes Morgado

Statement issued according to §c, nr. 1, art. 245 CMVM Code

Statement issued under the terms and for the purpose of sub-paragraph c) of no. 1 of Article 245 of the Portuguese Securities Code

(Free translation from the original in Portuguese)

In terms of the order in sub-paragraph c), no. 1, Article 245 of the Portuguese Securities Code, the Board members of Sonae Indústria, SGPS, SA hereby declare, to the best of our knowledge, that the:

• a) Management Report, the annual accounts and further related documents requested by current law have been prepared according to the applicable accountancy norms, reflecting a true and appropriate image of assets and liabilities, the financial situation and results of both the company and other companies within its consolidation perimeter; and
• b) Management Report dully states the evolution of the business, performance and financial position of both the company and other companies within its consolidation perimeter business and contains a description of the main risks and uncertainties they are confronted with.